Cairn Indianet profit plummets on low oil prices

Hydrocarbons major Cairn India on Friday reported a 99 percent fall in net profit at Rs.8.69 crore for the third quarter ending December 2015 due to falling oil prices and high taxes.

The company recorded a consolidated net profit of Rs.1.350 crore in the October-December period a year ago, a company statement said.

Cairn's average realisation per barrel for the oil produced from its Rajasthan fields fell to $34.5, as compared with about $68 per barrel in the same quarter of the previous fiscal.

Besides, increase in the discount to Brent for Rajasthan crude meant the rate in October-December was 21 percent lower than the prevailing price, Cairn said.

Revenue fell 42 percent to Rs.2,039.49 crore during the quarter in consideration, compared with the same quarter of the previous fiscal.

Cairn reported a forex gain of Rs.48.8 crore during the quarter, which declined sharply compared to Rs.380.7 crore in preceding quarter owing to a stable rupee during the quarter.

"To ensure timely investment decision in Rajasthan block and realise fair price for our crude, we have approached court to expedite the PSC (production-sharing contract) extension process and allow us to export the crude. The matters are sub judice," the statement said.

"In an encouraging development, the government has also supported the industry's view on rationalising the cess charges given the prevailing low oil prices," Cairn said.

Explorers like Cairn and Oil and Natural Gas Corporation are required to pay Rs.4,500 per tonne cess on crude oil produced and have been asking that the rate be made ad valorem linking it, thereby, to oil prices.

Commenting on the results, company chief executive Mayank Ashar said: "We maintain our strategic objective of generating healthy free cash flow which has been successfully guiding us through the constantly deteriorating oil pricing scenario."