Cairn India Q2 hit by lower oil, profit slumps 70% to Rs 673cr

Mining billionaire Anil Agarwal- controlled Cairn India today reported a 70 per cent plunge in September quarter net profit on oil prices dipping to their lowest levels in six years.
Cairn, which operates India's biggest onland oilfield at Barmer district in Rajasthan, reported net profit dropping to Rs 673 crore or Rs 5.54 per share in July-September compared with Rs 2,278 crore or Rs 13.77 per share in the same period a year ago.
Revenue dropped 44 per cent to Rs 2,242 crore, the company said in a statement.
The company sold oil at an average price of USD 43.7 a barrel in the second quarter, 53 per cent lower than USD 92.1 a year earlier.

The slump in oil prices has prompted the oil producer to cut its capital expenditure plans for the current fiscal by more than half to USD 500 million.
The drop was "due to fall in crude prices and increase in discount to Brent for Rajasthan crude," it said.

As per government approved formula, Cairn sells Rajasthan crude oil at a small discount to widely traded Brent crude oil.
"Discount to Brent for Rajasthan crude widened to 14.3 per cent from 9.9 per cent on sequential basis due to lower demand for heavy crude," Cairn said.
Decline in benchmark Brent prices was followed by a greater incentive for processing light grades, driving the demand for light crude. Oversupply of heavy crude also suppressed the prices.

Depreciation of 2.3 per cent in the average exchange rate for the rupee against the dollar partially offset the impact of crude prices.
Cairn ended 0.5 per cent higher on BSE to close at Rs 154.25 before the results were announced.
The company had a cash balance of Rs 17,943 crore as on September 30.
It produced 2,05,361 barrels of oil equivalent a day during the quarter, six per cent more than 194,508 barrels per day in the same period a year ago.
Output from its flagship Rajasthan block was 3 per cent higher at 168,126 barrels a day.
It relinquished exploration rights in Sri Lanka.

"We have submitted the requisite closure documents to Petroleum Resources Development Secretariat (PRDS), the regulatory authority for petroleum resources in Sri Lanka. The review is under process and is expected to be closed in October 2015," the statement said.
On outlook, Cairn said despite prevailing low oil prices and substantial cut in capex, the company will at a minimum maintain Rajasthan production in current year at FY15 levels.