Cairn India Q3 profit tanks 99% at Rs 9 cr

By: | Published: January 23, 2016 12:45 AM

The explorer’s EBITDA stood at Rs 665 crore in Q3 FY16 against Rs 2,113 crore in the same quarter last year

Cairn India on Friday reported net profit of Rs 9 crore during October-December 2015, a drop of 99% against Rs 1,350 crore in the same period last year, primarily due to lower crude price. It reported a revenue of Rs 2,039 crore during Q3 FY15, 42% lower year-on-year, primarily due to decline in crude prices. The explorer’s earnings before interest, tax, depreciation and amortisation (EBITDA) — an indicator of operating profitability stood at Rs 665 crore in Q3 FY16 against Rs 2,113 crore in the same quarter last year.

The private explorer got $34.5/barrel price for the crude oil it drilled from its Barmer block in Rajasthan fields against $68/ barrel in the third quarter of previous fiscal.

Net revenue for Q3FY16 decreased mainly due to sharp decline of 13% in crude prices and increase in discount (21%) to Brent for Rajasthan crude to $9.2/barrel ($7.2/barrel in Q2FY16). “Our average realisation came down by 19% quarter-on-quarter to $35.2/barrel as realisation for Rajasthan crude reduced to $34.5/barrel. Our constant effort to improve the cost efficiency helped us reduce our already low Rajasthan water-flood operating cost by 5.8% quarter-on-quarter to $5.1/barrel,” Cairn said.

Chief executive Mayank Ashar said, “We maintain our strategic objective of generating healthy free cash flow which has been successfully guiding us through the constantly deteriorating oil pricing scenario.”

The guidance for the fourth quarter is flat, Ashar said in analysts conference call.

Crude oil output from the most touted Barmer block has dropped 6% in October-December 2015 at an average of 167,979 barrels of oil per day (bopd) against 178,400 bopd in the same months previous year. Cairn’s gross operated production from all projects dropped 7% to 211,843 barrels of oil equivalent per day (boepd) in the third quarter of FY16 against 228,622 boepd in the corresponding quarter last year.

The Vedanta group company attributed the drastic fall in net profit because of lower operating profit. The total operating cost including the polymer injection is below $7/barrel. The Mangala enhanced oil recovery (EOR) programme, which aims to boost output by injecting polymers in the field, has yielded 19,000 barrels per day of additional production.

“Cairn remains our least preferred stock among our India oil & gas coverage…Risks also remain, in our view, that the government or ONGC may seek changes in Rajasthan block terms, as a pre-condition to merger approvals,” Nomura said in a January 18 report.


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