Cairn India on Monday cleared the air on a key issue that has intrigued shareholders and investors for long now – what it plans to do with its cash reserves, which stood at a whopping Rs16,000 crore at the end of March.
“We will retain the cash in the company. This will give us flexibility for accelerated discovery and production from the Barmer basin,” P Elango, whole time director and interim CEO, Cairn India said in a conference call after announcement of the company’s annual results.
For the year ended March 2013, Cairn reported a 52% year-on-year jump in profit after tax to Rs12,056 crore, riding on revenues of Rs17,524 crore, a jump of 48%.
Speculation has been rife that Vedanta Resources will use Cairn India’s reserves to buy its erstwhile parent, Cairn Energy.
Elango pointed out that Cairn Energy has earlier denied any such plan.
He, however, did not give a straight answer to queries on when the company hopes to reach its ambitious 300,000 barrels per day (bpd) production target. “That is the company’s eventual production target from the basin and we are working on an aggressive exploration and appraisal programme to achieve that.”
The company will close the current fiscal with a production rate of 200,000-215,000 bpd from the current 175,000 bpd, said Elango.
According to him, Cairn plans to drill over 450 wells in the Rajasthan block over a period of three years, including 100 exploration and appraisal wells, and that 50% of the prospective resource volume will be tested in the very first year.
It is also developing the prolific Barmer Hill in the basin, which is expected to start production this fiscal.
Cairn has submitted an integrated block development plan to the government which seeks to expedite the entire approval process and reduce the time cycle between “discovery and delivery” of output from the basin.
It expects to sustain the Mangala oil field at its plateau production level this fiscal and will extend the plateau by drilling more infill wells in the field coupled with enhanced oil recovery techniques, usually used for extracting more hydrocarbons from ageing fields.
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