Cairn Energy values Cairn India stake at $956 mn

Earlier, Anil Agarwal-led Vedanta had shown interests in acquiring British company's stake in Cairn India

The UK-based Cairn Energy, which is set to sell its stake in Cairn India, has valued its 10.3 per cent stake in the Indian company at $955.6 million. Though a proposal by Vedanta Resources to take over Cairn Energy’s residual stake in Cairn India is still there, it is yet to formalise.

In December 2011, Vedanta had acquired a controlling stake in Cairn India for $8.67 billion. Vedanta has 59 per cent holding in Cairn India. Terming the minority stake as “available-for-sale”, Cairn Energy in its half-yearly report filed at the London Stock Exchange said the financial asset had a market value of $956 million on June 30, a 22 per cent reduction from the value at the date of initial recognition. “There was a reduction in the value of our stake in Cairn India at the balance sheet date; however, there has been a recovery in the share price since that time,” the Cairn Energy statement says. The half-year report announcement added that the fair value of $955.6m, compared to $ 1,138.4 million in December 2012, is based on the closing market value at June 30 of Rs 290. During this time, it discovered, developed and produced oil and gas both offshore and onshore in Bangladesh and India and made more than 40 significant discoveries.

“In particular, Cairn made a major oil discovery in Rajasthan in the north west of India at the beginning of 2004 where over 25 discoveries have since been made with the potential to provide more than 30 per cent of India’s crude oil production,” the report added.

Cairn India has set a roadmap to invest Rs 16,000 crore in India for exploration and production of oil in the next three years. According to the company chairman Navin Agarwal, the higher investment ratio is in pursuit of finding and producing more oil. Out of this, a majority of its investment of about Rs 13,000 crore would be for Rajasthan only to drill about 450 wells, approximately 100 exploration wells and more than 350 development wells.

The company is targeting an additional 530 million barrels to its reserves. Cairn India had achieved its highest ever gross operated production of 212,442 barrels of oil equivalent per day (boepd) early this year. It is also having an average daily production of 173,517 boepd for the Rajasthan block and expects to increase it to 200,000-215,000 boepd by the end of the year.

Cairn India’s stocks closed 0.59 per cent down at Rs 309.85 a piece at the Bombay Stock Exchange on Friday.