Cairn net profits sky-rocket, upbeat on Vedanta deal

22nd March 2011, Comments 0 comments

Scottish oil and gas explorer Cairn Energy said Tuesday that annual net profits rocketed to $794.3 million (558 million euros) on record revenues and rising production in India.

The Edinburgh-based group also expressed confidence that it would win approval for a $9.6-billion deal to sell of up to 51 percent of its Indian division to rival resources giant Vedanta.

And the company added that it was planning to drill up to four exploration wells off the coast of Greenland later this year.

Cairn said in a results statement that earnings after taxation surged last year, compared with slender profit of $19 million in 2009.

Total revenues meanwhile surged to a record $1.6 billion, from just $234 million last time around, boosted by the successful startup of piped oil production from the group's large Mangala field in India.

"Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the government of India in a positive and constructive manner," said chief executive Bill Gammell.

"The planned sale of Cairn's majority stake in India would lead to a significant return of capital to shareholders whilst maintaining balance sheet strength and flexibility.

He added: "Cairn is continuing its active exploration programme offshore Greenland which has the potential for transformational growth while also seeking to add new opportunities."

Following completion of the deal, Cairn will retain up to 22 percent of Cairn India.

London-listed Vedanta announced last August that it would buy up to 60 percent of Cairn India for $9.6 billion, adding to its assets, which already include aluminium, copper, iron ore and zinc mines.

But India says it wants to set conditions before allowing Vedanta to assume control over Cairn India, whose biggest holding is the Mangala deposit in Rajasthan, the country's biggest onshore oil field.

Cairn added on Tuesday that it was also lifted last year by the start of its exploration drilling programme offshore Greenland, which was hit last year by environmental protestors.

"Subject to approval from the government of Greenland, Cairn is planning to carry out an exploration drilling programme of up to four exploration wells offshore Greenland in the summer of 2011," it said.

"This programme follows on from the 2010 three well exploration programme offshore west Greenland in the Baffin Bay basin."

Cairn had revealed last August that it had discovered gas in offshore Greenland, amid environmental protests by Greenpeace to stop its operations near the nation's fragile coast.

© 2011 AFP

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