Cairn plans IPO of Indian operations

UK-based oil firm Cairn Energy, which discovered India's biggest oil field in Rajasthan, plans to sell at least 25% of its shares in the Indian business through an initial public offering (IPO).

"We intend to examine a partial initial public offering of our Indian exploration and production business," Bill Fammel, chief executive of Cairn Energy, said.

Gamell said the company may offer a minimum 25% and a maximum of 80%. "It depends on market conditions. It depends on appetite and it depends on value."

The IPO, he said, may happen before oil production commences from the Rajasthan fields in 2008.

The company estimates in-place reserves in excess of 3.5 billion barrels in the Rajasthan block - the biggest oil find in India in the last two decades. It has upgraded recoverable reserves from Mangala, Bhagyam and Aishwariya - three of the dozen discoveries in the Rajasthan block - by 20% to 606-795 million barrels.

Denying any plans to completely sell-off the Indian business, Gammell said in a statement on the company website that Cairn remained in discussion with Oil and Natural Gas Corporation (ONGC) for a possible stake sale.

Sources said while Cairn was asking for $3.8 billion, ONGC was willing to pay only $2-2.2 billion.

Besides the Rajasthan block, Cairn also has a 22.5% stake in the 50,000 barrels per day Ravva oilfield and is the operator of the Cambay basin block CB/OS2, home to 130 million standard cubic feet per day producing Lakshmi and Gauri gas fields and a potential oilfield.