Interim Results
Cairn Energy PLC
11 September 2007
EMBARGOED FOR RELEASE AT 0700
11 September 2007
CAIRN ENERGY PLC
INTERIM RESULTS ANNOUNCEMENT
HIGHLIGHTS
CORPORATE
• IPO of Cairn India completed in January raising $1.98bn
• Return of £3 per share to Cairn Energy PLC shareholders
• IPO proceeds of $600m retained by Cairn India and $300m retained by
Capricorn
OPERATIONAL
• Gross operated production for H1 2007 92,173 boepd (H1 2006:111,640
boepd)
• Average net entitlement production 22,486 boepd (H1 2006: 27,346 boepd)
Cairn India
• Government of India 'Rights of Use' (RoU) approval for Rajasthan
pipeline
• Rajasthan planned production of 150,000 bopd from Northern Fields
• First oil production from Mangala on schedule for 2009
• Preparation of Mangala FDP addendum underway
• Rajasthan Northern Appraisal Area extension awarded - declaration of
commerciality on three discoveries under preparation
Capricorn
• Dyas investment of approximately $90m for 10% shareholding in Capricorn
• Recommended cash offer for Plectrum Petroleum Plc of approximately $47m
• Recommended cash offer for medOil plc of approximately $30m
• Potentially high impact exploration drilling campaign in Bangladesh
scheduled to commence in October
• Applications submitted for exploration blocks in Greenland
FINANCIAL
• Profit after tax of $1,523.8m including $1,537.6m exceptional gain on
IPO of Cairn India (H1 2006: loss $5.8m)
• Cash generated from operations $86.7m (H1 2006: $72.5m)
• Group net cash at 30 June 2007 of $847.2m (including 100% of Cairn
India's net cash balances of $523.5m) (H1 2006: $19.5m)
Sir Bill Gammell, Chief Executive said:
'Cairn has made strong progress in realising its vision of creating two world
class businesses.
Cairn India is now firmly established as an autonomously run Indian business
entity with an exciting future. The critical path process for securing access to
the land to build the pipeline from Rajasthan has started. Consequently, first
oil from Mangala remains on course for 2009.
The recent announcements regarding Capricorn represent the first steps towards
the establishment of a new exploration led business combining our existing South
Asia asset base with material acreage positions in new areas. We look forward to
the outcome of the potentially high impact Bangladesh exploration drilling
campaign.'
Enquiries to:
Analysts/Investors
Bill Gammell, Chief Executive
Jann Brown, Finance Director Tel: 0131 475 3000
Mike Watts, Exploration & New Business Director
Media Tel: 0207 404 5959
Brunswick Group LLP:
Patrick Handley, Mark Antelme, Phoebe Buckland
Cairn India Media Enquiries
David Nisbet Tel: 00 91 99 1069 4336
Cairn Energy Live Audio Webcast
The webcast of the 2007 interim results presentation will be available at 0900
(UK time) on Tuesday 11 September 2007.
This will be available at the Cairn Energy PLC website: www.cairn-energy.plc.uk
An archived version of the webcast will be available later.
These materials contain forward-looking statements regarding Cairn, our
corporate plans, future financial condition, future results of operations,
future business plans and strategies. All such forward-looking statements are
based on our management's assumptions and beliefs in the light of information
available to them at this time. These forward-looking statements are, by their
nature, subject to significant risks and uncertainties and actual results,
performance and achievements may be materially different from those expressed in
such statements. Factors that may cause actual results, performance or
achievements to differ from expectations include, but are not limited to,
regulatory changes, future levels of industry product supply, demand and
pricing, weather and weather related impacts, wars and acts of terrorism,
development and use of technology, acts of competitors and other changes to
business conditions. Cairn undertakes no obligation to revise any such
forward-looking statements to reflect any changes in Cairn's expectations with
regard thereto or any change in circumstances or events after the date hereof.
CHAIRMAN'S STATEMENT
Corporate Overview
The successful IPO of Cairn India in January raised $1.98 billion of which $600
million was retained by Cairn India, $300 million was retained by Capricorn and
£3 per share was returned in cash to Cairn Energy PLC shareholders.
Cairn India
I am pleased to report that Cairn India has made significant progress in all of
its operated assets since it was established as an autonomous business following
the IPO. In accordance with Indian reporting regulations, Cairn India has
already released two sets of quarterly results this year (in Indian Rupees and
under IGAAP) detailing its financial results and operational achievements.
I am delighted that the approval of the GoI has now been received to grant the
RoU, allowing Cairn India and ONGC to secure access to the land to build the
pipeline from Rajasthan.
Cairn India is committed to continuing investment in India and is very much
focused on creating shareholder value by developing its world class resource
base in Rajasthan and seeking to continue Cairn's track record of exploration
success.
Capricorn
I am also pleased to report on the progress of Cairn's subsidiary Capricorn. As
previously announced, all of the assets not transferred to Cairn India in the
IPO - those in Bangladesh, Nepal and certain exploration interests in northern
India - are now held by Capricorn.
Capricorn's aim is to create further value for shareholders in the future by
seeking to grow an exploration led balanced E&P business. I welcome a separate
investment by Dyas BV - a wholly owned subsidiary of Dutch conglomerate SHV
Holdings N.V. and an active investor in oil and gas exploration - which has
acquired a 10% holding in Capricorn for a total consideration of approximately
$90m.
Capricorn continues to evaluate new venture opportunities and is now actively
progressing a number of these, including the recommended cash offers for
Plectrum Petroleum Plc and medOil plc announced on 7 September. Further
announcements will be made as the offer processes progress.
Outlook
The Group continues to be well placed financially with a strong balance sheet,
positive operating cash flows, an $850m syndicated revolving credit facility in
Cairn India to fund the Rajasthan developments, cash generated from the
flotation of the Indian business and an approximately $90 million investment in
Capricorn by Dyas.
The respective strategies of the two arms of the Cairn business are now well
defined and both are making significant progress in achieving their objectives.
Norman Murray
Chairman, 11 September 2007
CHIEF EXECUTIVE'S REVIEW
CAIRN INDIA
The IPO of Cairn India was a natural evolution of the Cairn business, building
on over a decade of achievement in South Asia. The successful completion of the
IPO created an autonomous Indian business which is run by an experienced
management team capable of developing and building on a world class asset base.
Cairn India's oil and gas fields at Ravva and CB/OS-2 continue to be the
cornerstone of its existing production. The ongoing drilling programme at Ravva
and a further programme planned this year on CB/OS-2 will ensure that these
assets continue to underpin Cairn India's activities elsewhere in India.
A step change in production is expected from 2009, when the first of the
Rajasthan developments is scheduled to come onstream. The Mangala field will be
brought on production first followed by the Bhagyam and Aishwariya fields and
the targeted gross plateau production from these three fields is 150,000 bopd.
Once onstream, the fields will create value for the GoI, the Rajasthan State
Government and for investors and other stakeholders in both Cairn and Cairn
India.
Rajasthan Upstream
The estimated proven and probable (2P) hydrocarbons in place for the six fields
(Mangala, Bhagyam, Aishwariya, Saraswati, Raageshwari Oil and Raageshwari Deep
Gas) for which development plans have either been approved, or are being
prepared, total 2.2 billion boe and the associated gross 2P reserves plus
contingent resources are 864 million boe.
Additional smaller and/or low permeability fields and reservoirs have an
estimated 2P hydrocarbons in place volume of more than 1.4 billion boe. Over the
coming years, Cairn India's focus will be on converting as much of this
contingent resource base into 2P reserves as is economically possible.
Further details on progress on the upstream elements of the Rajasthan
development can be found in the Operational Review.
Rajasthan Midstream
The RJ-ON-90/1 Operating Committee (Cairn India and ONGC) have agreed an oil
export (midstream) solution. This proposal has been sent to the GoI for
approval, after which it will be submitted to the RJ-ON-90/1 Management
Committee.
The proposal is to expand the Mangala field development plan (FDP) to include an
oil export pipeline, which will transport the Rajasthan crude from Mangala to a
coastal location in Gujarat. The GoI has recently agreed to grant Rights of Use
for the pipeline. In order to meet the projected schedule the front end
engineering and design (FEED) has already been completed and the procurement
process for several long lead items has commenced.
The proposed routing of the pipeline will allow access to an extensive existing
pipeline infrastructure and refinery network, with a final coastal delivery
point that also affords access to the majority of India's refining capacity.
CAPRICORN
Capricorn intends to follow the Cairn model for exploration led growth within a
balanced E&P portfolio. Specifically, Capricorn aims to build material positions
in areas where it sees the potential for hidden and material value but it will
not be geographically constrained in doing so. Since the Cairn India IPO, the
Capricorn team has conducted an extensive opportunity screening exercise. The
recent announcements concerning the partnership with Dyas, who are investing
approximately $90 million for a 10% interest in Capricorn, and the recommended
cash offers for Plectrum and medOil, are consistent with this model and
represent the right first steps for Capricorn.
Bangladesh
An offshore drilling campaign in Block 16 commenced in January 2007 during which
two wells (South Sangu-3 and Sangu-10) were drilled. South Sangu-3, which was
drilled to evaluate the earlier South Sangu discovery, encountered
sub-commercial quantities of gas. Sangu-10, which was drilled as an extended
reach delineation well in the main Sangu field, did not encounter gas in the
main reservoir horizon but encountered small, potentially producible quantities
of gas in a separate upper horizon and was suspended. A planned third well (an
exploration well on the Hatia prospect) was not drilled due to operational
delays on the first two wells and the need to demobilise the drilling rig prior
to the onset of the monsoon season.
The net impact of the above drilling programme was a downgrade to Sangu
reserves, which was announced with our 2006 year end results in March.
A separate potentially high impact exploration drilling campaign targeting the
Magnama prospect (and potentially also the Hatia prospect) is now scheduled to
commence in October 2007. In the event of success on Magnama, a follow-up
appraisal well is planned.
Nepal
The security situation in Nepal continues to be monitored closely and a
contractual force majeure remains in place on these blocks. As soon as the
security situation permits, planning for seismic acquisition operations will
commence. An office in Kathmandu has already been established to support
Capricorn's activities in Nepal.
Capricorn has also reached agreement with Texana for the assignment of a 100%
interest in Blocks 3 and 5 pending the approval of the Government of Nepal.
Greenland
As part of a new venture initiative, Capricorn has recently submitted two bid
applications in the Disko West exploration licensing round offshore west
Greenland. The results of this bid round are currently expected to be announced
in early 2008.
RESULTS AND FINANCIAL PERFORMANCE
Cairn continues to demonstrate financial strength with a strong balance sheet,
cash retained from the IPO, positive operating cash flows and an $850m facility
in place in Cairn India.
Key statistics *
H1 2007 H1 2006
Production (boepd)** 22,486 27,346
Average price per boe ($) 34.10 31.03
Turnover ($m) 138.7 153.9
Average production costs per boe ($) 7.47 6.29
Profit before tax (pre-exceptional items) ($m)*** 10.5 12.7
Profit/(loss) after tax ($m) 1,523.8 (5.8)
Cash generated from operations ($m) 86.7 72.5
Net assets ($m) 1,663.5 742.7
Net cash ($m) 847.2 19.5
* figures are stated pre minority interest
** on an entitlement interest basis
*** exceptional items include an exceptional gain of $1,537.6m on the disposal
of a subsidiary and a $15.3m (H1 2006: $5.7m) exceptional oil and gas impairment
write down
Accounting overview
Following the IPO of Cairn India in January 2007, Cairn Energy PLC's
consolidated accounts include the full results of its subsidiary undertakings
(including Cairn India) to the balance sheet date. The 31% interest in Cairn
India held by external shareholders is reflected as a minority interest
adjustment.
PROFIT AND LOSS
Turnover
Turnover for the period was $138.7m (H1 2006: $153.9m).
Gross production for the period has decreased by 17% to 92,173 boepd (H1 2006:
111,640 boepd). This is principally due to a reduction in gross production on CB
/OS-2 and Sangu, as both of these gas fields are in decline. An infill drilling
campaign to extend the plateau on Ravva is ongoing and a campaign is also
planned on CB/OS-2 in H2 2007.
The decrease in entitlement production of 18% to 22,486 boepd (H1 2006: 27,346
boepd) is due primarily to the reduction in overall field production at both CB/
OS-2 and Sangu. The impact on entitlement production for Sangu is offset in part
by the development expenditure incurred on the 2006/07 drilling campaign.
The Group's production mix continues to be gas biased (approximately 68% on an
entitlement interest basis (2006: approximately 75%)). This, combined with
contractual gas price caps, resulted in an average price realised by the Group
for the period of $34.10 per boe (H1 2006: $31.03 per boe). The increase was
mainly due to an increase in the proportion of oil to gas and also increased gas
prices negotiated on Indian contracts.
Gross profit
The Group generated a gross profit of $31.1m (H1 2006: $49.2m).
Cost of sales for the period was $107.6m (H1 2006: $104.7m). Cost of sales
includes the write-off of unsuccessful exploration costs of $33.6m (H1 2006:
$28.2m), including $19.9m in respect of South Sangu. The balance of $13.7m
relates to exploration expenditure in India.
Production costs for the period were $30.4m (H1 2006: $31.1m). These include
pre-exploration costs expensed under IFRS 6 and stock movements of $3.3m.
Production costs per boe have increased to $7.47 per boe (H1 2006: $6.29 per
boe). Field costs are mainly fixed costs and, with the exception of
approximately $2.2m of non recurring workover costs in Ravva in H1 2007, overall
production costs are relatively unchanged period on period. Production costs per
boe have increased due to a reduction in entitlement production in the period.
The average Group rate for depletion and decommissioning has increased by 17% to
$10.72 per boe (H1 2006: $9.16 per boe). This is in part due to the initial
booking of Lakshmi oil reserves, including anticipated development expenditure.
Depletion has also been impacted by the Group's change in oil price assumption
from $30 per boe to $50 per boe, which has had the effect of reducing
entitlement reserves.
Profit for the period
The Group made a profit of $1,523.8m for the period; $1,517.0m is attributable
to the equity holders with the balance of $6.8m relating to minority interests.
Administrative expenses (net of other operating income) for the period were
$33.9m (H1 2006: $22.8m). This includes a charge of $11.7m (H1 2006: $6.1m) for
share based payments and associated National Insurance Contributions in
accordance with IFRS 2.
Net finance income for the period was $13.3m (H1 2006: net finance costs
$13.6m), after recognising a foreign currency exchange loss of $21.2m (H1 2006:
loss $10.0m). The majority of finance income relates to interest generated on
cash balances held following the IPO. Exchange movements in 2007 arose primarily
due to the further weakening of the US$ against Sterling and the Indian Rupee.
Profit before tax and pre-exceptional items was $10.5m (H1 2006: profit $12.7m).
Exceptional items
The exceptional oil and gas write down of $15.3m reflects impairment arising
from the recognition of final costs in relation to the Sangu-10 well.
The Group also made an exceptional gain of $1,537.6m on the disposal of 31% of
Cairn India through the IPO, which completed in January of this year. Cairn
Energy PLC retains a 69% interest in Cairn India. The $9.0m tax charge (H1 2006:
$12.8m) consists of a charge of $15.2m on Cairn India profits and a tax credit
of $6.2m in respect of the Capricorn group. The overall effective tax rate is
low as there is no tax associated with the gain arising on the IPO.
BALANCE SHEET
Capital expenditure
Capital expenditure during the period was $211.7m (H1 2006: $128.7m), comprising
$86.0m (H1 2006: $88.8m) on exploration/appraisal activities, $120.0m (H1 2006:
$33.5m) on development activities and $5.7m (H1 2006: $6.4m) on other fixed
assets.
The exploration expenditure during the period relates principally to continued
drilling in Rajasthan and on the South Sangu-3 well in Bangladesh (South Sangu-3
was subsequently written off as unsuccessful in the period).
The majority of the development expenditure was development expenditure in
Rajasthan, infill drilling activity on Ravva and the Sangu-10 development well
in Bangladesh (see exceptional items above).
CASH FLOW
Cash flows from operating activities
Cash generated from group operations has increased to $86.7m (H1 2006: $72.5m).
Tax payments during 2007 were $7.4m (H1 2006: $3.1m).
Cash flows from investing activities
H1 2007 H1 2006
$m $m
Exploration/appraisal expenditure 58.3 91.0
Development expenditure 135.2 30.6
Other expenditure 4.9 3.1
Total 198.4 124.7
Cash flows from financing activities
On 9 January 2007, Cairn India was floated on the Bombay Stock Exchange and the
National Stock Exchange of India, pursuant to Cairn's strategy of increasing the
autonomy of that business and of realising value for shareholders.
The total proceeds (before expenses) raised in the flotation were $1,984m ($752m
was received in 2006 and the balance of $1,232m was received in 2007). Of these
proceeds, $949.5m (including expenses) were returned to shareholders in 2007
(representing £3 per share).
Cairn India retained $600m, with approximately $300m held to fund Cairn's
ongoing business held by its subsidiary Capricorn. This provides financial
flexibility to support the growth of Capricorn, with the aim of creating and
realising further value for shareholders in the future.
Net assets/net cash
Net assets at 30 June 2007 were $1,663.5m; $1,294.9m of which is attributable to
equity shareholders with the remaining $368.6m relating to minority interests.
At the period end the Group had net cash of $847.2m, including 100% of Cairn
India's net cash balances of $523.5m (H1 2006: $19.5m).
The Group signed a $1bn syndicated revolving credit facility on 27 June 2006.
Following the IPO, the $150m corporate facility was cancelled and the remaining
$850m transferred to Cairn India to finance the Rajasthan development. The
amount available to draw-down at 30 June 2007 was $75m; the balance becomes
available once certain conditions precedent are met regarding the Rajasthan
development. The Cairn India group had net cash of $523.5m available at 30 June
2007 to fund ongoing activities.
Sir Bill Gammell
Chief Executive, 11 September 2007
OPERATIONAL REVIEW
Cairn's gross operated production across South Asia during H1 2007, including
100% of Cairn India's production, was 92,173 boepd (net entitlement 22,486
boepd).
RAJASTHAN BASIN - North West India
Block RJ-ON-90/1
Development Areas (Cairn India 70% (Operator); ONGC 30%)
A 120 km2 3D seismic survey was completed over the Mangala field and processing
of the data has started. An addendum to the Mangala FDP is currently under
preparation for submission to the Joint Venture and GoI.
The first phase of development drilling on Saraswati and Raageshwari has been
completed. Development drilling on Mangala is scheduled to commence in 2008 and
drilling rigs have been contracted for this programme.
All the permits and permissions required to begin major construction work have
been granted. A number of contracts have been awarded and others are being
progressed. Civil construction work is ongoing to meet the planned first oil
production from Mangala in 2009.
The FDP for Bhagyam, the second largest field in Block RJ-ON-90/1, was approved
by the Operating Committee in May and has subsequently been submitted to the
Management Committee for approval. The Bhagyam (and Shakti) fields are contained
within a second development area of 430 km2.
The planned Bhagyam plateau production rate is 40,000 bopd. It is intended that
the reserves associated with Bhagyam will be booked when Management Committee
approval of the FDP is obtained.
The Saraswati-Crest-1 exploration well, located approximately 0.8 km west of
Sarasawati-3, was drilled in April and encountered two hydrocarbon bearing
formations. Approximately 7 metres of net pay was encountered in the
Dharvi-Dungar formation and approximately 4.5 metres of net pay was encountered
in the Lower Barmer Hill. Saraswati-Crest-1 has been declared as a new
discovery.
The Kameshwari 220 km2 appraisal 3D seismic programme started in July to further
appraise this section of the Development Area.
Enhanced Oil Recovery
Work is ongoing to confirm the optimal EOR techniques to implement in the
Rajasthan block, with the aim of increasing ultimate oil recovery and extending
the production plateau periods for each field. The first phase of third party
laboratory studies, which are reviewing various chemical flooding options
(polymer, alkaline, surfactant, or combinations of these) has been completed for
Mangala.
Further laboratory studies on Mangala will now take place and simulation work is
ongoing. A pilot project to be implemented in 2009/10 is currently being
designed to demonstrate field-scale applicability of these techniques.
Additional laboratory work continues for Bhagyam, to be followed by work on
Aishwariya.
Northern Appraisal Area (Cairn India 100%)
The GoI awarded a six month extension to the Exploration Phase of the Northern
Appraisal Area (NAA) of Block RJ-ON-90/1 effective from 8 May 2007.
Appraisal drilling on the discoveries made in 2006 (Kameshwari West-2 and
Kameshwari West-3) has been completed. These discoveries have opened up a new
play in the Barmer Hill/Lower Dharvi Dungar sands on the western margin of the
basin. While reservoir quality is variable, an appraisal programme involving
five wells and 88 km of 2D seismic was completed to further delineate these
discoveries and explore the full potential of the NAA. As part of this
programme, Kameshwari West-6 tested 2.39 mmscfd and was declared as a new
discovery.
A Declaration of Commerciality for these three discoveries is now being prepared
(along with a proposed new Development Area) for submission to the GoI in H2
2007.
Block RJ-0NN-2003/1 (Cairn India 30%, ENI Operator)
In early January 2007, the Operator commenced acquisition of a 3D seismic survey
on this Rajasthan block, which was awarded in the NELP-V licensing round.
Acquisition and processing of the 622 km2 3D seismic programme has subsequently
been completed by the Operator.
CAMBAY BASIN - Western India
Block CB/OS-2: Lakshmi and Gauri Gas Fields (Cairn India 40% (Operator))
Average gross production from the Lakshmi and Gauri fields for H1 2007 was
15,238 boepd (comprising average oil and condensate production of 3,910 bopd and
average gas production of 68 mmscfd).
A planned four well infill development drilling programme is scheduled to
commence in H2 2007.
The onshore CB-X tie-in project was completed and delivered first gas in Q2
2007.
CB-ONN-2001/1 (Cairn India 30%, ONGC Operator)
A final commitment well on this block was drilled and abandoned in April.
CB-ONN-2002/1 (Cairn India 30%, ONGC Operator)
Three wells are scheduled to be drilled on this block during H2 2007 and early
2008.
GS-OSN-2003/1 (Cairn India 49%, ONGC Operator)
The Operator has acquired and processed a 3D marine seismic programme of 510 km2
on this block.
KRISHNA-GODAVARI BASIN - Eastern India
Ravva (Cairn India 22.5% (Operator))
Average gross production from the Ravva field for H1 2007 was 60,878 boepd
(comprising average oil production of 48,769 bopd and average gas production of
72.7 mmscfd).
An extensive offshore infill development and exploration drilling programme on
Ravva commenced in October 2006 and is nearing completion. Production has now
commenced from three new infill wells and one appraisal well. In addition, two
water injection wells have also been drilled and put into service to enhance the
reservoir water-flood scheme. The Ravva field has been on plateau for a number
of years and the current drilling programme is aimed at continuing the strong
production performance at Ravva.
The rig is currently operating on an exploration well, RX-8, on the MM301
prospect, which has to date discovered 44 metres of oil and gas pay in four
Lower to Upper Miocene age sands. A further three work-over wells are planned to
enhance production capacity. Earlier in the year the RX-10 exploration well
encountered 11 metres of gas pay in Late Miocene sands.
KG-DWN-98/2 (Cairn India 10%, ONGC (Operator))
The KT-1 Cretaceous exploration well spudded in June and drilling is ongoing.
KG-ONN-2003/1 (Cairn India 49%, Operator*)
Plans are underway to commence a seismic acquisition programme of 2D and 3D data
on this block in late 2007/early 2008.
PR-OSN-2004/1 (Cairn India Limited 35%, Operator)
This block was awarded in the NELP-VI licensing round and covers an area of
9,400 km2. A 2D seismic programme is being planned for early 2008.
KK-DWN-2004/1 (Cairn India Limited 40%, ONGC Operator)
This block was awarded in the NELP-VI licensing round and covers an area of
12,324 km2. A 2D seismic programme is planned by the Operator in early 2008.
HIMALAYAN FORELAND BASIN - Northern India
Ganga Valley
GV-ONN-2002/1 (Cairn India 50% (Operator), Capricorn 50%)
An aeromagnetic survey was completed on this block in April and a 500 km 2D
seismic acquisition programme was completed in early August. Processing of this
data has been completed and planning has commenced for drilling a commitment
well in 2008.
GV-ONN-97/1 (Cairn India 15%, Capricorn 15%; ONGC Operator)
A final commitment well on this block is expected to be drilled in late 2007/
early 2008.
GV-ONN-2003/1 (Cairn India 24% (Operator)*, Capricorn 25%)
A 550 km 2D seismic acquisition programme is scheduled to commence in early
2008.
VN-ONN-2003/1 (Cairn India 24% (Operator)*, Capricorn 25%)
Seismic reprocessing is underway and planning will commence later in 2007 for a
2D seismic acquisition programme which is expected to commence in 2008.
* The PSC provides that ONGC is the proposed operator for the development and
production of these blocks.
HIMALAYAN FORELAND BASIN - Nepal
Blocks 1, 2, 4, 6 & 7 (Capricorn 100% (Operator))
The security situation in Nepal continues to be monitored closely and a
contractual force majeure remains in place on these blocks. As soon as the
security situation permits, planning for seismic acquisition operations will
commence. An office in Kathmandu has been already been established to support
Capricorn's activities in Nepal.
Capricorn has also reached agreement with Texana for the assignment of a 100%
interest in Blocks 3 and 5 pending the approval of the Government of Nepal.
BENGAL BASIN - Bangladesh
Sangu (Capricorn 75% (Operator))
The Sangu gas field, which is in decline, has produced in excess of 420 bscf
since commencement of production in 1998. To date, the Sangu joint venture has
generated gross revenue in excess of $850m.
An offshore drilling programme was completed during H1 2007 and comprised one
appraisal well (South Sangu-3) and one development well (Sangu-10, targeting a
potentially undrained compartment in the main Sangu field). A planned third well
(an exploration well on the Hatia prospect) was not drilled due to operational
delays on the first two wells and the need to demobilise the drilling rig prior
to the onset of the monsoon season.
South Sangu-3 encountered non-commercial quantities of gas and was plugged and
abandoned. The South Sangu discovery will now not be developed.
Sangu-10, which was drilled as an extended reach delineation well in the main
Sangu field, did not encounter gas in the main reservoir horizon, but
encountered small, potentially producible quantities of gas in a separate upper
horizon and has been suspended. It is intended to complete the gas bearing
interval during Q4 2007.
A separate high impact exploration drilling campaign targeting the Magnama
prospect is scheduled to commence in October 2007. In the event of a discovery
on Magnama, the second well in the programme will be a Magnama appraisal well.
If the exploration well on Magnama is unsuccessful, it will instead be followed
by an exploration well on the Hatia prospect.
Blocks 5 & 10 (Capricorn 90% (Operator))
A 392 km 2D seismic survey has been completed on Block 10 and a further 296 km
2D survey has been completed on Block 5. Processing of this data is close to
completion
Block 7 (Capricorn 45%)
A 2D seismic survey of 1,054 km was acquired during 2006 and evaluation of the
potential of this block is ongoing.
GROUP PRODUCTION
The Group's average entitlement production for H1 2007 was 22,486 boepd net to
Cairn compared to 27,346 boepd in H1 2006.
The figures in the table below show group production for H1 2007 on a gross,
working interest and entitlement basis (including 100% of Cairn India's
production).
Production (boepd) Ravva CB/OS-2 Sangu Total
Gross field 60,878 15,238 16,057 92,173
Working interest 13,698 6,095 12,043 31,836
Entitlement interest 7,204 5,654 9,628 22,486
Group production during H1 2007 was 68% gas: 32% oil and condensate. On
commencement of oil production from Rajasthan, the majority of Group production
will be oil (currently estimated to be approximately 90%).
GROUP RESERVES
The table below shows reserves information at the end of June 2007 on an
entitlement basis for the Group (including 100% of Cairn India's reserves).
Reserves Produced in Additions in Revisions in Reserves
31.12.06 2007 2007 2007 30.06.07
mmboe mmboe mmboe mmboe mmboe
India 185.7 (2.3) 1.1 (25.9) 158.6
Bangladesh 10.3 (1.8) - 0.8 9.3
Total 196.0 (4.1) 1.1 (25.1)* 167.9
*The downward revision to entitlement reserves of 25.1 mmboe in H1 2007 is
mainly as a result of the change in the Group's oil price assumption (see
below).
On a direct working interest basis, reserves as at 30 June 2007 totalled 227.9
mmboe (31 December 2006: 230.5 mmboe), comprising 215.8 mmboe in India and 12.1
mmboe in Bangladesh.
For accounting and reserves purposes, the Group has used an oil price assumption
of $50 per boe (real) for the period (2006: $30 per boe). The table below shows
the impact of differing oil prices on net entitlement reserves.
Oil Net Entitlement Increase/(reduction)
Price Reserves compared to $50/ boe base case (boe)
($/boe) (boe)
$30 194.9 27.0
$40 179.3 11.4
$50 167.9 -
$60 158.3 (9.6)
GROUP INCOME STATEMENT
For the six months to 30 June 2007
----------------------- ------ -------- -------- ---------
Notes Six months Six months Year ended
to 30 June to 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
----------------------- ------ -------- -------- ---------
Revenue 138,711 153,861 286,304
Cost of sales
Production costs (30,409) (31,115) (56,931)
Unsuccessful exploration costs (33,575) (28,238) (62,018)
Depletion and decommissioning
charge (43,646) (45,347) (103,487)
----------------------- ------ -------- -------- ---------
Gross profit 31,081 49,161 63,868
Other operating income 2,979 2,364 3,340
Administrative expenses (36,925) (25,197) (60,323)
Exceptional impairment of oil
and gas assets (15,335) (5,710) (71,455)
Operating (loss)/profit (18,200) 20,618 (64,570)
Exceptional gain on deemed
disposal of subsidiary 1,537,585 - -
Finance income 38,495 1,525 4,603
Finance costs (25,152) (15,156) (30,609)
----------------------- ------ -------- -------- ---------
Profit /(loss) before 1,532,728 6,987 (90,576)
taxation ------ -------- -------- ---------
-----------------------
Taxation credit/(expense) on
profit/(loss)
- UK 7,080 4,448 38,920
- Overseas (16,038) (17,229) (30,361)
----------------------- ------ -------- -------- ---------
Profit/(loss) for the period 1,523,770 (5,794) (82,017)
----------------------- ------ -------- -------- ---------
Attributable to:
Equity holders of the parent 1,516,945 (5,794) (82,017)
Minority interests 6,825 - -
----------------------- ------ -------- -------- ---------
Earnings per ordinary share - 1 1,067.81 (3.68) (52.02)
basic (cents)
(attributable to equity
holders of the parent)
Earnings per ordinary share - 2 1,065.60 (3.68) (52.02)
diluted (cents)
(attributable to equity
holders of the parent)
----------------------- ------ -------- -------- ---------
Notes:
1 The basic earnings per ordinary share is calculated on a profit of
$1,516,945,000 (H1 2006: loss of $5,794,000) on a weighted average of
142,061,461 (H1 2006: 157,538,718) ordinary shares.
2 In respect of the six months to 30 June 2007, the diluted earnings per
ordinary share is calculated on a profit of $1,516,945,000 (H1 2006: loss of
$5,794,000) on 142,355,748 (H1 2006: 157,538,718) ordinary shares, being the
basic weighted average of 142,061,461 (H1 2006: 157,538,718) ordinary shares and
the dilutive potential ordinary shares of 294,287 (H1 2006: 835,055
anti-dilutive) ordinary shares relating to share options.
3 No dividend has been declared (2006: nil).
GROUP STATEMENT OF CHANGES IN EQUITY
For the six months to 30 June 2007
Six months Six months Year ended
to 30 June to 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Opening equity attributable to equity
holders 681,170 757,598 757,598
Currency translation differences 30,045 8,769 10,725
---------------------------- --------- -------- ---------
Total income recognised direct in
equity 30,045 8,769 10,725
Profit/(loss) for the period 1,523,770 (5,794) (82,017)
---------------------------- --------- -------- ---------
Total recognised income and expenses
for the period 1,553,815 2,975 (71,292)
Total recognised income and expenses
attributable to minority interests (9,977) - -
---------------------------- --------- -------- ---------
Total recognised income and expenses
attributable to equity holders for
the period 1,543,838 2,975 (71,292)
---------------------------- --------- -------- ---------
New shares issued in respect of
employee share options 5,851 1,681 3,219
Share based payments 10,704 2,722 13,304
Return of cash to shareholders (946,613) - -
Cost of shares purchased - (22,294) (21,659)
---------------------------- --------- -------- ---------
Closing equity attributable to equity
holders 1,294,950 742,682 681,170
---------------------------- --------- -------- ---------
Minority interests
Minority interest arising on deemed
disposal of subsidiary 356,191 - -
Total recognised income and expenses
attributable to minority interests:
Profit for the period 6,825 - -
Currency translation differences 3,152
Share based payments attributable to
minority interests 2,424 - -
---------------------------- --------- -------- ---------
Closing equity attributable to
minority interests 368,592 - -
---------------------------- --------- -------- ---------
Total closing equity 1,663,542 742,682 681,170
---------------------------- --------- -------- ---------
GROUP BALANCE SHEET
As at 30 June 2007
Notes As at 30 June As at 30 June As at
2007 2006 31 December
(unaudited) (unaudited) 2006
$'000 $'000 (audited)
$'000
Non-current assets
Intangible exploration/appraisal
assets 460,558 380,871 419,239
Property, plant & equipment -
development/producing assets 466,163 445,194 394,010
Property, plant and equipment -
other 7,197 6,738 5,891
Intangible assets - other 9,088 3,295 6,724
Investments 96 96 96
Deferred tax assets 23,447 6,784 18,911
------------------------------ ---------- --------- --------
966,549 842,978 844,871
Current assets
Inventory 5,891 3,728 4,615
Trade and other receivables 3 209,310 164,317 218,159
Current tax debtor - 5,938 -
Cash and cash equivalents 922,225 44,476 856,266
------------------------------ ---------- --------- --------
1,137,426 218,459 1,079,040
------------------------------ ---------- --------- --------
Total assets 2,103,975 1,061,437 1,923,911
------------------------------ ---------- --------- --------
Current liabilities
Trade and other payables 161,928 105,445 897,232
Obligations under finance leases 1,891 1,101 1,380
Provisions 10,217 - 6,845
Derivative financial instruments - - 9,694
Income tax liabilities 4,447 15,164 6,064
------------------------------ ---------- --------- --------
178,483 121,710 921,215
------------------------------ ---------- --------- --------
Non-current liabilities
Loans and borrowings 75,000 25,000 155,000
Obligations under finance leases 3,112 3,546 3,092
Provisions 24,921 20,606 24,740
Deferred tax liabilities 158,917 147,893 138,694
------------------------------ ---------- --------- --------
261,950 197,045 321,526
------------------------------ ---------- --------- --------
Total liabilities 440,433 318,755 1,242,741
------------------------------ ---------- --------- --------
Net assets 1,663,542 742,682 681,170
------------------------------ ---------- --------- --------
Equity attributable to equity
holders of the parent
Called-up share capital 5 15,817 25,824 25,870
Share premium 206,812 199,527 201,019
Shares held by ESOP Trust (45,886) (54,792) (55,756)
Foreign currency translation 29,693 842 2,798
Other reserves 37,284 37,284 37,284
Capital reserves - non-distributable 45,331 45,331 45,331
Capital reserves - distributable 178,429 178,429 178,429
Retained earnings 827,470 310,237 246,195
------------------------------ ---------- --------- --------
1,294,950 742,682 681,170
Minority interests 368,592 - -
------------------------------ ---------- --------- --------
Total equity 1,663,542 742,682 681,170
------------------------------ ---------- --------- --------
GROUP STATEMENT OF CASH FLOWS
For the six months to 30 June 2007
Six months Six months Year ended
to 30 June to 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Cash flows from operating activities
Cash generated from operations 86,670 72,477 207,199
Interest paid (4,393) (1,510) (5,599)
Income tax paid (7,420) (3,148) (12,184)
------------------------ --------- -------- --------
Net cash generated from operating
activities 74,857 67,819 189,416
------------------------ --------- -------- --------
Cash flows from investing activities
Expenditure on exploration/appraisal
assets (58,281) (91,003) (157,535)
Expenditure on development/producing
assets (135,171) (30,580) (114,995)
Purchase of property, plant and
equipment - other (1,527) (821) (1,346)
Purchase of intangible assets - other (3,377) (2,295) (7,779)
Proceeds on disposal of property,
plant and equipment - 43 20
Movement in funds on bank deposit - 20,000 20,000
Interest received 36,021 2,824 5,568
------------------------ --------- -------- --------
Net cash used in investing activities (162,335) (101,832) (256,067)
------------------------ --------- -------- --------
Cash flows from financing activities
Payments for IPO costs (64,304) - (23,276)
Proceeds from IPO 1,232,257 - 751,849
Arrangement and facility fees (6,572) - (17,074)
Currency exchange option (9,694) - -
Proceeds from issue of shares 5,851 1,681 3,219
Purchase of own shares - (22,294) (21,659)
Payment of finance lease liabilities (624) (607) (285)
(Repayment)/drawdown of loan
facilities (80,000) 25,000 155,000
Return of cash to shareholders (949,454) - -
------------------------ --------- -------- --------
Net cash flows from financing
activities 127,460 3,780 847,774
------------------------ --------- -------- --------
Net increase/(decrease) in cash and
cash equivalents 39,982 (30,233) 781,123
Opening cash and cash equivalents at
beginning of period 856,266 75,509 75,509
Exchange gains/(losses) on cash and
cash equivalents 25,977 (800) (366)
------------------------ --------- -------- --------
Closing cash and cash equivalents 922,225 44,476 856,266
------------------------ --------- -------- --------
RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES
For the six months to 30 June 2007
Six months Six months Year ended
to 30 June to 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Profit/(loss) before taxation 1,532,728 6,987 (90,576)
Exceptional gain on deemed disposal
of subsidiary (1,537,585) - -
Finance income (38,495) (1,525) (4,603)
Finance costs 25,152 15,156 30,609
Depletion, depreciation
decommissioning and amortisation 46,894 48,590 110,494
Share based payments charge 13,128 2,722 13,304
Inventory movement (1,276) 1,805 918
Trade receivables movement 11,410 (28,300) (7,037)
Trade payables movement (16,761) (5,287) 15,139
Movement in other provisions 2,728 (1,605) 5,762
Gain on sale of other non current
assets - (2) (2)
Exceptional impairment of oil and gas
assets 15,335 5,710 71,455
Unsuccessful exploration costs 33,575 28,238 62,018
Foreign exchange differences (163) (12) (282)
--------------------------- -------- -------- ---------
Net cash inflow from operating
activities 86,670 72,477 207,199
--------------------------- -------- -------- ---------
NET FUNDS
As at 30 June 2007
At 1 January Cash New finance Exchange At 30 June
2007 flow leases movements 2007
$'000 $'000 $'000 $'000 $'000
--------- --------- -------- -------- ---------
Cash at 27,573 26,850 11,714 66,137
bank
Short term
deposits 828,693 13,132 14,263 856,088
--------- --------- -------- -------- ---------
Cash and
cash 856,266 39,982 - 25,977 922,225
equivalents --------- --------- -------- -------- ---------
Bank loans (155,000) 80,000 - - (75,000)
--------- --------- -------- -------- ---------
Net cash 701,266 119,982 25,977 847,225
Finance (4,472) 624 (768) (387) (5,003)
leases --------- --------- -------- -------- ---------
Net funds 696,794 120,606 (768) 25,590 842,222
--------- --------- -------- -------- ---------
NOTES TO THE ACCOUNTS
For the six months to 30 June 2007
1. Accounting Policies
Basis of Preparation
This interim results announcement has been prepared on a basis consistent with
the accounting policies expected to be applied for the year ended 31 December
2007, and which is also consistent with the accounting policies applied for the
year ended 31 December 2006. The disclosed figures are not statutory accounts in
terms of section 240 of the Companies Act 1985. Statutory accounts for the year
ended 31 December 2006, on which the auditors gave an unqualified report, have
been filed with the Registrar of Companies.
2. Segmental Analysis - Operating segments
The Group's operating segments were revised to reflect the organisational
structure following the restructuring carried out in anticipation of the IPO in
India.
During the period ended 30 June 2007, the Group's operating activities were
internally reported to the chief operating decision maker based on two separable
areas grouped into different subsidiary entities: Capricorn Energy Limited Group
and Cairn India Limited Group. A third segment 'Other' exists to accumulate
Cairn UK Holdings Limited and Cairn Energy PLC company which will include the
administrative expenses of Cairn's head office in Edinburgh. This also includes
taxation and interest expenses of the Group which cannot be allocated to an
operating segment.
During the period to 30 June 2006 the operating segments were North Sea, South
Asia and Head Office Costs. Comparative information has been presented to
reflect the new operating segments. There is no overall financial impact of this
change.
The segment results for the period ended 30 June 2007 are as follows:
Capricorn
Cairn India Energy
Limited Limited Group
Group Group Other 2007
$'000 $'000 $'000 $'000
-------------------------------------------------------------------------------------------
Revenue from sale of oil, gas and condensate 107,680 30,670 138,350
Tariff income 361 - - 361
--------- -------- --------- ---------
Total revenue 108,041 30,670 - 138,711
--------- -------- --------- ---------
Total cost of sales (60,273) (47,357) - (107,630)
--------- -------- --------- ---------
Gross profit 47,768 (16,687) - 31,081
--------- -------- --------- ---------
Segmental operating profit/(loss) 32,919 (33,058) (18,061) (18,200)
--------- -------- --------- ---------
Cost of sales in the segment results above includes:
Production costs 18,947 11,462 - 30,409
Unsuccessful exploration costs 13,685 19,890 - 33,575
Depletion and decommissioning charge 27,641 16,005 - 43,646
--------- -------- --------- ---------
60,273 47,357 - 107,630
Other segment items included in the
Income Statement are:
Impairment of oil and gas assets - 15,335 - 15,335
Depreciation 759 - 284 1,043
Amortisation 1,908 - 297 2,205
Exceptional gain on deemed disposal of subsidiary - - 1,537,585 1,537,585
The segment results for the period ended 30 June 2006 were as follows:
Capricorn
Cairn India Energy
Limited Limited Group
Group Group Other 2006
$'000 $'000 $'000 $'000
-------------------------------------------------------------------------------------------
Revenue from sale of oil, gas and condensate 120,620 32,985 - 153,605
Tariff income 256 - - 256
--------- -------- --------- ---------
Total revenue 120,876 32,985 - 153,861
--------- -------- --------- ---------
Total Cost of sales (80,079) (24,621) - (104,700)
--------- -------- --------- ---------
Gross profit 40,797 8,364 - 49,161
--------- -------- --------- ---------
Segmental operating profit/(loss) 37,016 2,234 (18,632) 20,618
--------- -------- --------- ---------
Cost of sales in the segment results above includes:
Production costs 22,090 9,025 - 31,115
Unsuccessful exploration costs 28,238 - - 28,238
Depletion and decommissioning charge 29,751 15,596 - 45,347
--------- -------- --------- ---------
80,079 24,621 - 104,700
Other segment items included in the
Income Statement are:
Depreciation 1,319 - 243 1,562
Amortisation 1,095 - 586 1,681
The segment assets and liabilities as at 30 June 2007 and capital expenditure
for the period then ended are as follows:
Capricorn
Cairn India Energy
Limited Limited Group
Group Group Other 2007
$'000 $'000 $'000 $'000
--------------------------------------------------------------------------------
Assets 1,595,434 291,397 217,144 2,103,975
Liabilities 385,183 45,073 10,177 440,433
Capital expenditure 139,210 69,442 3,075 211,727
The segment assets and liabilities as at 30 June 2006 and capital expenditure
for the period then ended are as follows:
Capricorn
Cairn India Energy
Limited Limited Group
Group Group Other 2006
$'000 $'000 $'000 $'000
--------------------------------------------------------------------------------
Assets 815,965 234,186 11,286 1,061,437
Liabilities 270,831 46,809 1,115 318,755
Capital expenditure 120,335 6,935 1,442 128,712
Segment assets include intangible exploration/appraisal assets; property, plant
& equipment - development/producing assets; property, plant & equipment - other;
intangible assets - other; trade receivables and operating cash. They exclude
deferred tax assets and inter-company balances.
Segment liabilities comprise operating liabilities and exclude items such as
taxation, corporate borrowings and inter-company balances.
Other assets include assets of Cairn's head office in Edinburgh, as well as
deferred tax assets, interest receivable, deposits, cash and cash equivalents of
the Group which cannot be allocated to an operating segment.
Other liabilities include liabilities of Cairn's head office in Edinburgh, as
well as income tax liabilities and deferred tax liabilities of the Group which
cannot be allocated to an operating segment.
Capital expenditure comprises intangible exploration/appraisal asset additions
and acquisitions; property, plant & equipment - development/producing asset
additions and acquisitions; property, plant & equipment - other additions; and
intangible assets - other additions.
Business Segments
Cairn operates in only one business segment, being the oil and gas extractive
industry, and therefore no business segmental analysis is provided.
3. Trade and Other Receivables
Included within the Trade and Other Receivables balance are outstanding and
overdue cash calls of $69.2 million receivable from the Rajasthan joint venture
partner ONGC. Management is currently pursuing payment of this amount.
4. Contingent Liabilities
Ravva Arbitration
The calculation of the GoI's share of petroleum produced from the Ravva oil
field has been a matter of disagreement for some years. Ravva is an
unincorporated Joint Venture in which Cairn has an interest.
An arbitration panel opined in October 2004 and Cairn has been willing to be
bound by the award, although it was not as favourable as had been hoped. The
GoI, however, has lodged an appeal in the Malaysian courts and Cairn continues
to maintain their challenge to the GoI's appeal.
Cairn has challenged both the GoI's right to appeal, and the grounds of that
appeal. If the GoI were successful on both these points, it is unclear what
process would then follow to resolve the original issue under dispute. Cairn
will defend its right to continue to refer to the existing arbitration panel,
whose composition and terms of reference were agreed by all parties at the
outset. It is expected that this appeal will be heard in November 2007.
In the event that the GoI's appeal succeeded and a process then ensued which
concluded with the arbitration award being reversed in a manner and a forum
which Cairn accepted as binding, then Cairn would be due to pay an additional
$63.9m.
In a separate and unrelated dispute related to the profit petroleum calculations
under the Ravva PSC, the Ravva JV received a claim from the DGH for
approximately $166.4m (representing $37.4m net to Cairn) for an alleged
underpayment of profit petroleum to the GoI, together with interest on that
amount through to 30 June 2006 of $30.6m (representing $6.9m net to Cairn).
This claim relates to the GoI's allegation that the Ravva JV has recovered costs
in excess of the Base Development Costs ('BDC') cap imposed in the PSC and that
the Ravva JV has also allowed these excess costs in the calculation of the PTRR.
Cairn believes that such a claim is unsustainable under the terms of the PSC
because, amongst other reasons, the BDC cap only applies to the initial
development of the Ravva field and not to subsequent development activities
under the PSC. Additionally the Ravva JV has also contested the basis of the
calculation in the above claim from the DGH. Even if upheld, Cairn believes that
the DGH has miscalculated the sums that would be due to the GoI in such
circumstances.
5. Share Capital
Number Number Number
5p 10p 6 2/13p
B Shares Ordinary Ordinary
'000 '000 '000
Authorised ordinary shares
At 1 January 2007 - 225,000 -
Consolidation of Shares 160,468 (225,000) 365,625
B Shares repurchased and cancelled (160,468) - -
--------------------- --------- -------- --------
At 30 June 2007 - - 365,625
--------------------- --------- -------- --------
Number Number Number 10p 6 2/13p
5p 10p 6 2/13p Ordinary Ordinary
B Shares Ordinary Ordinary $000 $000
'000 '000 '000
Allotted, issued and
fully paid ordinary
shares
At 1 January 2007 - 160,287 - 25,870 -
Issued and allotted for
employee share options -
pre consolidation - 181 - 36 -
Consolidation of shares 160,468 (160,468) 130,380 (25,906) 15,795
B Shares repurchased and
cancelled (160,468) - - - -
Issued and allotted for
employee share options -
post consolidation - - 183 - 22
------------------------ -------- ------- ------- ------- -------
At 30 June 2007 - - 130,563 - 15,817
------------------------ -------- ------- ------- ------- -------
At the extraordinary general meeting held on 22 March 2007, it was resolved that
the 160,467,920 existing ordinary shares of 10 pence each be replaced by
130,380,185 new ordinary shares of 6 2/13 pence each and 160,467,920 B shares of
5 pence each. The effective date of this transaction was 23 March 2007.
The B share scheme allowed Cairn to return to shareholders approximately $949m
(including expenses) of the proceeds from the flotation, on 9 January 2007, of
its Indian business, Cairn India. The B shares were not listed on the Official
List or admitted to trading on the London Stock Exchange. As at the Balance
Sheet date, all B shares had been fully converted to cash.
In order to make the market price of a Cairn share comparable before and after
the return of cash to shareholders, a share consolidation was carried out to
convert 16 existing ordinary shares of 10 pence each to 13 new ordinary shares
of 6 2/13 pence each. Following the share capital consolidation, Cairn's
authorised equity share capital was 365,625,000 shares of 6 2/13 pence each.
GLOSSARY OF TERMS
The following are the main terms and abbreviations used in this announcement:
Corporate
Cairn Cairn Energy PLC and/or its subsidiaries as appropriate
Cairn India Cairn India Limited
Capricorn Capricorn Energy Limited
Company Cairn Energy PLC
DGH Director General of Hydrocarbons
GoI Government of India
Group the Company and its subsidiaries
IPO initial public offering (of shares in Cairn India Limited)
NELP New Exploration Licensing Policy
medOil medOil plc
NELP V Fifth New Exploration Licensing Policy round
NELP VI Sixth New Exploration Licensing Policy round
ONGC Oil and Natural Gas Corporation Ltd
Plectrum Plectrum Petroleum PLC
Technical
2P proven plus probable
2D/3D two dimensional/three dimensional
boe barrel(s) of oil equivalent
boepd barrels of oil equivalent per day
bopd barrels of oil per day
bscf billion standard cubic feet of gas
E&P exploration and production
EOR enhanced oil recovery
FDP field development plan
FEED front end engineering and design
JV Joint Venture
mmboe million barrels of oil equivalent
mmscfd million standard cubic feet of gas per day
PSC production sharing contract
RoU Rights of Use
Accounting
bn billion
ESOP Employee Share Ownership Plan
IFRS 2 International Financial Reporting Standard 2 'Share-based Payment'
IFRS 6 International Financial Reporting Standard 6 'Exploration for and
Evaluation of Mineral Resources'
IGAAP Indian Generally Accepted Accounting Practices
m million
PTRR post tax rate of return
Rupees Indian Rupees
$ /US$ United States Dollars
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