Cairn to hive off Indian operations

UK-based oil firm Cairn Energy Plc is planning to create a separate unit out of its Indian operations, and sell at least 25% shares of the new firm through an initial public offering (IPO).

"We plan to split the company into two - one based in India focused on exploration and production, and the other based in the UK focussed on Cairn's core competence of exploration," a company spokesperson said today.

The Indian firm will hold the prolific Rajasthan block where Cairn estimates it has found in-place oil reserves in excess of 3.5 billion barrels, the 22.5% stake in the 50,000 barrels per day Ravva offshore oilfield, and the Cambay Basin block CB/OS-2, which is home to the 130 million standard cubic feet per day of gas producing Lakshmi and Gauri fields and a potential oilfield.

An IPO of atleast 25% shareholding of the Indian operations would be
launched in 2008 before oil production starts from Mangala, Bhagyam and Aishwariya fields - the largest finds in the Rajasthan block, he said.

"We estimate more than 3.5 billion barrels of oil in the Rajasthan block, and that figure may increase furtner," Lawrence Smyth, managing director of Cairn Energy India Pty, said.

The company estimates that peak production from the Mangala, Bhagyam and Aishwariya fields could be as much as 1,50,000 barrels per day when compared with an estimate of 60,000-1,00,000 barrels about 18 months ago.