Financial Performance: The Group has posted a net profit of Rs. 2,933.20mn for Q308 (Rs. 232.40 mn for Q307). Total Income also increased from Rs. 3,001.10 mn to Rs. 5,261.70 mn for the quarter ended September 30, 2008. The main factors for the high growth in revenues include higher oil price realization, weakening of rupee, and revenues from other income. Cairn India’s other income for the quarter was Rs 2055.4mn (Rs343mn), which included income from investments and gains from forex fluctuations.
Operational Performance: The gross production was 65,566 barrels of oil equivalent per day (boepd) in Q308 (75,280 boepd in Q307). The working interest production was 17,111 boepd in Q308 (18,871 boepd in Q307). The average price realization in Q308 was $116.3/bbl ($77.2/bbl in Q307). The gas price realisation in Q308 was $ 4mscf, at par with the corresponding quarter last year. Average price realisation per barrel of oil equivalent (boe) was US$87.3 in Q308 against US$58.4 in Q307.
With the GOI giving their consent to shift the delivery point from Barmer to the Gujarat Coast, the pipeline project infrastructure is included in the revision to the Mangala FDP for cost recovery purposes. The proposed routing of the pipeline will allow access to an extensive existing pipeline infrastructure & refinery network, with a final coastal delivery point that also affords access to the majority of India’s refining capacity.
We believe that the concerns on the oil prices have been overplayed on the stock. At current valuations, we still favour an investment in the stock with a longer-term horizon. The debt equity ratios remain almost nil, with growing return ratios as a result of commencement of production from Rajasthan. There is an enhanced earnings visibility for CIL, subject to scheduled production of oil & gas.