Rahul Dhir: We are now poised to optimise development
BRITAIN’S Cairn Energy India unit has reported a 52 per cent plunge in quarterly net profits, hit by a one-time provision for crude output royalty payments.
Announcement of the figures come as the long-delayed $ six billion (£3.8 bn) sale of a controlling stake in Cairn India is expected to be completed "shortly" to British mining giant Vedanta, led by Indian-born billionaire Anil Agarwal.
Energy explorer Cairn India`s net profit for the three months to September fell to $167 million (£105 mn) from 16 billion (£9.8 bn) in the year-earlier period, but still beat analysts` forecasts.
Analysts had expected Cairn India, which produces oil in the western Indian state of Rajasthan, to post a second-quarter profit of around six billion rupees (£3.7 bn).
"We are now poised to optimise development," Rahul Dhir, chief executive officer of Cairn India, said.
The Indian government in late June gave London-listed mining group Vedanta Resources conditional approval for its planned takeover of Cairn Energy`s India unit.
But approval of the sale came with a critical rider that Cairn India and India`s state-owned Oil and Natural Gas Corp (ONGC) share royalty payments on crude production from their Rajasthan oil fields.
ONGC owns a 30 per cent stake in the oil block but has paid royalties on 100 per cent of the output under a "royalty holiday" scheme aimed at promoting private oil exploration in energy-hungry India.
Cairn objected to the royalty payment sharing, saying such a step would sharply cut its profits, but finally accepted the terms. The royalty obligation is estimated at around 15 per cent of revenue.
Cairn India`s sales slipped one per cent during the second quarter from a year earlier.
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