Episode du 27

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27 JUL, 2011, 02.12PM IST, PTI
Cairn India profits to halve if asked to share royalty

NEW DELHI:Cairn India today said that its net profit will halve to Rs 1,435 crore in the quarter ended June 30 if it is asked to share royalty on crude production from the all-important Rajasthan oilfield, even as its parent Cairn Energy seemed inclined to agree to the proposition.

The board of Cairn India is opposed to accepting riders like sharing of royalty and payment of cess on the Rajasthan crude for getting government approval for its parent Cairn Energy's sale of a controlling stake in the company to mining group Vedanta Resources.

In this regard, Cairn Energy wants the conditions to be voted on by the shareholders of Cairn India. Cairn Energy holds a 52.1 per cent stake in Cairn India and together with another 28.5 per cent held by Vedanta, can see any proposal through.

Cairn India, in a press statement, said it received "a requisition" from Cairn Energy under Section 169 of The Companies Act, 1956, for convening an extraordinary general meeting to consider the government riders.

Although Cairn India's Annual General Meeting (AGM) of company shareholders -- where the issue could have been considered -- is scheduled for August 18, its board, which is headed by Cairn Energy Chairman Bill Gammell, at a meeting in Edinburgh yesterday decided to hold a postal ballot.

Cairn India CEO Rahul Dhir told analysts that as per the letter received from the government yesterday, it has to "comply" with the riders set by Cabinet within a month.

"That may be difficult because the postal ballot itself will take more than a month," he said.

Since its parent announced the USD 9.6 billion deal with Vedanta in August last year, Cairn India has been opposed to making royalty payments recoverable from the sale of oil and the company being made liable to pay a Rs 2,500 per tonne cess, as this was not in line with the Production Sharing Contract (PSC). A change in the contract was neither in the interest of the company, nor its minority shareholders.

Since it would have been difficult to explain why the board changed its stand and compromised on the interest of minority shareholders so that one stakeholder can sell his shares, the matter was posted for hearing at an EGM.

"Based on the requisition, the Cairn India Board has noted its obligations under Section 169 of The Companies Act, 1956 and has reached a conclusion that it would be appropriate to hold a postal ballot of all the shareholders to consider the conditions imposed by the government," the statement said.

"It should be noted that if royalty were to be cost recoverable, it would lead to a decline in the revenues and profit-after-tax for the current quarter by Rs 1,291.6 crore," it added.

Cairn India reported a 10-fold jump in net profit to Rs 2,726.6 crore for the April-June quarter.

[LesCrozes]

Cairn India Q1 profit soars on higher output
Wed Jul 27, 2011 3:29am GMT
NEW DELHI, July 27 (Reuters) - Oil explorer Cairn India reported a nearly 10-fold jump in quarterly profit on higher output and said it would seek shareholder approval on the conditions set by the Indian government for its deal with Vedanta Resources .

Last month, India gave conditional approval to Vedanta Resources to buy a 40 percent stake in Cairn India from its British parent Cairn Energy , in a deal valued at around $6 billion.

Cairn India said net profit jumped to 27.27 billion rupees ($617 million) for its fiscal first quarter ended June, from 2.8 billion rupees in the year-ago quarter.

Revenue surged more than four times to 37.13 billion rupees.

India's oil ministry has been pushing Cairn India to share royalty payments with state-run Oil and Natural Gas Corp , which has a 30-percent holding in the Cairn-operated fields in western India but pays 100 percent of the royalties.

Treating royalty as a cost for developing the field was one of the conditions set by the government to clear the deal with Vedanta.

Cairn India said in a statement late on Tuesday if royalty were to be cost recoverable it would lead to a decline in revenue and profit for the June quarter by 12.92 billion rupees.

Cairn India said it would hold a postal ballot of all the shareholders to consider the conditions imposed by the Indian government.

[LesCrozes]

Cairn India to seek shareholders' nod for accepting govt riders
BS Reporter / New Delhi July 27, 2011, 0:09 IST

In a fresh twist to the Cairn-Vedanta tale, Cairn India on Tuesday decided to seek shareholders’ nod on the government’s riders for approving the deal. It formally received a letter from the government on Tuesday, allowing a conditional stake sale.

“Cairn India reached a conclusion that it would be appropriate to hold a postal ballot of all shareholders to consider the conditions imposed by the government of India,” said a company announcement. The company had last week also received a requisition from the parent company, Cairn UK Holdings, to convene an extraordinary general meeting to consider the conditions.

The government last month approved the stake sale in Cairn India to Vedanta Resources only if the company accepted treatment of royalty from its Barmer block in Rajasthan as cost-recoverable. In addition to royalty, the cess of Rs 2,500 per tonne on Barmer output that is being paid by Cairn India under protest, will also have to be made cost-recoverable. Further, Cairn India will have to give up its right to challenge the above two conditions in future.
However, if Cairn India accepts these conditions its profits will be impacted. For the current quarter, the company estimated its profit would be lower by Rs 1,291 crore, if it accepts these conditions.

STRONG Q1 PERFORMANCE
For the quarter ended June 30, Cairn India reported an 869 per cent jump in net profit, riding on higher crude output.

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Cairn India Advances as Higher Output Boosts Profit 10-Fold
QBy Rakteem Katakey - Jul 27, 2011 7:14 AM GMT+0200 .
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Cairn India Profit Jumps 10-Fold to Record Cairn India Ltd. via Bloomberg
Workers at Cairn India Ltd.'s production train one at the Mangala Processing Terminal (MPT), in Barmer, India. .

Workers at Cairn India Ltd.'s production train one at the Mangala Processing Terminal (MPT), in Barmer, India. Source: Cairn India Ltd. via Bloomberg .
.Cairn India Ltd. (CAIR), the energy explorer that’s the target of a takeover by Vedanta Resources Plc (VED), advanced in Mumbai trading after higher output and prices boosted quarterly profit 10-fold.

Net income at Cairn India and its units rose to a record 27.3 billion rupees ($618 million) in the three months ended June 30 from 2.8 billion rupees a year earlier, the company based in Gurgaon near New Delhi said in an e-mailed statement yesterday. The median estimate of 18 analysts compiled by Bloomberg was a profit of 26.3 billion rupees. Shares rose as much as 1.7 percent.

Profit at the unit of U.K.-based Cairn Energy Plc (CNE) has surged since the explorer started producing oil from India’s biggest onshore oil deposit in 2009. London-based Vedanta’s proposed $8.7 billion acquisition was approved by Prime Minister Manmohan Singh’s cabinet on June 30 on the condition it pays royalties on output from the field in western Rajasthan state.

“Higher production from here on will depend on how soon everything with the stake sale and various approvals fall into place,” said Sandeep Randery, an analyst with Brics Securities Ltd. in Mumbai. “The additional royalty they may have to pay would be a burden.”

Average daily production at Cairn’s Rajasthan block almost tripled to 125,127 barrels from a year earlier, the company said. The oil was sold at $105.90 a barrel compared with $71.80 a year earlier.

Production Plateau
Output at the Mangala field in the block is about half the area’s potential and has plateaued at about 125,000 barrels a day since August. Production may get a boost following approval of the deal between Vedanta and Cairn Energy.

Cairn India has declined 2.6 percent this year compared with a 9.8 percent drop in the benchmark Sensitive Index. The stock climbed 0.4 percent to 324 rupees as of 10:42 a.m. local time on the Bombay Stock Exchange.

Vedanta won cabinet approval to take control of Cairn Energy’s local unit on condition it bears part of the royalty payments now covered by state-run Oil & Natural Gas Corp., a partner with a 30 percent interest in the Rajasthan block.

Vedanta and Cairn Energy need to agree that royalty payments by ONGC will be deducted from the project’s revenue, Oil Minister S. Jaipal Reddy said June 30 after a cabinet meeting. Cairn India also needs to withdraw arbitration against the government over tax on crude oil sales.

Shareholder Approval
Cairn India plans to seek shareholder approval through a postal ballot for the conditions set by the government, according to the statement. Revenue and profit after tax would have declined by 12.9 billion rupees in the first quarter if royalties were made cost recoverable, Cairn India said.

The government wants Cairn India to “comply” with the cabinet’s decision within a month, Chief Executive Officer Rahul Dhir told analysts on an earnings conference call yesterday. “That may be difficult because the postal ballot itself will take more than a month,” Dhir said.

Approval for the Vedanta-Cairn deal came 10 months after the transaction was announced.

‘Optimal’ Development
Cairn India is awaiting approval from a panel, which includes representatives from the regulator and the government, to increase production from the Mangala field in Rajasthan to 150,000 barrels a day. Output from Mangala, which started in August 2009, is sold to customers including Indian Oil Corp. and Reliance Industries Ltd. (RIL)

“The optimal development of this resource will only be possible with the active support of our joint venture partner, ONGC, and the government of India,” Dhir said on the conference call.

The three fields in Rajasthan may produce a combined 240,000 barrels a day, which is about 30 percent of India’s current crude output, according to the company’s annual report for the year ended March 31.

Cairn India sells oil at market-linked rates. Crude oil in New York rose 31 percent to an average of $102.34 a barrel in the three months ended June 30 from a year earlier, according to data compiled by Bloomberg.

The Vedanta Group held 28.5 percent of the fully diluted share capital of Cairn India as of July 12, after purchasing a 10 percent stake from Cairn India. Vedanta earlier acquired an 8.1 percent holding from Cairn India’s minority shareholders and 10.4 percent from Malaysia’s Petroliam Nasional Bhd.

Vedanta agreed June 27 to buy an additional 30 percent stake in Cairn India from the parent after getting approvals from the Indian government