Cairn Energy's India unit reports leap in profit
The Indian unit of Britain's Cairn Energy reported a huge leap in quarterly profit on Thursday amid an ongoing standoff over its sale to British resources giant Vedanta.
The company reported net profit jumped to $448 million in the third quarter to December, up from a profit of $62 million in the same period a year earlier, thanks to higher crude output from its fields in western India.
Revenues soared to $691 million from $106 million a year earlier.
Production from Cairn India's oil-rich Mangala field in Rajasthan, the company's most important asset, "has consistently delivered," Cairn India chief executive Rahul Dhir said in a statement.
Cairn India said average production totalled 124,861 barrels per day from Rajasthan state in the third quarter compared with 15,430 barrels a year earlier.
The figures came as India has been piling pressure on Cairn Energy, saying it will not approve sale of its controlling stake in its Indian unit to Vedanta unless the concerns of its Indian state-owned partner ONGC are satisfied.
There have been growing doubts over whether the bid, worth up to $9.6 billion by London-listed Vedanta, will go through.
Cairn India holds stakes in 10 oil and gas blocks in the country and has tie-ups with state-run Oil and Natural Gas Corp (ONGC), energy-hungry India's largest oil producer by output.
India's government has said it wants to set new conditions before giving its consent to Vedanta to assume control over Cairn India.
ONGC has to pay 100 percent royalties on output, even though its share of production is just 30 percent, under a scheme put in place earlier by the Indian government to give incentives to private firms to draw investment.
ONGC is now seeking a more even sharing of the royalty payments.
Acceptance of the government's royalty demands would hurt Cairn India's valuation as its profits would be hit and Indian media have reported Vedanta might scrap the deal if the royalty arrangements were changed.
Talks were held last weekend between Cairn Energy and the government to resolve the impasse but ended inconclusively. Cairn Energy has said it aims to complete the deal before April 15, when the sale agreement lapses.
© 2011 AFP