Cairn's PAT down on high depreciation charges

Average daily production up 3% y-o-y during Q1, gas output down 12% to 48 mscfd

Cairn India has lined up a $3-billion capital expenditure programme to improve production from its known discoveries in Rajasthan. The company intends to deploy 81 per cent of this over FY15 and FY16 to boost production. However, the company reported a weak set of numbers for the June quarter, as net profit declined sharply on higher depreciation. Revenue, post profit-sharing with the government and royalty expense in the Rajasthan block, has grown 10 per cent year-on-year (y-o-y) to Rs 4,483 crore, primarily on account of higher realisations, better volumes and rupee depreciation, despite higher profit tranche.

However, sequentially revenues are down 11 per cent. Operating profit is up by a modest three per cent to Rs 3,029 crore but sequentially it is down 15 per cent. The change in depreciation policy, under the new accounting norms, has led to a sharp decline in the profit after tax, which has fallen 65 per cent y-o-y and 64 per cent quarter-on-quarter to Rs 1,093 crore. Accordingly, the diluted earnings per share are lower at Rs 5.76. The fall in the rupee has resulted in forex gains of Rs 99 crore during the quarter.

While the average daily production of oil and gas (total gross operated) rose three per cent y-o-y to 226,597 barrels of oil equivalent, sequentially production dropped three per cent. The decline in gas output has been sharper than oil. While oil output has risen three per cent to 209,846 barrels per day, sequentially it is down three per cent. Gas output is down 12 per cent y-o-y to 48 mscfd. Sequentially, gas output has declined 10 per cent. While blended average price realisations have risen moderately up four per cent y-o-y to $97 a barrel of oil equivalent, there has been a decline in gas realisations. Realisations from gas have risen 15 per cent y-o-y to $5.6 per mscf, sequentially realisations are down eight per cent. The company says it is targeting a growth rate of 7-10 per cent over the next three years.