Cairn India’s Mangala oil field in the prolific Rajasthan block is likely to hit peak output of 1,50,000 barrels per day by the first quarter of 2012.
Peak production from Mangala, Bhagyam and Aishwarya — three of the 18 oil and gas finds Cairn made in the Rajasthan block and that are first being put to production, is expected in Q1 2013.
“Cairn India (CIL) has largely maintained its reserve estimates for the MBA (Mangala, Bhagyam, Aishwarya) fields, but has raised its Mangala production target from 1,25,000 bpd to 1,50,000 bpd, implying faster monetisation of the reserves,” Royal Bank of Scotland said in an analyst research note.
Plateau production from the three fields has been revised upward to 2,10,000 bpd from 1,85,000 bpd estimated earlier.
“We now believe Mangala production could reach 1,50,000 bpd by Q4 of 2010-11 which may require approvals from the Indian government by Q2 (of) FY11,” it said.
“This would raise our estimate for MBA plateau production from 1,85,000 bpd to 2,10,000 bpd, which we expect to be achieved by Q4 FY12.”
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RBS maintained ‘buy’ on Cairn stock with a price target of Rs 330. “The upside to near-term oil production is particularly relevant given global oil prices continue to trade above our near-term expectations. We have raised our DCF-based target price from Rs 310 to Rs 330.”
Stating CIL has provided an upgraded resource base in Rajasthan, it said in-place oil reserves in MBA fields are unchanged, but the company had increased its recoverable reserve estimates from 993 million barrels oil equivalent to 1,003 million barrels.
“This was based on a comprehensive review of the resource potential for the block. In addition, DeGolyer and MacNaughton conducted an independent estimate of reserves and contingent resources and their conclusions are in line with CIL’s estimates,” it said.
CIL had increased its estimates of in-place oil from Barmer Hill and other fields by 11 per cent to 1.9 billion barrels and of recoverable reserves by 63 per cent to 140 million barrels.