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Cairn India Limited
PRICE : RS.336
RECOMMENDATION : BUY
TARGET PRICE : RS.378
FY11E: P/E: 9.9X
Cairn India Ltd (CIL) is one of the biggest private exploration and production
(E&P) companies in India. It has been developing exploration assets
for more than a decade in India and is one of the lowest cost producers in
the world. Its E&P portfolio consist of 11 upstream assets with a key asset
located in Rajasthan having 2P oil reserve of ~4bn bbls. It has proven
track record of converting discoveries to production so we believe that
any commercial discovery in the KG basin and Sri Lanka block can be converted
into production at lowest possible cost and shortest possible time,
which will add significant value to CIL. However on a conservative basis
we have not taken the same in our valuation. Our DCF-based price target
stands at Rs.378/share. We are positive on Cairn’s long term growth prospects.
Therefore, we are initiating coverage with BUY recommendation
on the stock with 12.5% upside potential.
Key investment arguments
We strongly believe, that in the current scenario of rising oil prices the
key beneficiary is CIL mainly due to the following reasons:
q Private exploration company: Cairn is a private E&P company so not liable
to share under-recoveries like ONGC, OIL.
q Efficient execution skills: Crude production surges earlier than expected at
peak level of 125 kbopd from Mangala field (Raj.)
q Higher volumes-revenue: Peak production from Bhagyam and Aishwariya
will flow in a rising crude price scenario leading to higher revenues. Brent
crude price surged by 9% to $90/bbls in last 2.5 months.
q Lower opex: Commissioning of pipeline will also keep the cost of transportation
low as against truck transportation
q Product mix skewed more towards oil: Recent surge has been seen in the
crude oil prices and gas prices are flat. Cairn’s higher oil mix will lead to
higher revenue and margins
q World-class oil asset-Mangala, Bhagyam and Aishwariya (MBA): MBA
have recoverable oil reserves and resources of nearly 1 billion barrels, which
includes proven plus probable (2P) gross reserves and resources of 685 million
barrels of oil equivalent (Mn boe) with a further 300 Mn boe or more of enhanced
oil recovery (EOR) potential. At project level, the block is valued at
~$14 bn. This is 25-30 years of production.
q Peak production from Mangala achieved earlier than expected: The
Mangala field has started producing at 125kbopd (peak production) in
Q2FY11 against an estimate of Q3FY11 reflecting better operations. Cairn is
targeting to produce 175kbopd by end of FY11 subject to getting government
approvals. It has already sold more than 16 mn bbls to domestic refineries.
In Q2FY11, average gross production was 116 Kbopd. The Rajasthan
gross field revenue was ~USD$ 1.1 bn in Q2FY11.
The Company has drilled total 107 development wells in Mangala field and
out of it 74 wells are completed. It has commenced start-up injection testing
in the Mangala field. Also, it has commenced the extension of development
and infrastructure of the Bhagyam field.
q Capacity expansion with train 4 commissioning in 2011: With 75 kbpd capacity
4th train likely to be commissioned in CY11, the production capacity
could reach higher than 225kbpd. The nameplate capacity is 130 kbpd but
management guided that it is capable of delivering 150kbpd from first three
production trains.
q Crude sales to refinery by pipeline, leading to lower operating cost:
Crude oil sales from Rajasthan to refineries are through pipeline which is helping
the Company to avoid cost of transportation, which was incurred earlier.
The Current operating cost is ~USD$2/bbls as against USD$4/bbls in Q1FY11.
q Discovery in KG block-another feather in its Cap: CIL has made discovery
in Nagayalanka-1z, KG-ONN-2003/1 block. It has started further exploration
and appraisal. Any major commercial discovery will improve the future growth
prospects of the Company.
q Offshore Ravva field - further drilling wells to boost production: Cairn
India (operator) will drill additional five wells to boost production from the current
level of 35 Kboe. It will invest ~Rs.650 Mn to extract a total of 70-80 Mn
boe. Ravva is one of the lowest cost fields with direct operating cost of $2.1/
boe. Average gross production from the field for Q2FY11 was 38.1 Kboepd -
comprising an average oil production of 29.4 Kbopd and average gas production
of 52 Mn mscfpd.
Based on the Rajasthan exploratory portfolio upsides and advancing production
from the MBA block our fair value for the stock is Rs.378/share. The stock is
currently trading at a PE multiple of 9.9x based on FY11E EPS of Rs.33.9. In our
DCF model, we have assumed a long-term static average crude oil price of US$86/
bbls; Cairn crude oil realization @ 10% discount; Cess at Rs.2575/MT; plateau
production at 240kbopd; development capex of US$2.8 bn.
Key Risk and Concerns
q Any delays and cost overruns; though cost is 100% recoverable, could impact
NAV of the project.
q Any major decline in crude oil prices due to fall in global oil demand, will have
a corresponding impact on CIL’s realizations.
q If Cairn is asked to share royalty along with ONGC than it will impact (depends
on Vedanta acquiring stake in Cairn India) the valuations significantly.
q Less than expected EOR upside may restrict further upsides.
INVESTMENT ARGUMENTS
Not exposed to government policy of under-recoveries
With the rise in international crude oil prices the under-recoveries of OMCs (Oil
marketing Companies) increase unless retail sale prices are hiked. As per the
government policy, part of this under-recovery is born by upstream government
companies (ONGC, OIL and GAIL) resulting in to lower realizations and profitability.
However, Cairn India is a private upstream company and is not liable to share any
under-recovery. In the current environment of rising crude oil prices, we believe the
main beneficiary is CIL mainly on account of free pricing. Hence, it is our best pick
in the upstream oil and gas sector.
Strong revenue visibility
CIL has a strong discovered resource base of 4.0 bn boe in its Rajasthan basin
alone and it is expected that it will take next 20-23 years to extract the same. The
production from Rajasthan is heading towards peak production level of 240 kbopd
and is expected to be maintained there for next 6-7 years (FY13E). Also, we believe
that in the long run, crude oil prices will rise due to global economic growth and
higher cost of production. Both this factors i.e. rising crude prices & production,
give us lot of revenue visibility for next few years.
Better technology to lead speedy execution of the project
The Company has time and again proved its technical and operational skills. Earlier
in 2002, it acquired the abandoned Rajasthan block from Shell for mere USD$7.25
Mn and later discovered huge oil reserves. Thereafter it continuously upgraded the
resource potential. Now by achieving peak production level from Mangala field
(Rajasthan) far earlier than expected it has again proved its speedy execution skills.
We strongly believe in the operating capability of the Company and expect more
positive surprises from its other fields.
Strategy of high-growth and low-cost resource company
Cairn India is one of the lowest cost producers in the world. The Company follows
the strategy of high-growth and low-cost. In Q2FY11, the cost of production from
Mangala field (Rajasthan) was as low as $2/bbls and additional pipeline cost was
$0.5/bbls. However, Management has maintained its earlier guidance for Rajasthan
opex and pipeline cost of USD3.5/bbl and USD1.5/bbl respectively. This is to
account for future work-over (maintenance) operations. Cairn also produces crude
oil from its Ravva field off the coast of Andhra Pradesh at around $2.1/bbls and
CB/OS-2, opex of ~$2.4/bbls. The cost of crude oil production in USA is more than
$14/bbls. Rajasthan block is a very high growth block as the production will reach
peak level with low cost of production and distribution.
New opportunities for growth in reserves and production
Cairn India is actively exploring for hydrocarbons in basins throughout India and
has identified and acquired interest in some of those blocks. Not only this, the
Company is seeking new exploration opportunities through organic growth,
acquisition opportunities and by participating in New Exploration Licensing Policy
(NELP) rounds. In the medium term, we expect some positive news from KG basin
and Sri Lanka block which leaves substantial upside for the investors.
Strong track record of conversion of discovery to production
CIL has a strong track record of converting discoveries to production. It has
converted discovered Rajasthan resource to production within five years, which as
per international standards is considered good. We strongly believe that any
commercial discovery in the KG basin and Sri Lanka block can be converted into
production at lowest possible cost and shortest possible time going forward, which
will add significant value to CIL.
Valuation suppressed due to uncertainty over Vedanta acquisition
deal
We believe that the current valuation of cairn India is suppressed due to lack of
clarity on government policy regarding Vedanta’s plan of acquiring majority stake
in Cairn India. The government has indicated that it will comment on the same by
Mar’11. However, we believe it will not impact the production growth and
profitability of the company.
Government guided 10%-15% return on investment to ONGC
The Government of India has ensured a 10% (Min)-15% (Max.) return on
investment to ONGC, as it has to bear the entire royalty burden on crude oil
production by Cairn in Rajasthan. We believe this is positive for both ONGC and
Cairn as it will remove obstacles for the Cairn-Vedanta deal.
Retaining the entire management team of Cairn
One of the big concerns is Vedanta’s lack of experience in the upstream
exploration business. However, we believe the same will be taken care of by the
government by asking Vedanta to retain the Carin India’s management. Also, the
Directorate General of Hydrocarbons might ask Vedanta to guarantee that
operations at Cairn’s oil and gas assets will not be affected after Vedanta takes
over.
Realizations improving
Recently, the Brent crude oil price has surged by 9% to USD$90/bbls (15thDec’10).
As mentioned earlier, Cairn’s key producing asset located in Rajasthan (MBA) is a
crude oil asset and the Company enjoys free pricing for its crude oil, so we believe
it is one of the main beneficiaries of the rising crude oil prices. Also, the
Company’s resource base is more skewed towards crude oil rather than natural gas
and we are bullish on crude oil prices, hence be believe the Company will have
robust earnings growth going forward due to these two drivers.
Key Risk and Concerns
q Any delays and cost overruns; though cost is 100% recoverable, could impact
NAV of the project.
q Any major decline in crude oil prices due to fall in global oil demand, will have
a corresponding impact on CIL’s realizations.
q If Cairn is asked to share royalty along with ONGC than it will impact (depends
on Vedanta acquiring stake in Cairn India) the valuations significantly.
q Less than expected EOR upside may restrict further upsides.
BUSINESS BACKGROUND
Cairn India Ltd. (62.38% subsidiary of UK-listed Cairn Energy Plc) is engaged in oil
and gas exploration and production business. Currently, it has interest in 11 blocks;
out of that 10 blocks are in India and one in Sri Lanka. These blocks are located in
the Krishna-Godavari Basin, the Palar Basin (off the coast of Chennai in the Bay of
Bengal), the Kerala Konkan Basin (off the Konkan coast in the Arabian sea), the
Cambay Basin (off the coast of Gujarat), the Gujarat Saurashtra Basin (off the
Saurashtra coast in the Arabian sea), the Barmer Basin (Rajasthan), the Indus Basin,
the Vindhyan Basin and the Ganga Valley.
The Company has a diversified portfolio which allows it to explore and drill a
number of potential prospects. It is one of the lowest cost E&P companies in the
world with a proven track record of converting discoveries to production stage.
Cairn has made more than 40 discoveries in India, including the biggest onshore
oil discovery in the last twenty years.
Ravva in eastern India was the first offshore oil and gas field to be developed,
followed by the Lakshmi gas field in western India, which was discovered in 2000
and commenced production in 2002. In January 2004, it added the Mangala
oilfield in Rajasthan.
INVESTMENT POSITIVES
World-class oil asset-MBA
Overall potential resource base
Cairn India Ltd. has potential resource base of 6.5bn boe in its Rajasthan block,
where it has a 70% working interest and is also the operator of the 3111 kms of
the development area in Rajasthan.
Discovered in-place resource base
Out of the potential resource base of 6.5 bn boe, it has discovered resource base
of 4.0 bn boe in its Rajasthan basin. The resource estimate of small fields (including
Barmer Hill formation) has been increased to ~2.0 bn boe from 1.7 bn boe. The
Company had made 25 discoveries in Rajasthan.
The current production is ~125 kbopd from the Mangala field and is transported
through 600 km heated pipeline. The main development area consists of Mangala,
Bhagyam, Aishwariya, Raageshwari and Saraswati and is spread over 1858 kms. A
further development area consists of 430 kms including Bhagyam and Shakti fields
and 822 Kms comprising of the Kaameshwari field.
The Company is expected to achieve a plateau production of 240 kbopd mainly on
account of higher production guidance at Mangala (150 kbopd vs. 125 kbopd
earlier) and Aiswaraya fields (20 kbopd as against 10 kbopd earlier). However, it is
subject to Government approval and additional investment. The capacity of the
processing terminal could be increased by expansion of Train-I to 50 Kbopd from
30 Kbopd and de-bottlenecking of other trains. Management has also guided that
the capacity of the pipeline could easily be enhanced with the commissioning of
additional boosters.
Exploration portfolio
Cairn India Ltd. has strong exploration and development portfolio consisting of oil
and gas assets located in India and Srilanka. These assets are at different stagesexploration,
development and production. The three key basins where currently
exploration activity is going on are Cambay, Krishna-Godavari and Mannar basins.
However, its key oil asset is RJ-ON/90/1 block (70% stake) which has ~4 bn barrels
of 2P oil in place and is currently producing crude oil at 125 kbopd. The Company
is operating in India since 1994 at its two producing assets (Ravva -22.5% and
Cambay-40% stake).
Exploration in Sri Lanka: Block SL 2007-01-001
CIL has commenced 3D seismic survey in the Mannar basin in Sri Lanka. The O&G
block is under its 100% subsidiary-Cairn Lanka Private Limited. It has commenced
exploration program on 1450 sq km and is expected to collect & process the data
by Q3FY11 and based on that it will drill the wells in H1 2011. The water depth is
in the range from 400 to 1,900m and the block area is ~3000 square km, lies
offshore northeast Sri Lanka.
Spreading wings beyond Rajasthan
CIL has signed PSC for two blocks which were awarded under NELP VIII in 2009.
The KG block is an on-shore block (KG-OSN-2009/3) and the other block is a deep
water offshore block in Mumbai offshore area (MB-DWN-2009/1). Currently, it has
applied for production exploration license. The Company has past experience in
KG basin i.e. Ravva and ONGC’s KG offshore block (CIL has 10% stake). Also in
Aug’10, Cairn India found oil and gas at the onshore KG-ONN-2003/1 block. The
discovery was made in the Nagayalanka-1z well, with 75 bopd and 0.27 million
cubic feet per day of gas. The company is studying the commercial potential of the
discovery and is planning to start drilling at the KG block between June and
Sep’11.
Crude sale agreement in place
The Company has sales arrangements in place for 143 kbopd with MRPL (Govt.
nominated), IOC, RIL and Essar Oil. This gives us clear visibility for the off-take of
the crude production to 125 kbopd and later as it ramps up to 150 kbopd at the
Mangala field. In Q2FY11, the Company sold 10 Mn bbls of Mangala crude
through pipeline to private & PSU refineries.
Sensitivity analysis
Our target price is highly sensitive to crude oil price movement and exchange rate.
Hence, to understand its impact we have done sensitivity analysis of both the key
factors. We are bullish on crude oil prices mainly on account of rising demand
from emerging markets and dollar depreciation. In our base case scenario we have
assumed crude oil price of USD$86/bbls.
Pricing of crude oil
The GOI has benchmarked the quality of crude oil produced in Rajasthan to Bonny
light. The implied price realization is an average of ~10-15% discount to Brent on
the basis of prices prevailing for 12 months to Sep’10.
Details of the proposed part sale of stake in Cairn India
Limited to Vedanta Resources Plc
Cairn Energy Plc. (Holding Company) is planning to sale part of its stake (between
40% (Min) - 51% (Max) out of its 62.38% stake) to Vedanta Resources Group
(VRG) for $6.651bn- $8.48 bn (i.e. Rs.405/Share including Rs.50 for non-compete
fees). The non-compete fees is to keep the Cairn Energy Plc. out of India, Pakistan,
Bangladesh and Sri Lanka for three years. The holding company will retain minority
stake (between 11.38-22.38%) in the Company.
Cairn Energy Plc. will sale 40% of its stake to VRG. As per SEBI guidelines, the
acquirer company needs to make an open offer for a minimum 20% additional
stake of the target firm after reaching the 15% threshold. Hence, VRG will make
an open offer for another 20% stake (383,985,368 equity shares) from minority
shareholders at a price of Rs. 355/share. Based on the outcome of the open offer,
Cairn Energy Plc. will offer additional stake (max. 11%) to ensure Vedanta
Resources gets majority stake in the Company. However, VRG is yet to get SEBI's
approval for an open offer to acquire up to a 20% stake.
Vedanta Resources Group (VRG) includes THL Alumium Ltd., Vedanta Resources
Plc. and Sesa Goa Ltd. Cairn Energy Plc. is monetizing part of its stake to invest in
the Arctic regions of Greenland.
INDUSTRY OUTLOOK
Energy is one of the key variables for the growth of the world. The International
Energy Association (IEA) study forecasts that the world, at current levels of
industrialization, would require 50 per cent more energy by 2030.
Demand & Supply Scenario:
According to IEA, the global oil demand in 2010 would rise by 170 Kbopd to 86.5
Mn bopd mainly on account of rising demand from the developing countries like
India, China and others. India and China will contribute for the 45% increase in
the global primary energy demand by 2030. India is the fifth largest consumer of
crude oil in the world after USA, China, Russia and Germany.
The global crude oil demand for 2010 and 2011 is revised up by 0.3 Mn bopd on
average to 86.9 Mn bopd and 88.2 Mn bopd, respectively by IEA. The revision is
mainly on account of stronger-than-expected 3Q10 readings, notably in the OECD,
and updated GDP and price assumptions. Yearly growth is now +2.1 mb/d in 2010
and +1.2 mb/d in 2011. If GDP growth were a third lower, demand growth would
only reach 0.4 mb/d in 2011.
The global oil supply fell by 150 kb/d to 86.9 mb/d in September on lower non-
OPEC output, but was up by 1.5 mb/d year-on-year, shared equally between non-
OPEC, OPEC crude and NGLs. Estimated 2011 non-OPEC supply is raised by 150
kb/d to 53.1 mb/d on stronger US, Canadian and Chinese output, growing from
52.6 mb/d in 2010.
India crude demand and supply outlook
The combination of rising oil consumption and relatively flat production has left
India increasingly dependent on imports to meet its petroleum demand. The EIA
expects India to become the fourth largest net importer of oil in the world by
2025, behind the United States, China, and Japan.
India is heavily dependent on import of crude oil to meet its internal energy
requirements. The marginal increase in domestic crude oil production as against a
spur in domestic demand increased crude oil imports to ~76% of India's total
requirement. In FY10, indigenous crude oil production stood at ~37.56 Mn MTPA
as against imports of ~120 Mn MTPA. The GOI continues to encourage exploration
activity in order to ensure energy security of the country.
The accompanying chart shows stagnant domestic crude oil production and rising
consumption leading to continuous increase in imports.
The Rajasthan oil production will add substantially to India's crude oil production. It
is expected that India's crude oil production will grow by 11 percent in FY11 with
Cairn India's production. Cairn India's contribution in the domestic crude oil
production going forward will be ~20 percent.
Indian petroleum regulatory framework
The Indian hydrocarbon framework can be classified into three categories-policy
maker, regulator and the operator. The E&P policies are framed by prime minister's
office, Ministry of petroleum & natural gas and planning commission. Directorate
General of Hydrocarbon (DGH) plays the role of regulator for upstream and
ensures proper enforcement of the GOI policy guidelines. Finally, the operator of
the block who bears all exploration risks, production & development costs and
shares the profit on successful commercial discovery.
The GOI in order to ensure energy security, increase upstream investment and
attract technology has till date offered nine rounds of exploration bidding. In this
regard, GOI has formulated the New Exploration Licensing Policy (NELP). The New
Oil Exploration Policy (NELP) was announced in 1997 but became effective since
Jan'99.
Some of the key highlights of NELP are as follows:
1). Level Playing Field
l All players including Govt. companies would compete on equal terms for production
and exploration license i.e. no mandatory state participation through
ONGC/OIL nor any carried interest of the state.
l Natural gas from new discoveries would fetch market related prices.
2). Model production sharing contract by MoP&NG (Ministry of Petroleum & Natural
Gas)
3). Infrastructure status
4). Royalty on crude oil: 12.5% for on-land areas, 10% offshore areas and 5% on
deep water blocks (first 7 years)
5). Cess abolished under NELP, Administrative Price Mechanism (APM) abolished
6). Cost recovery up to 100%
7). No signature, discovery and production bonuses
8). Seven year tax holiday from the date of commencement of commercial production
9). Pre-tax sharing of profit oil based on investment multiple achieved rather than
post-tax sharing as at present
10). 100% FDI in E&P sector approved
11). International pricing for crude oil
Production sharing contract (PSC)
Production sharing contract (PSC) is an agreement between Contractor of the
exploration asset and the Government, whereby Contractor bears all exploration
risks, production and development costs. If successful commercial discovery is
made then the Contractor will recover its costs and earn a profit by receiving a
share of production. Contractor has to pay royalty & income tax as applicable. In
India, first PSC was signed in 1993 for a Pre-NELP block. The terms of the PSC has
continuously improved in each NELP rounds.
Pre-tax investment multiple (PTIM)
Profit share ratio/split our determined by pre-tax Investment multiple (PTIM)
formula, which rewards the Government in higher ratios only at higher levels of
production.
VALUATIONS
Cairn India - Valuation of the Rajasthan oil and gas assets
We have followed sum-of-the-parts valuation method for deriving the intrinsic
value of the discovered reserves. The Rajasthan block (70% stake) is the main value
driver (~95-96%) and the same has been valued on the discounted cash flow
method (DCF), however, the Ravva (22.5% stake) and Cambay block (40% stake)
are valued using reserve multiple method. Ravva and Cambay are matured blocks
and do not add significant value hence valued on EV/boe method.
Comments
Cairn India has 70% stake in the Rajasthan block and remaining stake is with
ONGC. Accordingly, in our DCF valuation, we have considered only 70%. We
expect that the peak production of crude oil from the Rajasthan block will
commence from FY13 onwards. The government of India (GOI) has benchmarked
the quality of crude oil produced in Rajasthan to Bonny light.
MBA have recoverable oil reserves and resources of nearly 1 billion barrels, which
includes proven plus probable (2P) gross reserves and resources of 685 million
barrels of oil equivalent (Mn boe) with a further 300 Mn boe or more of enhanced
oil recovery (EOR) potential. At project level, the block is valued at ~$14 bn. This is
25-30 years of production.
Key Assumptions:
n 10% discount in our valuation and assumed a static crude oil price of $86/bbls.
n As per the PSC, it has seven year tax holiday. Accordingly, we have taken
19.93% (MAT) which is applicable during tax holiday period and thereafter normal
corporate tax rate of 41.82% (foreign Company).
n WACC rate is 12%.
n As per the PSC, 100% cost recovery is allowed.
n Zero royalty for Cairn as per PSC; borne entirely by ONGC (Raj.).
n Cairn India is already paying “under protest” its share of cess at Rs.2575 per
tonne.
n After considering the Rajasthan exploratory portfolio upsides and advancing
production from the MBA block our fair value for the stock is Rs.378/share.
We have calculated the profit petroleum on the terms of the PSC signed by Cairn
India.
Recommendation
Based on the Rajasthan exploratory portfolio upsides and advancing production
from the MBA block our fair value for the stock is Rs.378/share. The stock is
currently trading at a PE multiple of 9.9x based on FY11E EPS of Rs.33.9. In our
DCF model, we have assumed a long-term static average crude oil price of US$86/
bbls; Cairn crude oil realization @ 10% discount; Cess at Rs2575/MT; plateau
production at 240kbopd; development capex of US$2.8 bn.
We have followed sum-of-the-parts valuation method for deriving the intrinsic
value of the discovered reserves. The Rajasthan block is the main value driver (~95-
96%) and the same has been valued on the DCF, however, the Ravva and Cambay
block are valued using reserve multiple method. Ravva and Cambay are matured
blocks and do not add significant value hence valued on EV/boe method.
We are bullish on crude oil prices mainly on account of quantitative easing 2 (QE2),
bounce back in global economies, dollar depreciation, hard winters and stead
decline in inventories. The fed is expected to buy approximately $75 Bn of longerterm
Treasury securities each month through the second quarter of 2011. This
$600 billion "Quantitative Easing 2" (QE2) strategy of buying U.S. debt has been
bullish for the dollar.
Result analysis
The gross production of oil and gas from three producing blocks including
Mangala is 165.4 Kboepd in Q2FY11 as against 94.95 Kboepd in Q1FY11. The
production has increased mainly on account of increase in production from the
Managala field located in Rajasthan to 125 kbopd far earlier than expected.
The company recorded lower operating expenditure of USD$2/bbl for Mangala
field and additional USD0.5/bbl as pipeline opex. However, the Company has
maintained its earlier guidance for Rajasthan opex and pipeline opex of USD3.5/bbl
and USD1.5/bbl respectively. This is to account for future work-over (maintenance)
operations.
The average price realization is USD $67.8/boe in Q2FY11 as compared to USD
59.6/boe in Q2FY10.
In Q2FY11, cash flow from operations is Rs.15.7 bn and ~7 bn capex incurred in
Q2FY11. The Company also raised Rs.22.5 bn through issue of INR Unsecured
Non-convertible Debentures.
The Company is targeting production of 175 Kbopd from Managala (+Bhagama)
field by the end of FY11.
The crude oil sales agreement is valid till March'11 and will be renegotiated for
which discussions are expected to start in January 2011.
The company does not intend to carry out exploratory drilling in the current fiscal
year for Rajasthan block
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