Cairn India today reported 28 per cent fall in its June quarter net profit as drop in oil prices wiped away gains made from operational efficiencies and cost cutting.
Net profit in April-June at Rs 360 crore, or Rs 6.73 a share, was 28 per cent lower than Rs 501 crore, or Rs 9.10 a share, net profit in the same period a year ago, the company said in a statement.
Revenues dipped to Rs 1,885 crore from Rs 2,627 crore in the first quarter of last fiscal as oil prices slumped 32 per cent to USD 38 per barrel.
Quarter-on-quarter net profit rose 88 per cent as Cairn reduced cost by 10 per cent. Its enhanced oil recovery (EOR) project on Mangala oilfield, the largest on its flagship Rajasthan block achieved 20 per cent less operating cost at USD 10 per barrel.
Also, ultimate gas recovery potential from the block was up by 25 per cent in the Raageshwari field post completion of hydro-fracking in 15 wells, the company said adding cross recovery of gas and condensate has been raised from 74 million barrels of oil equivalent to 86 mmboe till 2030.
Besides, polymer flood in the main Mangla-Bhagyan- Aishwariya or MBA oilfields has potential to add 10-12 per cent recovery, further to 30-35 per cent estimated from water-flooding, Cairn said.
“Development plan for Aishwariya (15 million barrels) and Bhagyam (45 million barrels) EOR till 2030 is expected to be submitted in current quarter and 1H CY17, respectively, it said.
Development of Aishwariya Barmer Hill (20-30 million barrels) is envisaged in stages.
Sudhir Mathur, CFO and Acting CEO of Cairn India said: “The Cairn team has delivered a resilient performance, registering 88 per cent increase in profit for the quarter on sequential basis. We have taken significant measures to drive cost efficiency and rationalize capital investment, resulting in free cash generation in a lower-for-longer oil price environment.”
Cairn, he said, remained committed to four projects – Raageshwari Gas, Enhance Recovery at Bhagyam and Aishwariya as well as the tight oil projects.
“Sharp reductions in drilling and fracking costs coupled with learnings from Mangala EOR give us the confidence that we will be ready to execute in a USD 50 a barrel world within 12 months,” he said.