Cairn said on Tuesday it was financially well placed to extend the drilling programme in Rajasthan that has brought the UK oil company five sizeable discoveries so far this year.
First production from Rajasthan is forecast for the fourth quarter of 2007 when the Mangala and N-A fields will start building towards output of 60,000-100,000 barrels a day.
The company said in its interim results statement that it was reshaping to prepare itself for the Rajasthan developments. A new asset management structure has been established and a dedicated management team with onshore experience recruited. Cairn has sold off its remaining North Sea assets.
The scale of the finds has yet to be determined. The figure of 2bn barrels of oil in place is not an indication of how much oil may ultimately be recovered. But an independent study has put proven recoverable reserves at 99.5m barrels and probable recoverable reserves at 111m for the Mangala field alone.
Evaluation of the recoverable reserves is continuing as is the company’s exploration programme in the area.
Cairn’s existing gas production operations in Bangladesh ran at a slightly higher level than in the first half of last year but the company cautioned that future exploration work would have to be evaluated against demand forecasts.
Ravva in east India remained on its production plateau but from April this year the Indian government’s share of profit from petroleum rose to 60 per cent from 35 per cent. In west India, output from the Lakshmi well has been held back by problems on three wells.
The increased government take of profit oil played a large part in reducing production from some 30,600 barrels of oil equivalent a day in the first half of 2003 to under 25,000 boe/d this time round. Pre-tax profits were down 40 per cent at £22.9m.
Cairn’s share price was off 40p at £14.34 in early London trade. Prior to the Rajasthan finds it was around 364p.