Cairn India exits Sri Lanka oil exploration - report
Sat, Apr 25, 2015, 10:06 am SL Time, ColomboPage News Desk, Sri Lanka.
Apr 25, Colombo: Cairn India Limited (CIL), one of the leading independent exploration and production companies globally, has decided to exit from its oil exploration operations in Sri Lanka due to slump in revenues, a market report said.
A nearly 50 percent drop in crude oil prices has forced Cairn India to exit its operations in Sri Lanka, a report in Business Standards said.
According to the annual financial results announced for the period ending 31st March, 2015, Cairn India's revenue of US$ 2.4 billion is 22 % lower year-on-year primarily due to reduced crude prices.
"Exceptional item in Q4 FY15 pertained to impairment loss of Sri Lanka amounting to INR 505 crores(Gross of tax) leading to a negative profit after tax for the quarter of INR (241) crores," Cairn India said in its financial statement.
An analyst with Edelweiss, in his report has said that the company has exited Sri Lanka, in its bid to optimize its portfolio.
Till last year, however, Cairn was optimistic about its Mannar basin block and was planning to begin gas production from the block by 2017-18.
In 2013, Cairn made gas discoveries in two of the four exploration wells it was awarded. It successfully discovered two successive gas and condensate deposits in the wells Dorado and Barracuda in the offshore Block SL 2007-01-001 in the Mannar Basin.
The Company in its Annual financial report for the period ended 31st March, 2014 said that they in 2013, concluded appraisal and commercial studies to determine the next steps for the gas discoveries made on the block SL 2007-01-001.
The Dorado discovery is up for development with first gas officially expected in 2017-18 while Barracuda was being further assessed, according to Cairn. The Company estimated reserves of 74 million barrels of oil equivalent at the two sites.
Cairn India last year said they are continuing discussions with the Sri Lankan government regarding commercial terms necessary to monetize the discovered gas resources on the block in Mannar Basin.
Following the successful completion of the first phase of oil exploration Cairn commenced second phase of operations in February 2013 but abandoned the exploration in the fourth well a month later. The third well Dorado North was abandoned as a dry hole in December 2011.
Cairn has 100 per cent participating interest in Mannar Basin block SL 2007-01-001.
Cairn had spent $150 million for the first phase and the following phases could have involved more investments, the company had earlier said.