Sesa Sterlite Limited: Cairn India Announces Annual Financial Results for the Period Ended 31st March, 2014
PANJIM, India, April 23, 2014 /PRNewswire/ --
The following release was issued today by Sesa Sterlite Limited's subsidiary Cairn India Limited.
Cairn India Limited
Annual Financial Results for the period ended 31st March, 2014
Cairn India Limited (CIL), one of the fastest growing independent oil exploration and production companies in the world*, today announces its annual financial results for the period ending 31st March, 2014.
(Logo: http://photos.prnewswire.com/prnh/20140117/663814 )
Annual FY 14 Highlights
Financial:
- Record revenue of INR 18,762 crore (US$ 3.1 bn), up 7% YoY on account of enhanced volumes
- EBITDA of INR 13,877 crore (US$ 2.3 bn) driven by low operational cost of US$ 3.9/bbl in onshore RJ block
- Profit After Tax of INR 12,432 crore (US$ 2.1 bn), Diluted EPS of INR 64.95 up 3% YoY
- Generated Cash Flow From Operations of INR 11,093 crore (US$ 1.8 bn), up 0.3% YoY
- Record Gross capex INR 5,471 crore (US$ 0.9 bn) led by all-time high exploration activity
- Achieved Reserve Replacement Ratio of 100%
- Gross contribution of INR 24,299 crore (>US$ 4 bn) to the exchequer for the year
Exploration:
- Rajasthan
- Drilled out 50% of gross risked prospective resources in the fiscal year as planned
- Opened up 5 new play types and added oil in place resources of over 1 billion boe
- Of the 17 wells drilled to date, 14 wells have found hydrocarbons
- Established 6 discoveries (2 in the quarter and 1 in April 2014) since resumption of exploration in 2013
- 29th Discovery, Guda-South-7 well flowed oil at an initial rate of 92 bopd from two zones in the DDCS formation
- 1 discovery in the Barmer Hill formation- the company's 30th, NR-3-2100 well, flowed oil at an initial rate of 62 bopd
- 1 discovery was also established in April 2014; our 31st discovery, Kaameshwari West-8, flowed oil at 117 bopd from the Dharvi Dungar formation
- KG Onshore
- Extended flow test on Nagayalanka-1z-ST well completed with maximum flow rate of 850 bopd and further evaluation is in progress
- High level of seismic activity across the portfolio especially in South Africa
- Completed 2,378 square km of 3D seismic data acquisition, 42% of the plan
- Completed 3,000 line km of 2D seismic data acquisition, 31% of the plan
Production and Development:
- Achieved 6% yoy growth in average daily gross operated production
- Highest ever crude oil production of ~76 mmbbls (~11 MMT) for the year, contributing to ~30% domestic crude oil production**
- Achieved the targeted production rate of 200,000 boepd in the prolific Rajasthan block in March 2014, a sequential growth of 2% at 190,881 boepd in the quarter
- Raag-S-1 well, 26th discovery in Rajasthan brought on test production within a year of discovery under IDP
* Platts 2013 Global rankings, ** based on data from MoPNG, February 2014
Mr. Elango P, Interim CEO and Whole time Director, Cairn India said:
"Our performance over the last fiscal reflects of our unique position of delivering industry-leading production growth which has contributed to reduction in imports and has also benefited all stakeholders.
In Rajasthan, by combining a world-class asset with our proven technical expertise and disciplined approach to execution, we achieved a landmark cumulative oil production of 200 million barrels and a 200,000 boepd production milestone in March 2014.
We have also significantly added to our resource base by delivering a rapid exploration and appraisal drilling program with a success ratio of 50%, establishing 6 discoveries and adding over 1 billion barrels of oil and gas in-place.
Going forward, we continue to remain focused on executing multiple projects especially in Barmer Basin, by deploying talent and technology to achieve world class recovery and discovery rates."
Corporate and Regulatory Developments
Corporate
In line with our strategy to consistently reward the shareholders of the company, the Cairn India Board recommended a final dividend of INR 6.50 per Equity share, entailing an outflow of approximately INR 1,451 crore including dividend distribution tax. This is subject to approval of shareholders at the ensuing Annual General Meeting of the Company scheduled to be held on 23rd July, 2014. This along with the interim dividend paid in October 2013 cumulatively amounts to around 22.46% of our annual consolidated net profit according to our stated dividend policy.
On the backdrop of strong cash flows generated through our operational excellence and world class asset base, we have also opened the Equity Share Buyback programme as a shareholder reward mechanism, at a price not exceeding INR 335 per share. Till 31st March 2014, we have bought back 3,270,549 shares for a total consideration of approximately INR 106 crore from the open market through stock exchanges.
We received a show cause notice from the Income Tax Department for an alleged failure to deduct withholding tax on alleged capital gains in 2006-07, arising in the hands of Cairn UK Holdings Limited, erstwhile parent company. We have responded appropriately to the said notice and the matter is under consideration. Cairn India has always been fully compliant with all Indian income tax laws.
Regulatory
During the year, we continued to engage effectively with all Government stakeholders for an informed policy discourse. FY 14 saw increased engagement between Ministry of Petroleum & Natural Gas and industry associations to improvise regulatory and operational environment.
To help India in energy security, the Government undertook initiatives such as Integrated Development Policy, introduced policy guidelines for exploration and exploitation of shale gas under the nomination regime, and constituting a Standing Committee on Petroleum Industry Practices, among others.
Industry is looking forward to PSC extension policy, fiscal model for the next round of NELP auctions and shale gas policy for Pre-NELP and NELP blocks.
Financial Review
INR Crore Q4 FY 14 Q4 FY 13 y-o-y (%) Q3 FY 14 q-o-q (%)
Revenue 5,049 4,363 16% 5,000 1%
EBITDA 3,654 2,912 26% 3,555 3%
Margin (%) 72% 67% 71%
PAT 3,035 2,564 18% 2,884 5%
Margin (%) 60% 59% 58%
EPS (INR) - Diluted 15.85 13.41 18% 15.05 5%
Cash EPS (INR) 17.75 13.30 33% 16.90 5%
US$ million Q4 FY 14 Q4 FY 13 y-o-y (%) Q3 FY 14 q-o-q (%)
Revenue 817 806 1% 806 1%
EBITDA 592 538 10% 573 3%
Margin (%) 72% 66% 71%
PAT 491 474 4% 465 6%
Margin (%) 60% 59% 58%
EPS (US$) - Diluted 0.26 0.25 4% 0.24 8%
Cash EPS (US$) 0.29 0.24 21% 0.27 7%
Revenue reported for Q4 FY14, post profit sharing with the Government of India and the royalty expense in the Rajasthan block, was INR 5,049 crore up 1% QoQ driven by higher entitlement revenue. During the quarter, profit petroleum of INR 1,201 crore (US$ 194 million) and the royalty of INR 1,097 crore (US$ 178 million) was for Rajasthan block and profit petroleum of INR 107 crore (US$ 17 million) for other blocks.
The operating expense during Q4 FY14 was higher at INR 345 crore due to maintenance activities carried out; Expenditure on Cess is lower at INR 683 crore on account of reversal of levy of Education Cess and SHE cess of 3% on Oil Cess following the order of Central Bureau of Excise & Customs. Consequently, Earnings before Interest, Tax, Depreciation and Amortisation for the quarter was INR 3,654 crore (US$ 592 million), up 3% QoQ. Profit After Tax in Q4 FY14 was INR 3,035 crore, up by 5% QoQ primarily due to increase in investment income consequent to realisation of gains on maturity of investible funds and one time charge of ESOP policy change accounted in previous quarter. The cash earnings per share was INR 17.75. Overall capex incurred was higher at ~US$ 362 million (gross) and US$ 237 million (net).
Year end Year end Year end Year end
FY 14 FY 13 y-o-y FY 14 FY 13 y-o-y
INR Crore (%) US$ million (%)
Revenue 18,762 17,524 7% 3,106 3,223 (4%)
EBITDA 13,877 13,012 7% 2,297 2,394 (4%)
Margin (%) 74% 74% 74% 74%
PAT 12,432 12,056 3% 2,058 2,218 (7%)
Margin (%) 66% 69% 66% 69%
EPS (INR/US$) -
Diluted 64.95 63.06 3% 1.08 1.16 (7%)
Cash EPS (INR/US$) 64.11 58.86 9% 1.06 1.08 (2%)
Revenue reported for FY 14, post profit sharing with the GoI and the royalty expense in the Rajasthan block, was INR 18,762 crore up 7% YoY driven by increase in working interest volume to 137.1 kboepd (PY - 127.8 kboepd) and benefit from rupee depreciation. This increase has been partly offset by higher profit sharing with GoI in DA1 consequent to tranche change. During the year, profit petroleum for Rajasthan block was INR 4,770 crore (US$ 788 million) and the royalty for the Rajasthan block was INR 4,180 crore (US$ 689 million) and profit petroleum of INR 825 crore (US$ 137 million) for other blocks.
FY 14 Earnings before Interest, Tax, Depreciation and Amortisation was INR 13,877 crore, up 7% compared to the previous year. The operating expenses for the year increased to INR 1,174 crore primarily due to increase in production from Rajasthan block and increased maintenance and operation activities. Employee benefit expense for the year was higher at INR 274 crore primarily due to change in measurement of outstanding stock option liabilities using the Fair value method (Black-Scholes) as against the previously followed Intrinsic value method. Forex gain for the year was higher at INR 739 crore on account of over 10% rupee depreciation against the dollar.
Profit After Tax for the year was INR 12,432 crore, up by 3% YoY. The cash earnings per share for the year were up 9% at INR 64.11. The company wide capex incurred was ~US$ 899 million (gross) and US$ 601 million (net) in the year of which 41% pertains to exploration and balance to development. Cumulative Capex in RJ at the end of FY14 stands at US$ 4.3 bn of which US$ 3.8 Bn pertains to DA1 and US$ 0.5 Bn to DA2.
Cash and Cash equivalents as at period end were ~INR 13,707 crore in rupee funds and ~US$ 1,530 million in dollar funds, part of which is expected to be used for share buy-back and dividends.
Operational Activity across the Portfolio
Asset Basin Exploration Development Production
India
1 RJ-ON-90/1 Barmer Y Y Y
2 CB/OS-2 Cambay Y Y
3 KG-ONN-2003/1 KG Onshore Y
4 KG-OSN-2009/3 KG Offshore Y
5 PKGM-1 (Ravva) KG Offshore Y Y Y
6 MB-DWN-2009/1 Mumbai Offshore Y
7 PR-OSN-2004/1 Palar - Pennar Y
International
Mannar, Sri
8 SL-2007-01-001 Lanka Y
Orange, South
9 Block 1 Africa Y
Exploration Review
Area
Cairn India's
Asset Basin Interest (%) JV partners (in km2)
India
1 RJ-ON-90/1 Barmer 70% ONGC 3,111
ONGC, Tata
2 CB/OS-2 Cambay 40% Petrodyne 207
ONGC, Ravva Oil,
3 PKGM-1 (Ravva) KG Offshore 22.5% Videocon 331
4 KG-ONN-2003/1 KG Onshore 49% ONGC 1,273
5 KG-OSN-2009/3 KG Offshore 100% - 1,988
6 MB-DWN-2009/1 Mumbai Offshore 100% - 2,961
ONGC, Tata
7 PR-OSN-2004/1 Palar-Pennar 35% Petrodyne 9,417
International
Mannar, Sri
8 SL 2007-01-001 Lanka 100% - 3,000
Orange, South
9 Block 1 Africa 60% Petro SA 19,922
Total 42,210
Cairn India is the Operator in all the blocks with varying participating interests.
During the year, we made significant achievements in our exploration activities paving the way for exploration led future growth opportunities.
Rajasthan (Block RJ-ON-90/1)
Since resumption of exploration in March 2013, we have drilled out 50% of gross prospective resource base of 530 million barrels of oil equivalent. The on-going exploration program has been successful in opening up 5 new play types, proving up a resource base of over 1 billion boe in place, in addition to existing 4.2 billion boe. Of the 17 exploration wells drilled to date, over 80% have shown hydrocarbons. Till date, 6 discoveries have been established and the testing of the other hydrocarbon bearing wells is underway. The evaluation of the discoveries in the tight reservoirs is on-going to establish recovery rates.
During Q4 FY14, we have tested three exploration wells, leading to two new discoveries in the block. The Guda-South-7 well flowed oil at an initial rate of 92 bopd from two zones in the Dharvi Dungar Carbonaceous Shale (DDCS) formation, making it the 29th Discovery and establishing DDCS as a significant play in the southern part of the block. The Barmer Hill formation was tested through a well , NR-3-2100, which flowed oil at 62 bopd and was established as the 30th discovery.
In April 2014, another new discovery has been established, Kaameshwari West 8 in Dharvi Dungar formation, flowing oil at 117 bopd.
With the addition of higher capacity rigs in our drilling program, we have been able to drill two high impact prospects to test potential gas accumulation in the deeper section. The initial results obtained are encouraging and testing is underway.
The two year 3D seismic data acquisition programme for ~1,900 square kilometres that is currently underway will further help in identifying new exploration leads and augmenting the prospective resource base. As at 31st March, 2014, we have acquired 266 square kilometres of 3D seismic data.
Ravva (Block PKGM-1)
Results from the adoption of established technologies such as 4D seismic at Ravva Block were encouraging, delivering tremendous value in terms of interpretation of internal reservoir structure and the identification of depleted and un-swept zones leading to further development activity.
In November 2013, we commenced drilling of the 'high temperature, high pressure' deep exploration prospect LO110 in Ravva which is intended to test the hydrocarbon potential within the Late Oligocene sands. The maximum total depth estimated is 4140m of which 2720m has been drilled, as at 31st March. The campaign has witnessed some weather and operational challenges; however we expect to complete the drilling activity before the onset of monsoons.
KG Onshore (Block KG-ONN-2003/1)
The Declaration of Commerciality for the Nagayalanka discovery is currently under Management Committee review. The Field Development Plan (FDP) is being prepared and is expected to be submitted in FY 15.
The extended flow test on Nagayalanka-1z-ST appraisal well was completed in March 2014 and the maximum combined flow rate achieved was ~850 bopd. The well has contributed ~14,500 bbls of oil to the domestic oil output in FY14. The evaluation of the results is in progress with the objective of optimizing development. Drilling is on-going on the second appraisal well, Nagayalanka-NW-1, with a view to increase the resource base in the block.
Work is progressing on rebuilding the Exploration portfolio including several additional exploration prospects within the block. Planning for 315 square km of 3D seismic data acquisition is underway and is expected to begin in Q4 FY 15.
KG Offshore (Block KG-OSN-2009/3)
With the conditional clearance received from the Government last quarter, the exploration activity has resumed in the block in March 2014. Approximately, 1050 square km of 3D seismic data is expected to be acquired over the course of FY 15 with an objective of building an exploration portfolio across multiple play types. Planning, well construction design and long lead procurement for the drilling of exploration wells is expected to begin.
Mumbai Offshore (Block MB-DWN-2009/1)
With the conditional clearance received from the Government last quarter, the exploration activity has resumed. The tender for acquisition of ~2,000 line-km of 2D seismic programme has been awarded and the same is expected to begin in the near term. Planning for acquisition of additional 500 square kilometres of 3D seismic data is underway.
Palar-Pennar (Block PR-OSN-2004/1)
The application for the shift of the restricted boundary has been accepted by government authorities paving the way for further exploration activity.
Sri Lanka (Block SL 2007-01-001)
In 2013, we concluded appraisal and commercial studies to determine the next steps for the gas discoveries made on the block. We continue discussions with the Sri Lankan Government regarding commercial terms necessary to monetize the discovered gas resources on the block, urging the policy makers to take a holistic view to maximize benefits from the maiden natural gas discoveries in the Mannar Basin.
We also participated in Sri Lanka's offshore bidding round for M-5 block, south of our current block in the Mannar Basin in November 2013.
South Africa (Block 1)
Following farm-in and assignment of participating interest in the block in early 2013, we acquired 1,981 square kilometres of 3D seismic data in FY 14. Initial processing of the data is now complete and advanced processing is ongoing. Additionally, acquisition of 3,000 line kilometres of 2D seismic data was concluded in early March, 2014. Processing of the new 2D seismic data is now under way. Both the surveys were completed without incident and on time.
Based on the preliminary assessment of the seismic data, a working petroleum system with multiple oil and gas plays have been identified in a structural setting similar to the KG basin in India where we have significant exploration and development experience. The block lies within the proven oil & gas play trends. The on-going technical evaluation is expected to de-risk and identify drillable prospects during the year.
Operational Review
Q4 Q4 Q3 q-o-q Year end Year y-o-y
Average Daily y-o-y end FY
Production Units FY 14 FY 13 (%) FY 14 (%) FY 14 13 (%)
Gross operated Boepd 224,429 202,014 11% 224,493 0% 218,651 205,323 6%
Oil Bopd 215,493 193,919 11% 215,093 0% 209,378 195,780 7%
Gas Mmscfd 54 49 10% 56 (4%) 56 57 (2%)
Working
Interest Boepd 142,796 126,623 13% 140,830 1% 137,127 127,843 7%
Year
Q4 Q4 Q3 q-o-q Year end end y-o-y
Average Price y-o-y FY
Realization Units FY 14 FY 13 (%) FY 14 (%) FY 14 13 (%)
Cairn India US$/boe 94.4 99.5 (5%) 94.9 (1%) 94.5 97.5 (3%)
Oil US$/bbl 95.7 100.6 (5%) 96.3 (1%) 95.8 99.0 (3%)
Gas US$/mscf 6.1 5.1 20% 5.9 3% 5.7 4.6 24%
Participating
Producing Assets Region Operator Interest
1 RJ-ON-90/1 North Western India Cairn India 70%
2 PKGM-1 (Ravva) Eastern India Cairn India 22.5%
3 CB/OS-2 Western India Cairn India 40%
Rajasthan (Block RJ-ON-90/1)
Q4 Q4 Q3 q-o-q Year end Year y-o-y
Average Daily y-o-y end FY
Production Units FY 14 FY 13 (%) FY 14 (%) FY 14 13 (%)
Gross
operated Boepd 190,881 168,594 13% 186,359 2% 181,530 169,390 7%
Oil Bopd 189,304 168,594 12% 184,982 2% 180,316 169,390 6%
Gas Mmscfd 9 - 100% 8 13% 7 - 100%
Gross DA 1 Boepd 162,245 149,835 8% 160,975 1% 156,662 147,839 6%
Gross DA 2 Boepd 28,636 18,759 53% 25,384 13% 24,867 21,551 15%
Gross DA 3 Boepd - - - - - - - -
Working
Interest Boepd 133,616 118,016 13% 130,451 2% 127,071 118,573 7%
Production
Cairn successfully achieved its target FY13-14 exit rate of production from Rajasthan of 200,000 boepd. During the quarter, the Block produced 17.2 mmboe of oil equivalent, achieving record total production for the year of 66.3 mmboe. In the process, we achieved the landmark cumulative crude oil production milestone of 200 mmbbls from the RJ block. As on 31st March, the cumulative total production is at ~216 mmboe.
A total of 129 new wells were brought on production during the year, with 45 wells added in Q4 FY 14. This has led to the Block achieving gross average production of 181,530 boepd for FY 14, up 7% YoY.
We continue to focus on operational excellence with high standards of HSE practices, lowering of drilling cycle times, reduction of non-productive time and significant improvements in rig movement times. The overall uptime of the facilities in Rajasthan stood at ~98% with an opex of US$ 3.9/bbl for FY 14. MPT completed 2.5 million LTI free man hours, with Aishwariya field completing 1 year of LTI free production.
In FY 14, Development Area (DA) 1, comprising the Mangala, Aishwariya, Saraswati and Raageshwari oil & gas fields, produced a gross average 156,662 boepd, up 6% YoY with the Mangala field being the largest contributor and Aishwariya field adding to the volume growth. During the year, DA 2, comprising Bhagyam field, produced a gross average of 24,867 boepd, up 15% YoY as a result of the infill drilling program. As on date, DA 3 does not have any oil and gas producing fields.
Development
Our ongoing capex program is focused on exploration and development activities across all the assets with 87% of the capex planned to be invested in the RJ Block in next three years. In Rajasthan, we are focused on infrastructure development for early monetisation of exploration success and improved reservoir recovery through EOR, infill drilling and facilities upgrades. As part of this program, plans for redevelopment of Raageshwari Deep Gas field, implementation of full field polymer flood EOR in the Bhagyam field and better reservoir performance of the Aishwariya field have led to a net addition of ~50mmboe to 2P reserves resulting in a 2P Reserve Replacement Ratio of ~100% for FY 14.
We are embarking on the implementation of three major development projects in our Rajasthan Block.
- Enhanced oil recovery (EOR) Project including drilling campaign and facilities upgrade
- We are now targeting first polymer injection in the Mangala field EOR project, within this fiscal and have awarded all contracts for the execution.
- Polymer flood EOR plan is in place for Bhagyam field
- We commenced the Alkaline Surfactant Polymer pilot at Mangala and plan to extend polymer flood EOR to Aishwariya field
- Barmer Hill development
- The Barmer hill formation which is spread across the block has the potential to become a new major oil play in India and can be classified into 2 major development opportunities
- Barmer Hill North consisting of oil prone porcellanite rocks
- Barmer Hill South consisting of muddy porcellanites
- Exploration results confirm the potential of Barmer Hill across the RJ block, with better than expected results in Vijaya & Vandana.
- Aishwariya Barmer Hill (Aish-4 BH), the 27th discovery in Barmer Hill North in DA 1, has been placed on long term testing.
- Over the next 3 months, drilling and hydro fracturing horizontal and vertical wells will be carried out to optimize the application of hydro-fracturing technology.
- We are putting together execution plans to scale up the tight reservoir development of the BH in the northern area of the block replicating the North American development model; permeability of the BH reservoir has been proved to be better than shale by an order of magnitude.
- Satellite Fields
- FDPs for the two fields, NI and NE, in DA 2 are awaiting approval from regulators.
- Raag-S-1, the 26th discovery in DA 1, was brought on test production within a year of discovery under Integrated Block Development Policy (IDP).
- The Barmer hill formation which is spread across the block has the potential to become a new major oil play in India and can be classified into 2 major development opportunities
- Gas development
- Development of Raageshwari Deep Gas field is underway
- Initial results from 2 high impact prospects drilled during the current exploration campaign are encouraging
- We have plans to upgrade the existing Raageshwari Gas Terminal and are looking at options to construct a new gas pipeline to monetise the additional gas potential in the block.
- Infrastructure is also being created to capture significant NGLs potential in the block
Facilities
With increased scale and size of operations, we have embarked on major initiatives for facilities enhancement.
- Fluid handling capacity at Mangala Processing Terminal (MPT)
- We have made significant progress on up-grading the fluid (oil, gas, water) handling capacity at the MPT to meet the anticipated additional requirements.
- This is associated with the increasing water cuts as the fields mature and more water is injected for pressure support and sweep efficiency.
- This project will augment the water injection facilities by quality and quantity.
- Salaya-Bhogat Pipeline
- 100% of the pipeline has now been laid and final testing and commissioning is underway.
- Work at the Bhogat terminal is in the final pre-commissioning stage.
- Once fully commissioned, we would benefit by adding sea route for evacuation of RJ crude oil.
Sales
An average of 179,947 bopd (up from 169,201 bopd last year), amounting to ~66 mmbbls for the year was sold to PSU and private refiners, across India. Gas sales during the year were ~7 mmscfd, amounting to total sales of ~2.7 Bscf. During the year, in order to demonstrate pipeline operations at higher day rate, we have successfully dispatched ~227,000 bbls from MPT; in terms of sales and delivery, achieved a record day delivery rate of ~ 220,000 bbls through our existing infrastructure.
The average crude price realisation for the year was US$ 95.2/bbl, an implied ~11.5% discount to Dated Brent
Ravva (Block PKGM-1)
Q4 Q4 Q3 q-o-q Year end y-o-y
Average Daily y-o-y Year end
Production Units FY 14 FY 13 (%) FY 14 (%) FY 14 FY 13 (%)
Gross operated Boepd 24,225 27,205 (11%) 27,857 (13%) 27,386 29,161 (6%)
Oil Bopd 18,846 20,779 (9%) 21,864 (14%) 21,316 21,849 (2%)
Gas Mmscfd 32 39 (18%) 36 (11%) 36 44 (18%)
Working
Interest Boepd 5,451 6,121 (11%) 6,268 (13%) 6,162 6,561 (6%)
Production
Since inception in 1994, the Ravva block has produced more than 261 mmbbls of crude and over 330 billion cubic feet of gas, more than double the initial resource estimates at the time the PSC was awarded. During the year, the block produced 27,386 boepd, with a plant uptime of 99.8%. The asset recorded 3.81 million LTI free man-hours as at end of FY 14. Routine production operations were un-interrupted last year in spite of increased cyclonic conditions in the Bay of Bengal and local disturbances due to Andhra Pradesh State bifurcation.
Development
In March 2014, we commenced the 5th phase of Ravva development drilling using a mat supported jackup rig. This infill drilling campaign, based on the 4D seismic survey, consists of drilling 7 wells. The first well in the campaign has successfully identified un-swept oil as predicted by the 4D seismic survey, demonstrating our ability to apply high end 4D seismic technology. The infill drilling campaigns and prudent reservoir management is expected to result in the overall recovery factor of over 50%.
Sales
During the year, ~7.5 mmbbls of crude and 13.3 billion scf of gas was sold, averaging 20,466 bopd of crude oil and 36 mmscfd of gas, respectively.
Cambay (Block CB/OS-2)
Q4 Q4 Q3 q-o-q Year end Year y-o-y
Average Daily y-o-y end
Production Units FY 14 FY 13 (%) FY 14 (%) FY 14 FY 13 (%)
Gross operated Boepd 9,323 6,215 50% 10,277 (9%) 9,735 6,772 44%
Oil Bopd 7,342 4,546 62% 8,246 (11%) 7,747 4,541 71%
Gas Mmscfd 12 10 20% 12 0% 12 13 (8%)
Working
Interest Boepd 3,729 2,486 50% 4,111 (9%) 3,894 2,709 44%
Production
Since inception in 2002, the Cambay block has produced about 19 MMbbls of crude and over 218 billion cubic feet of gas. During the year, the block produced 9,735 boepd, with a plant uptime of 98.6%. The infill drilling campaign carried out in FY 13 continues to help sustain production levels. The asset recorded 1.1 million LTI free man-hours as at end of FY 14.
The sequential production was lower in the quarter on account of planned shut-down for maintenance.
The block provides an example of optimal asset utilization, with its infrastructure being used for the tolling and processing ONGC's gas from its North Tapti field and the Gas Balancing Agreement with Niko and Gujarat State Petroleum Corporation JV.
Development
For the first time, crude oil from the block was evacuated through a sea route (Hazira Port) with substantial HSE and operational benefits. In Q4, the first cargo was loaded, with 211,000 bbls of crude transported to a west coast refinery. This was a milestone event in the history of the asset.
Sales
During the year, ~2.7 mmbbls of crude and ~4.4 billion scf of gas were sold averaging 7,385 bopd of crude oil and ~12 mmscfd of gas, respectively.
Talent and Technology Development
In line with the growth opportunities expected in the future, during the year, our net talent base increased by over 300 to 1,852. The anticipated resource requirement across critical and niche areas in technology functions has been bridged. We have acquired key leadership technical talent for Drilling, Petroleum Engineering, Subsurface and Exploration. Of our total employee base, over 16% of professionals have global technical experience of Oil and Gas sector and 7% are specialists in onshore and offshore exploration activities.
In order to further improve ourselves for best in class practices adopted across sectors, we have hired talent from diverse sectors other than oil and gas. Younger brigade forms a good percentage of our current talent pool reflecting vibrancy and offering scope for innovation. 55 of the new hires are women reflecting Cairn as a committed equal opportunity employer.
Health, Safety, Environment and Sustainability
We are committed to meet the highest international standards of HSE and continue to demonstrate top quartile HSE performance versus our peers.
All our operating assets remain focussed to maintain an excellent safety culture, recording a continuous LTI-free work performance. LTI frequency rate (Lost Time Incidents per million man hours) for FY 14 stands at 0.16 which is at the top quartile as per OGP rankings for 2013.
During the quarter, we undertook several HSE awareness initiatives like National Safety Week, Road Safety Week, Know Your Hazard campaign across all the sites engaging our employees, contract personnel and local communities.
Corporate Social Responsibility
Cairn India was awarded the prestigious 'FICCI Corporate Social Responsibility Award - 2013' under 'Category: Private Sector Companies with INR 3001 Cr. per annum and above turnover' by a jury headed by Mr. M. Damodaran, former chairman of SEBI.
We continue to scale up our existing CSR programs thereby strengthening our partnership with the state governments and local communities. Some of the major initiatives till FY 14 include:
- Installation of RO plants including 'Any Time Water' based service making safe drinking water available to over 30,000 community members.
- Encouraging results from farm based program with production of new types of vegetables in the desert with market linkage.
- Installation of 3,600 solar street lights along the Salaya-Bhogat pipeline, benefiting 70,000+ individuals.
- 19 preventive Mobile Healthcare Vans running in 9 districts of Rajasthan and Gujarat.
- Initiation of specialized training programs at our Cairn Enterprise Center for emergency health services and banking to provide employment opportunities to the youth including women.
- Plans to impart advanced vocational training in Jodhpur at Cairn Center of Excellence, our flagship CSR initiative..
In addition, we continue to conduct workshops with entrepreneurs and vendors from the local community to imbibe a culture of safety and quality with the objective of promoting local content. Three local vendors were recognized in our "3rd Annual Supplier Conference" held during Q4.
Going forward the plan is to scale up our existing programs to reach each and every household in our operational area to influence their prosperity.
Outlook
We at Cairn India remain committed to create long term shareholder value. Considering the significant potential in the Rajasthan asset, we shall continue to focus on key development projects to enhance recovery with overall planned net capex of US$ 3 Bn by FY17. We shall target to achieve reserve replacement ratio of 150% in next 3 years subject to PSC extension till 2030 and a 3 year production CAGR of 7-10% from known discoveries with flat production in FY15.
Further exploration activity across the portfolio provides additional value upside and momentum while technology adoption supports low cost operations and development.
Cairn India Limited Fact Sheet
On 9 January, 2007, Cairn India Limited was listed on the Bombay Stock Exchange and the National Stock Exchange of India. Cairn India is now part of the Vedanta Group, a globally diversified natural resources group.
Cairn India is headquartered in Gurgaon in the National Capital Region. The Company has operational offices in India including Andhra Pradesh, Gujarat, Rajasthan, Tamil Nadu and International offices in Colombo and London.
Cairn India is one of the largest independent oil and gas exploration and production companies in India. Together with its JV partners, Cairn India accounts for around one fourth of India's domestic crude oil production. Average gross operated production was 218,651 boepd in FY 14. The Company sells its oil to major refineries in India and its gas to both PSU and private buyers.
The Company has a world-class resource base, with interest in seven blocks in India, one in Sri Lanka and one in South Africa. Cairn India's resource base is located in four strategically focused areas namely one block in Rajasthan, two on the west coast of India, five on the east coast of India (including one in Sri Lanka) and one in South Africa.
The blocks are located in the Barmer Basin, Krishna-Godavari Basin, the Palar-Pennar Basin, the Cambay Basin, the Mumbai Offshore Basin, the Mannar Basin and Orange Basin.
Cairn India's focus on India has resulted in a significant number of oil and gas discoveries. Cairn India made a major oil discovery (Mangala) in Rajasthan in the north west of India at the beginning of 2004. To date, thirty one discoveries have been made in the Rajasthan block RJ-ON-90/1 and the exploration and appraisal drilling campaign is targeting over 3 billion barrels of gross oil in place resources.
In Rajasthan, Cairn India operates Block RJ-ON-90/1 under a PSC signed on 15 May, 1995 comprising of three development areas. DA 1 (1,859 km2) includes discoveries namely Mangala, Aishwariya, Raageshwari and Saraswati, DA 2 (430 km2), includes the Bhagyam and Shakti fields and DA 3 (822 km2) comprising of the Kaameshwari West Development Area, is shared between Cairn India and ONGC, with Cairn India holding 70% and ONGC having exercised their back in right for 30%.
The total resource base supports a long term vision to produce 300,000 boepd, subject to exploration success, further development investments and regulatory approvals.
In Andhra Pradesh and Gujarat, Cairn India on behalf of its JV partners operates two processing plants, 11 platforms and more than 200 km of sub-sea pipelines with a production of over 37,000 boepd as of FY 14.
Block SL-2007-01-001 was awarded to Cairn Lanka in the bid round held in 2008. This offshore block is located in the Gulf of Mannar. The water depths range from 400 to 1,900 meter. The signing of the Petroleum Resources Agreement (PRA) to explore oil and natural gas in the Mannar Basin was held in July 2008 in Colombo.
The farm-in agreement was signed with PetroSA on 16 August, 2012 in the 'Block-I' located in Orange basin, South Africa. The block covers an area of 19,922 sq km. The assignment of 60% interest and operatorship has been granted by the South African regulatory authorities.
India currently imports 3.5* million bopd of crude oil. The current domestic crude oil production is approximately 0.77** million bopd of which Cairn India operated assets (Ravva, CB/OS-2 and the RJ-ON-90/1) contributes about 30%.
For further information on Cairn India Limited, kindly visit http://www.cairnindia.com
*BP Statistical Review of World Energy June 2013
**MoPNG February 2014 production statistics
Corporate Glossary
Cairn India Limited
and/or its subsidiaries
Cairn India as appropriate
Company Cairn India Limited
Refers to Cairn Lanka
(Pvt) Ltd, a wholly
owned subsidiary of
Cairn Lanka Cairn India
PAT adjusted for DD&A,
impact of forex
fluctuation, MAT credit
Cash EPS and deferred tax
Cash Flow from
Operations includes PAT
(excluding other income
and exceptional item)
prior to non-cash
expenses and exploration
CFFO costs.
Central Processing
CPT Terminal
CY Calendar Year
Declaration of
DoC Commerciality
Exploration and
E&P Production
Earnings before
Interest, Taxes,
Depreciation and
Amortisation includes
forex gain/loss earned
EBITDA as part of operations
EPS Earnings Per Share
FY Financial Year
GBA Gas Balancing Agreement
GoI Government of India
GoSL Government of Sri Lanka
The Company and its
Group subsidiaries
JV Joint Venture
MC Management Committee
Ministry of Petroleum
MoPNG and Natural Gas
New Exploration
NELP Licensing Policy
Oil and Natural Gas
ONGC Corporation Limited
OC Operating Committee
Petroleum Resources
PRA Agreement
Petroleum Planning &
PPAC Analysis Cell
qoq Quarter on Quarter
SL Sri Lanka
Vedanta Resources plc
Vedanta and/or its subsidiaries
Group from time to time
yoy Year on Year
Technical Glossary
2P Proven plus probable
Proven plus probable and
3P possible
Two dimensional/three
2D/3D/4D dimensional/ time lapse
Barrel(s) of oil
Boe equivalent
Barrels of oil
Boepd equivalent per day
Bopd Barrels of oil per day
Billion standard cubic
Bscf feet of gas
EOR Enhanced Oil Recovery
FDP Field Development Plan
MDT Modular Dynamic Tester
million barrels of oil
Mmboe equivalent
million standard cubic
Mmscfd feet of gas per day
Mmt million metric tonne
Petroleum Resources
PRDS Development Secretariat
PSU Public Sector Utilities
Production Sharing
PSC Contract
Field Glossary
Lower permeability
Barmer Hill reservoir which overlies
Formation the Fatehgarh
Secondary reservoirs in
the Guda field and is
the reservoir rock
encountered in the
Dharvi recent Kaameshwari West
Dungar discoveries
Name given to the
primary reservoir rock
of the Northern
Rajasthan fields of
Mangala, Aishwariya and
Fatehgarh Bhagyam
Located in the Gulf of
Mannar, situated on the
NE shallow continental
Mannar Basin shelf of Sri Lanka
Mangala, Bhagyam and
MBA Aishwariya
Youngest reservoirs
encountered in the
basin. The Thumbli is
the primary reservoir
for the Raageshwari
Thumbli field
Disclaimer
This material contains forward-looking statements regarding Cairn India and its affiliates, our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward- looking statements are based on our management's assumptions and beliefs in the light of information available to them at this time. These forward-looking statements are by their nature subject to significant risks and uncertainties; and actual results, performance and achievements may be materially different from those expressed in such statements. Factors that may cause actual results, performance or achievements to differ from expectations include, but are not limited to, regulatory changes, future levels of industry product supply, demand and pricing, weather and weather related impacts, wars and acts of terrorism, development and use of technology, acts of competitors and other changes to business conditions. Cairn India undertakes no obligation to revise any such forward-looking statements to reflect any changes in Cairn India's expectations with regard thereto or any change in circumstances or events after the date hereof. Unless otherwise stated the reserves and resource numbers within this document represent the views of Cairn India and do not represent the views of any other party, including the Government of India, the Directorate General of Hydrocarbons or any of Cairn India's joint venture partner.
About Sesa Sterlite Limited
Sesa Sterlite Limited ("Sesa Sterlite") is one of the world's largest diversified natural resources companies. Our business primarily involves exploring, extracting and processing minerals and oil & gas. We produce oil & gas, zinc, lead, silver, copper, iron ore, aluminium and commercial power and have a presence across India, South Africa, Namibia, Ireland, Australia, Liberia and Sri Lanka. Sesa Sterlite has a strong position in emerging markets with over 80% of its revenues from India, China, East Asia, Africa and the Middle East.
Sustainability is at the core of Sesa Sterlite's strategy, with a strong focus on health, safety and environment and on enhancing the lives of local communities.
Sesa Sterlite is a subsidiary of Vedanta Resources plc, a London-listed company. Sesa Sterlite is listed on the Bombay Stock Exchange and the National Stock Exchange in India and has ADRs listed on the New York Stock Exchange.
Sesa Sterlite Limited
(Formerly known as Sesa Goa Limited)
Vedanta, 75, Nehru Road,
Vile Parle (East), Mumbai - 400 099
Registered Office:
Sesa Ghor, 20 EDC Complex,
Patto, Panaji (Goa) - 403 001
CIN: L13209GA1965PLC000044
Contact Details
Investor Relations
Nidhi Aggarwal, Head - Investor Relations
+91-124-459-3490
+91-98101-97755
[email protected]
Media Relations
Dr Sunil Bharati, Head, Corporate Affairs & Communications
+91-124-459-3138
+91-99104-86055
[email protected]; [email protected]
In conjunction with these financial results Cairn India is hosting an Investor Conference Call today. Details for the live audio webcast and dial in numbers for the call are available at the Cairn India website (http://www.cairnindia.com).
Communications
Roma Balwani
Executive Vice President - Group Communications & CSR
Tel: +91-22-6646-1330
[email protected]
Investor Relations
Ashwin Bajaj
Senior Vice President - Investor Relations
Tel: +91-22-6646-1531
[email protected]
Sheetal Khanduja
Assoc. General Manager - Investor Relations
Hitesh Dhaddha
Manager - Investor Relations
SOURCE Sesa Sterlite Limited
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