 "Cairn India employees work at a storage facility for crude oil at Mangala oil field at Barmer in Rajasthan")
The company reported a net profit of Rs 193 crore during the quarter as compared to Rs 1,165 crore in the corresponding quarter of 2014-15 and Rs 322 crore in the first quarter current fiscal. Average brent prices fell 18% quarter-on-quarter to $50.5 per barrel driving Cairn's average oil realization down by 22% to $43.7 per barrel.
"Discount to Brent for (heavy) Rajasthan crude widened to 14.3% from 9.9% on sequential basis due to lower demand for heavy crude. Decline in Benchmark Brent prices was followed by greater incentive for processing light grades, driving the demand for light crude," the company said a statement.
"The profit was down by 19% Q-o-Q mainly on account of lower Earnings before Interest Tax Depreciation (EBITDA) and other income, which was partially offset by higher foreign exchange gain and lower tax," the company said. Cairn Managing Director and Chief Executive (CEO) Mayank Ashar added the company is taking efforts to cut costs and focus on adopting advanced technologies to improve efficiencies and productivity.
Total income of the company also dipped 43% to Rs 1,350 crore during the second quarter as compared to Rs 2,405 crore in the same period last fiscal.
Ashar said the company is in discussion with the government on "improving the investment climate for the opil and gas industry" in the country which will enable mid-term growth.
The issues include the demand for revision of the cess charged on oil production to align it with crude prices, Production Sharing Contract (PSC) Extension policy and fair price realization of domestically produced hydrocarbons.
Cairn India's net capital expenditure for the second quarter stood at Rs 402 crore with 80% of the investment made on development projects and the rest 20% on exploration activities. The company had earlier announced a cut in its planned capital investment to $ 500 million in current fiscal. It said it retains the flexibility to invest the balance $1.4 billion as oil prices improve and costs bottom out.
The private sector explorer said it has managed to bring down procurement costs by 13% and well costs by 15% apart from maintaining low operational expenditure at $5.5 per barrel in the flagship Rajasthan field. The company's total production across its three producing assets - Rajasthan, Ravva and CB/OS2 on the Western coast - rose 6.6% to 205,361 barrels of oil equivalent per day (boepd).
Cairn India's share price at the Bombay Stock Exchange (BSE) today closed at Rs 154.05, up 0.06% as compared to previous close.
