Cairn India takes big hit in Q4

The company's realisation was down 42 per cent to $28.2 per barrel of oil equivalent, compared to the quarter-ended March 2015

The continued fall in crude oil prices pulled down Cairn India performance in the March quarter, with the company reporting a historically high loss of Rs 10,948 crore. It also undertook an impairment of Rs 11,674 crore for the full year ending March 2016.

The impairment largely reflects the lower crude price, prevailing discount on Rajasthan crude and adverse long-term impact of revised cess. “All the company’s projects, including Bhagyam and Aishwariya enhanced oil recovery (EOR), Aishwariya Barmer Hill, as well as the Raageshwari Deep Gas project, remain viable at the price assumptions taken for impairment,” the company stated.

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The Vedanta group company closed 2015-16 with a loss of Rs 9,432 crore and a normalised profit after tax of Rs 2,145 crore, compared to Rs 4,480 crore profit the previous year. It had taken an impairment of Rs 505 crore last year in the same quarter, on account of its Sri Lankan assets.

“The drive for cost efficiency and rationalisation of capital investment have aided free cash generation, despite crude prices plummeting to a 12-year low. We are delighted to recommend a dividend of Rs 3 per equity share for the year,” said Mayank Ashar, managing director and chief executive officer, Cairn India. The dividend entails an outflow of Rs 677 crore, including dividend distribution tax.

The company’s realisation was down 42 per cent to $28.2 per barrel of oil equivalent, compared to the quarter ending March 2015. It was almost $41 for 2015-16, a 46 per cent fall over the previous year.

Net revenue for the quarter was Rs 1,717 crore, down 36 per cent over Rs 2,677 crore a year before. On a yearly basis, revenue at Rs 8,626 crore was down 41 per cent from Rs 14,646 crore. Operating earnings dropped 60 per cent to Rs 3,505 crore, with a margin of 41 per cent.

The company said, “A favourable movement in the rupee of sixper cent depreciation versus the dollar resulted in a forex gain of Rs 714 crore on investment and operating activities.”

During FY16, gross production was 74.6 million barrels of oil equivalent across all assets, of which its share was 46.9 mboe.

The company said it expects to maintain production from the Rajasthan asset broadly at the FY16 level. With an estimated net capital expenditure of $100 mn, of which 80 per cent would in development activity, primarily of Raageshwari Deep Gas and Mangala EOR completion, and the rest in exploration.