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 October 21, 2015 - 12:42 PM EDT
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Vedanta Limited: Cairn India Limited Announces Results for Q2 FY2016

MUMBAI, India, Oct. 21, 2015 /PRNewswire/ -- The following release was issued today by Vedanta Ltd subsidiary Cairn India Limited.

Cairn India Limited
Results for the Second Quarter ended 30th Sep, 2015
Healthy EBITDA margin at 43% driven by enhanced operational and cost efficiencies

Financial Highlights

  • Revenue of INR 2,242 crore (US$ 345 mn); 44% lower YoY, mainly due to decline in crude prices
  • EBITDA of INR 966 crore (US$ 149 mn); robust EBITDA margin at 43%
  • Profit after Tax of INR 673 crore (US$ 104 mn); PAT margin at 30%
  • Strong Cash Flow from Operations of INR 986 crore (US$ 152 mn)
  • Gross Capital Expenditure of INR 523 crore (US$ 81 mn), primarily development capex in Rajasthan
  • Gross contribution to exchequer of INR 3,098 crore (US$ 477 mn)
  • Solid Cash and Cash Equivalents position of INR 17,943 crore (US$ 2.7 bn)

Operational Highlights

Production

  • Overall gross production volume of 205,361 boepd across Rajasthan, Ravva and Cambay assets
  • Rajasthan production up by 3% YoY to 168,126 boepd
    • In-line reservoir performance in Mangala, production from 12 new infill wells in Aishwariya
    • Increase in gas production to an average rate of 30 mmscfd, 93% growth YoY
  • Offshore assets perform well; production up by 19% YoY to 37,235 boepd
    • Prudent reservoir management methods including higher sustained water injection rates and deeper gas lift injection

Development

  • Significant progress made in the core MBA field
    • Bhagyam EOR - FEED in advance stage; tendering for rigs and long lead items started
    • Mangala EOR - Injection ramped up from 80,000 blpd to 200,000 blpd QoQ; 75% wells drilled
    • Aishwariya Infill- 6 more wells brought online; currently 12 out of 20 drilled wells online
  • Growth projects also advancing as per schedule:
    • RDG Gas- Completed a 5 well hydro-frac campaign; tendering process underway for terminal
    • Aishwariya Barmer Hill – Continued focus on cost optimization led to finalization of FDP; will be submitted to the JV partner shortly

Exploration

  • Appraisal well RDG Main was fracced in two zones; flowed oil at an average rate of 220 bopd
  • 123 sq km of 3D seismic data acquired in Rajasthan in Q2FY16, totalling 322 sq km in H1FY16
  • First phase of appraisal testing of Barmer Hill at DP, NL and V&V fields started

Operational Excellence

  • Achieved ~13% procurement savings through constant cost focus approach; resulted from negotiations and tapering of service providers costs
  • Rajasthan water flood operating costs remain low at $5.5/boe

Mr. Mayank Ashar, Managing Director and CEO of Cairn India commented:

"Our strategic objective is to maintain healthy cash flows post dividend. The last quarter has seen this strategy tested and we have responded by recommitting our efforts to drive down costs and focus on adopting advanced technologies to improve our efficiencies and productivity. Improving our health, safety and environmental standards remain at the core of all our activities.

"Enhanced Oil Recovery from core fields, recovery of tight oil reserves and Raageshwari Deep Gas are all examples of projects where technology and cost efficiency factors are at the heart of our growth strategy. With good visibility in near term on multiple projects in the pipeline, we are optimistic of meeting our production projections for 2015-16.

"The company is also focusing on dialogue with the Government on improving the investment climate for oil and gas industry in the country. We believe that these discussions will be enablers of our mid-term growth ensuring consistent value creation to our stakeholders."

Corporate and Regulatory Developments

Corporate

Following the Annual General Meeting held in July 2015, the Company paid a final dividend of INR 4 per equity share to shareholders, taking the FY 2014-15 total dividend to INR 9 per share culminating in the payout ratio of 45% including dividend distribution tax.

With regard to proposed merger of Cairn India Ltd with Vedanta Ltd, both NSE and BSE have provided their 'No Objection' to the proposed merger vide their Observation letters dated 10 September, 2015. The validity of the 'Observation Letter' is six months, within which the Scheme of Amalgamation is required to be submitted to the Hon'ble High Court.

Regulatory

Cairn India contributes actively in Oil & Gas policy formulation through structured & strategic engagement with government and its stakeholders. At present, amid the sustained low price environment, Cairn along with other industry players is actively engaging with the government on various strategic issues, which include a revision of the cess charged on oil production to be in-line with crude prices, PSC Extension policy and fair price realization of domestically produced hydrocarbons amongst others. We believe that these policy revisions will enhance the investment climate for the oil & gas sector in India

In addition, Cairn India continues to actively engage with government constituted committees on Good International Petroleum Industry Practices (GIPIP) and Site Restoration Guidelines for Petroleum Operations.

 

Financial Review

INR Crore

Q2 FY16

Q2 FY15

y-o-y (%)

Q1 FY16

q-o-q (%)

Net Revenue

2,242

3,982

(44%)

2,627

(15%)

EBITDA

966

2,701

(64%)

1,302

(26%)

Margin (%)

43%

68%


50%


PAT

673

2,278

(70%)

835

(19%)

Margin (%)

30%

57%


32%


EPS (INR) – Diluted

3.58

12.10

(70%)

4.44

(19%)

Cash EPS (INR)

5.54

13.77

(60%)

8.36

(34%)

 

US$ million

Q2 FY16

Q2 FY15

y-o-y (%)

Q1 FY16

q-o-q (%)

Net Revenue

345

657

(47%)

414

(17%)

EBITDA

149

446

(67%)

205

(27%)

Margin (%)

43%

68%


50%


PAT

104

376

(72%)

131

(21%)

Margin (%)

30%

57%


32%


EPS (US$) – Diluted

0.06

0.20

(72%)

0.07

(21%)

Cash EPS (US$)

0.09

0.23

(63%)

0.13

(35%)

 


H1 FY16

H1 FY15

y-o-y

H1 FY16

H1 FY15

y-o-y


INR Crore

(%)

US$ million

(%)

Net Revenue

4,869

8,465

(42%)

758

1,406

(46%)

EBITDA

2,269

5,821

(61%)

353

967

(63%)

Margin (%)

47%

69%


47%

69%


PAT

1,508

3,371

(55%)

235

560

(58%)

Margin (%)

31%

40%


31%

40%


EPS (INR/US$) – Diluted

8.02

17.86

(55%)

0.12

0.30

(58%)

Cash EPS (INR/US$)

13.89

31.96

(57%)

0.22

0.53

(59%)

Note: EBITDA includes forex gain/(loss) on operating activities

 

Average Price
Realization

Units

Q2 FY16

Q2 FY15

y-o-y (%)

Q1 FY16

q-o-q (%)

H1 FY16

H1 FY15

y-o-y (%)

  Cairn India

US$/boe

43.7

91.3

(52%)

56.0

(22%)

49.9

94.3

(47%)

    Oil

US$/bbl

43.7

92.1

(53%)

56.3

(22%)

50.1

95.3

(47%)

    Gas

US$/mscf

7.0

7.3

(4%)

6.6

6%

6.8

6.5

5%

 

Net revenue for Q2FY16 was reported at INR 2,242 crore which declined 15% QoQ mainly due to fall in crude prices and increase in discount to Brent for Rajasthan crude. Average Brent prices fell 18% QoQ to $50.5 per barrel driving our average oil realization down by 22% QoQ to $43.7/bbl. Discount to Brent for Rajasthan crude widened to 14.3% from 9.9% on sequential basis due to lower demand for heavy crude. Decline in Benchmark Brent prices was followed by greater incentive for processing light grades, driving the demand for light crude. Oversupply of heavy crude also suppressed the prices. Depreciation of 2.3% in the average exchange rate for Rupee against US Dollar partially offset the impact of crude prices. During the quarter, total profit petroleum was INR 674 crore (US$ 104 million) including INR 536 crore (US$ 83 million) for Rajasthan block.

EBITDA for the quarter came in at INR 966 crore with a strong EBITDA margin of 43%. EBITDA was down 26% QoQ on account of lower realization and increase in overall operating cost due to increase in polymer injection volumes. We continued to maintain low water-flood operating cost at Rajasthan at $5.5/boe aided by reduction in crude processing and facility maintenance costs. The water-flood opex was slightly up by 4% QoQ from $5.2/boe in Q1FY16 due to lower production volumes resulting into increase in cost per unit. Ramp-up in the polymer injection volumes also lifted the blended operating cost by 11% QoQ to US$ 6.4/boe.

DD&A charges remained almost stable at INR 864 crore as compared to the first quarter, which is expected to continue at the current normalised level.

A favourable movement in the currency resulted into forex gain of INR 381 crore, a 109% QoQ increase, on our investments and operating activities. The 3.3% depreciation in the Rupee against US Dollar emanated from quarter end exchange rate rising to 65.9 from 63.8 over second quarter.

Other income declined by 68% QoQ to INR 120 crore due to timing difference in the maturity of our investments and mark-to-market losses on bond investments.

There was reversal of tax expense by INR 130 crore in the second quarter against charge of INR 141 crore in the first quarter.  We posted profit after tax of INR 673 crore with a healthy profit margin of 30%. The profit was down by 19% QoQ mainly on account of lower EBITDA and other income, which was partially offset by higher forex gain and lower tax, as highlighted above. Earnings per share came down proportionately to INR 3.6 in the second quarter from INR 4.4 in the first quarter. Cash EPS was also down 34% QoQ to INR 5.5 due to lower EBITDA and other income.

Cash flow from operations for the quarter was INR 986 crore. Net capital expenditure for the second quarter stood at INR 402 crore (US$ 62 million) with 80% of the investment made on development projects and 20% on exploration activities. Our closing cash and cash equivalent position was solid at INR 17,943 crore (US$ 2.7 billion), of which 68% is invested in rupee funds and 32% in dollar funds.

Operational Review

During Q2FY16, Cairn had a gross production of 18.9 mmboe from its three producing blocks where it enjoys 100% operatorship, of which net working interest production was 11.8 mmboe. Gross production per day for Q2FY16 was 205,361 boepd and working interest production per day was 128,021 boepd.

Gross Sales averaged 205,673 boepd.

Average Daily Production

Units

Q2
FY16

Q2 
FY15

y-o-y
(%)

Q1 
FY16

q-o-q
(%)

H1  
FY16

H1 
FY15

y-o-y
(%)

Total Gross operated*

Boepd

214,247

204,128

5%

217,935

(2%)

216,081

215,301

0%

Gross operated

Boepd

205,361

194,508

6%

209,738

(2%)

207,538

206,125

1%

  Oil

Bopd

197,685

190,557

4%

203,731

(3%)

200,692

200,148

0%

  Gas

Mmscfd

46

24

94%

36

28%

41

36

15%

Working Interest

Boepd

128,021

123,178

4%

130,565

(2%)

129,286

130,502

(1%)

* Includes internal gas consumption


Producing Assets

Region

Operator

Participating Interest

1

RJ-ON-90/1

North Western India

Cairn India

70%

2

PKGM-1 (Ravva)

Eastern India

Cairn India

22.5%

3

CB/OS-2

Western India

Cairn India

40%

We continue to work on improving our economics to weather the prevailing weak oil price environment better by optimizing our overall capital and operating expenditure. As a result of our focused efforts, we realized better efficiencies in our operations:

  • Procurement savings of ~13% realized through constant focus on the cost reduction, mainly led by tapering of costs and negotiations with the vendors for new contracts across assets
  • Well cost cut by approx.15%: Realized better cost efficiency for drilling and completion of well at Barmer Hill tight reservoir formation over one year. This is a result of various measures taken including optimizing the well completion designs, comparable rate of penetration with the global players, improvement in cycle time and leveraging lower service providers cost.
  • Sustaining low Opex/boe at Rajasthan: The water-flood operating costs remain low at $5.5/boe driven by decrease in the crude processing and facility maintenance costs.

Rajasthan (Block RJ-ON-90/1)

Average Daily
Production

Units

Q2
FY16

Q2
FY15

y-o-y
(%)

Q1
FY16

q-o-q
(%)

H1
FY16

H1
FY15

y-o-y
(%)

Total Gross operated*

Boepd

176,281

170,508

3%

179,683

(2%)

177,972

180,638

(1%)

Gross operated

Boepd

168,126

163,262

3%

172,224

(2%)

170,164

173,158

(2%)

  Oil

Bopd

165,585

161,690

2%

170,686

(3%)

168,121

171,737

(2%)

  Gas

Mmscfd

15

9

62%

9

65%

12

9

44%

Gross DA 1

Boepd

147,443

134,539

10%

149,651

(1%)

148,541

143,951

3%

Gross DA 2

Boepd

20,683

28,723

(28%)

22,573

(8%)

21,622

29,207

(26%)

Gross DA 3

Boepd

-

-

-

-

-

-

-

-

Working Interest

Boepd

117,688

114,283

3%

120,557

(2%)

119,115

121,211

(2%)

* Includes internal gas consumption

Operations and Development1

Rajasthan block crossed the cumulative production of 300 million barrels of oil equivalent (mmboe) in the second quarter with the total production of 312 mmboe by the end of the quarter. Gross production was at 15.5 mmboe in Q2FY16 at an average of 168,126 boepd driven by in-line reservoir performance at Mangala and additional volumes from new infill wells at Aishwariya. Barmer Hill and Satellite Field production contributed ~5.5 kboepd on average in Q2FY16. During the quarter, a total of 15.2 mn barrels of oil was sold, at an average of 165,008 bopd, to PSU and private refiners across India.

The average crude price realization for the quarter declined to US$ 43.3/bbl from US$ 55.8/bbl, 22% lower QoQ largely on account of 18% QoQ drop in the Brent price from US$ 61.9/bbl to US$ 50.5/bbl. An expansion of the discount to Brent from 9.9% in Q1FY16 to 14.3% in Q2FY16 also implied a 4% lower realization per barrel for Rajasthan crude. The water-flood operating expense in Rajasthan remained low at US$ 5.5/boe, slightly up by 4% QoQ due to lower volumes. Increase in the polymer injection volumes lifted the blended operating cost to US$ 6.4/boe.

RDG field in DA-1 witnessed a ramp-up in the gas production with the volumes rising by 58% to an average rate of 30 mmscfd in Q2FY16 from 19 mmscfd in Q1FY16. We achieved a record peak production of 34 mmscfd from RDG in August 2015, and expect to produce more than our guidance of an average production of 25 mmscfd of gas from existing RDG infrastructure in FY16. Total gas production in the quarter was 2.8bscf. We successfully completed a 5 well hydro-frac campaign in the quarter, which helped us ramp-up production of the gas from the field. We are planning to commence a 15 well hydro-frac campaign in the next quarter to sustain the production growth.

Gas sales from RDG field increased 65% QoQ to an average rate of 15 mmscfd in Q2FY16 and touched a peak of 18 mmscfd in August, on account of optimization of existing infrastructure. Total Gas sales were 1.4 Bscf. In addition, we also produced and sold an average of 1,700 bopd of condensate from the RDG field.

The average facility uptime for the quarter was ~97%

Our development projects continued to see traction in the second quarter:

Mangala EOR: Injection has been increased from 80,000 barrels of polymer solution per day in Q1FY16 to 200,000 polymer solution per day in Q2FY16. The injection ramp up plan is on track and impact of polymer injection on production has been seen, which is in-line with our expectation. Current polymer injection rates and production performance have reduced the risks significantly both from surface facilities and reservoir perspective. We expect to ramp up the polymer injection volumes to 400,000 blpd by end of FY16 as per our schedule.

More than 75% of the new wells are already drilled, and the work on drilling and surface facilities is ongoing as per schedule. Modifications to the existing facilities for handling polymerized fluids are nearing completion. Some of the pre-producer wells have also been converted into polymer injection wells as per the plan, which will eventually lead to ramp-up in the production.

Aishwariya Infill: As on date, 12 wells out of the 20 wells infill campaign have been brought online. Balance wells have been drilled and will be brought online progressively in the current fiscal year. Production from these wells has helped in arresting the natural decline in Aishwariya.

Bhagyam EOR: Front End Engineering Design contract has been awarded and it is in advance stage. Tendering for Rig, drilling & completion long lead items has also started while we await the FDP approval from our JV partner.

As indicated earlier, we expect an additional recovery of ~40-50 mm barrels of unswept oil still in-ground at the Bhagyam field. We estimated a capital cost for Bhagyam EOR project at ~US$ 260 mn, resulting in a development cost of ~US$ 5-6/bbl.

Gas Development at RDG Field: Discussions on the pipeline are in an advanced stage with all stakeholders including Petroleum and Natural Gas Regulatory Board (PNGRB). In addition to optimizing existing infrastructure, we are also progressing on the tendering process for the new gas processing terminal. We expect first gas from the new terminal in H2 CY17 subject to the pipeline approval.

Aishwariya Barmer Hill – Our constant efforts on cost optimization helped in finalization of the Field Development Plan and it is expected to be submitted to the JV Partner soon. Internal assurance process is completed, and discussion and alignment with the JV partner has been initiated to expedite the process. Under the current project, the recovery is expected at ~20-30 mn barrels of oil. The capital outlay for the project is estimated at ~US$ 300 mn, resulting in a development cost of ~US$ 10-15/bbl.

Mangala ASP: The Mangala ASP Pilot was completed in Q4FY15 with encouraging results. Work is currently under progress to upscale the results from pilot to full field and review possible expansion options after completing performance matching and modelling of the completed pilot in Q1FY16.

M&A Barmer Hill Appraisal: In Q1FY16 we brought online the balance 3 appraisal wells, hence all 15 wells of the Appraisal Phase are now producing for long term testing. The first phase of appraisal testing of other fields in Barmer Hill (DP, NL and V&V) has started. 

We remain focused on monetizing the Satellite Fields through capitalizing on existing Rajasthan infrastructure and using cost efficient approach.

A routine operational and statutory maintenance shutdown at the Mangala Processing Terminal was planned for Q3FY16. This has been rescheduled to Q1FY17. This delay would facilitate identifying additional shutdown work required to sustain polymer breakthrough regime.

Exploration

In-line with our re-phased exploration program, we continued testing of key wells in the new discoveries and acquiring new 3D seismic data over high priority areas.

During Q2FY16, three wells were in various stages of fraccing and testing:

  • Appraisal well Raageshwari Deep Main was drilled in Q4FY15. Two zones in the Volcanics section were fracced and tested in this well during H1 FY16. Zone-2 produced oil at the average rate of 220 bopd with gas rate of 0.35 mmscfd. Zone-3 in this well has been fracced and the flow back is imminent. One zone in the Fatehgarh formation is also planned to be fracced and tested in Q3 FY16.
  • Exploration well NL-2 drilled in Q1FY15 has been put on extended test during the quarter. A zone in Barmer Hill formation produced oil at the rate of 350 bopd.
  • Appraisal well DP-4 drilled in Q3FY15 has been fracced in the Barmer Hill formation and flow back is in progress.

Successful testing of the key wells would increase the present resource base. The total drilled and tested hydrocarbons in-place remained stable at ~1.6 bn boe and total drilled but yet be tested hydrocarbons at ~0.8 bn boe as reported in Q1FY16.

The seismic crew acquired a further 123 sq km of high quality 3D data in the Airfield area in DA3, completing the program over that area. Till end of Q2FY16, 64% of the seismic program in Rajasthan block has been completed. The seismic data is expected to improve the understanding of the block and increase the resource base. A new technique on seismic inversion "Sparse Layer Inversion" is being selectively applied to improve the vertical resolution and mappability of reservoirs in key areas.

During the current financial year, activity will continue to be focused upon appraisal of the Raag Deep Gas Field extension and the key oil discoveries at DP, NL, V&V together with Saraswati Basement with the objective of progressing these discoveries to development.

Ravva (Block PKGM-1)

Average Daily
Production

Units

Q2
FY16

Q2
FY15

y-o-y
(%)

Q1
FY16

q-o-q
(%)

H1
FY16

H1
FY15

y-o-y
(%)

Total Gross operated*

Boepd

27,162

23,187

17%

29,563

(8%)

28,356

24,169

17%

Gross operated

Boepd

26,064

20,596

27%

28,556

(9%)

27,303

22,259

23%

  Oil

Bopd

22,491

20,491

10%

25,245

(11%)

23,861

20,022

19%

  Gas

Mmscfd

21

1

3310%

20

8%

21

13

54%

Working Interest

Boepd

5,864

4,634

27%

6,425

(9%)

6,143

5,008

23%

* Includes internal gas consumption

Operations and Development

The Ravva block continues to be an example of good reservoir management and operational excellence, having produced more than 273 mmbbls of crude and over 341 billion cubic feet of gas since inception in 1993, far greater than the initial resource estimates at the time of the PSC award.

During the quarter, the block produced a total of 2.4 million boe at an average rate of 26,064 boepd, 27% higher YoY. Though the field is on natural decline, the decline rate is arrested by employing prudent reservoir management practices including sustained higher water injection rates and deeper gas lift injection. Ravva asset upholds strong focus on asset integrity through continuous surveillance and proactive measures. The facilities continued to record a high uptime rate at 99.8% in Q2FY16.

During the quarter, 2.2 mmbbls of crude and 2.0 bcf of gas were sold, averaging 24,109 bopd of crude oil and 21.4 mmscfd of gas, respectively.

Maintaining the high standards of safety, Ravva asset recorded 3.6 million LTI free man-hours since last LTI as of Q2FY16.

Cambay (Block CB/OS-2)

Average Daily
Production

Units

Q2
FY16

Q2
FY15

y-o-y
(%)

Q1
FY16

q-o-q
(%)

H1
FY16

H1
FY15

y-o-y
(%)

Total Gross operated*

Boepd

10,805

10,433

4%

8,689

24%

9,753

10,494

(7%)

Gross operated

Boepd

11,172

10,651

5%

8,958

25%

10,071

10,708

(6%)

  Oil

Bopd

9,609

8,376

15%

7,800

23%

8,710

8,390

4%

  Gas

Mmscfd

9

14

(31%)

7

35%

8

14

(41%)

Working Interest

Boepd

4,469

4,260

5%

3,583

25%

4,028

4,283

(6%)

* Includes internal gas consumption

Operations and Development

Since inception in 2002, the Cambay block has produced more than 23 mmbbls of crude and over 224 bn cubic feet of gas.

For the quarter, total production was 1.0 mmboe at an average rate of 11,172 boepd, 4.9% higher YoY. Effective reservoir management practices have helped in achieving higher production as the well intervention program was executed in Q1FY16.

Facilities maintained at excellent uptime rate of 99.9% during the quarter. Additional crude oil tank construction, effluent treatment plant augmentation and offshore gas lift compressor installation are in progress as part of facility up-gradation.

During the quarter, 0.8 mmbbls of crude and 0.9 billion scf of gas were sold averaging 8,870 bopd of crude oil and 9.4 mmscfd of gas, respectively.

Safety of operations continued to be of paramount importance and the asset recorded ~2.6 million LTI free man-hours since last LTI as of Q2FY16.

 

 

Exploration Review - Other India & International Assets


Asset

Basin

Cairn India's
Interest (%)

JV partners

Area
(in km2)

1

KG-ONN-2003/1

KG Onshore

49%

ONGC

315

2

KG-OSN-2009/3

KG Offshore

100%

-

1,988

3

MB-DWN-2009/1

Mumbai Offshore

100%

-

2,961

4

PR-OSN-2004/1

Palar-Pennar

35%

ONGC, Tata Petrodyne

9,417

5

SL 2007-01-001

Mannar, Sri Lanka

100%

-

2,912

6

Block 1

Orange, South Africa

60%

Petro SA

19,898

During the quarter, significant advancements were made in exploration activities across other Indian and International blocks paving the way for long term growth opportunities from these blocks.

KG Offshore (Block KG-OSN-2009/3)

Preliminary depth migrated preliminary seismic data have been interpreted for the maturation of prospects in the block and preparations are ongoing for exploratory drilling. Drilling is anticipated to commence in Q3FY17, subject to all statutory clearances.

KG Onshore (Block KG-ON-2003/1)

Our, Joint Venture partner and operator, ONGC, has submitted a Field Development Plan to the Management Committee. The project is in pre-development phase.

Mumbai Offshore (Block MB-DWN-2009/1)

Regional prospectivity analysis has been completed, together with interpretation of the newly acquired PSTM processed broadband 2D seismic data. We are currently assessing the implication on block specific prospectivity and future exploration program.

Palar-Pennar (Block PR-OSN-2004/1)

We continue evaluation of the prospect inventory and optimization of drilling locations in Q2FY16 to prioritize and execute the outstanding drilling work program.

Sri Lanka (SL 2007-01-001)

We have submitted the requisite closure documents to Petroleum Resources Development Secretariat (PRDS), the regulatory authority for petroleum resources in Sri Lanka. The review is under process and is expected to be closed in October 2015.

South Africa (Block 1)

Evaluation of in board prospectivity for oil and gas commenced in last quarter and is currently ongoing.

Human Resources

Last quarter, we focused on effectively cascading the key corporate objectives and goals with all employees, and laid emphasis on driving the new way of working in a low oil price regime.

We re-aligned our field manpower to our business plan and planned projects. We focused on building talent from within by aiding our employee to continuously develop their skills through various L&D opportunities and also encouraging them to take on higher responsibilities and job rotations. This enables us to stay lean and keep our hiring from outside focused only on critical skills/roles.

For our employees in our technical functions, we launched a project to create a comprehensive technical skills database which will help in identifying in-house expertise and development areas.

We also continued to promote employee wellness and piloted a daily 5 minute chair yoga program for 200 employees aimed at creating engagement and boosting productivity.

Health, Safety, Environment and Sustainability

Cairn India is committed to meet the highest international standards of Health, Safety, and Environmental performance and continues to accord highest priority to conducting safe operations while being responsible towards the environment and sustainability.

We are continuing with our flagship health programs on Fitness and Yoga, and introduced new programs on Diet and Nutrition. Towards a healthy and fit organization, a major campaign was started for Periodic Medical Examination of employees. Early results revealed significant improvement (81% compliance) in Q2FY16.

During Q2 FY16, Cairn India's road transport safety guidelines were revised to align with recent changes in Indian Motor Vehicle Rules and to bring in more clarity.

During Q2 FY16, Cairn India improved reporting of Process Safety Events & revised Emergency Management Plans across our sites. We have incorporated new HSE training modules to strengthen the HSE management system.

Our Ravva and Midstream Asset have received OISD (Oil Industry Safety Directorate) Safety Awards. MBA operational activities and projects across Rajasthan have clocked 29.8 million Lost Time Incident (LTI) free man-hours, until end of Q2FY16. Project Construction also continues to maintain an excellent HSE track record and clocked 25 million LTI free man-hours at the end of Q2 FY16.

Cairn India released its third annual sustainability report, 'The Process Story', in conjunction with its Annual General Meeting.

Corporate Social Responsibility

Cairn is shortlisted amongst the 12 finalists for the Platts global energy awards in the CSR category. The winner will be announced on December 9th. During the quarter we focused on alignment with Government to ensure smooth execution of all the projects and increase the number of beneficiaries.

  • Water: We are in the advanced stage for our safe drinking water project. We plan to commence on-ground installation by Nov 2015. This is one of the largest safe drinking water projects in the country and will provide access to 1.1 million population spread across 800 villages.
  • Cairn Centre of Excellence (CCoE): In partnership with Rajasthan Skill Development Corporation, we have increased the enrolment and presently batch of 200 youth is undergoing training. We are working on partnering with various corporate and government agencies for the recruitment.
  • Cairn Enterprise Centre (CEC): 460 youths were trained across 6 Barmer centres, of which 400 were placed in various quality jobs
  • Health: Continued support to District Hospital by providing specialist doctor and sanitation services. Added a General Surgeon to the already supported   ENT, Orthopaedics and Gynaecology leading to a substantive increase in number of surgeries.
  • Sanitation: Completed our commitment to construct 188 school toilets under Swachh Bharat Swachh Vidyalaya Yojana.
  • Solar: Installed 300 home solar systems in various villages without access to the electricity. We plan to expand the program significantly given the positive feedback so far.
  • Water Harvesting: Installing roof top rain water harvesting system; 7000 children to benefit

As part of our social commitment, Cairn took proactive measures in flood relief effort in Rajasthan and Gujarat. We touched the lives of 25,000 people through food distribution, rescue and relief operation.

FY16 Outlook

Cairn India continues to remain committed to creating long term shareholder value. Despite prevailing low oil prices and substantial cut in capex, the company will at a minimum maintain Rajasthan production in current year at FY15 levels. Planned capital investment is for a net capex of US$ 500 million; 45% in Core MBA fields, 40% in Growth projects of Barmer Hill, Satellite Fields & Gas and 15% in Exploration. The company retains the flexibility to invest balance US$ 1.4 bn as oil prices improve and costs bottom out. The company aims to have healthy cash flows post capex so as to retain the ability to pay dividends subject to Board.

Cairn India Limited Fact Sheet

On 9 January, 2007, Cairn India Limited was listed on the Bombay Stock Exchange and the National Stock Exchange of India. Cairn India is now a subsidiary of Vedanta Limited; part of the Vedanta Group, a globally diversified natural resources group.

Cairn India is headquartered in Gurgaon in the National Capital Region. The Company has operational offices in India including Andhra Pradesh, Gujarat, Rajasthan, Tamil Nadu and International offices in Colombo and Houston.

Cairn India is one of the largest independent oil and gas exploration and production companies in India. Together with its JV partners, Cairn India accounted for ~27.2% of India's domestic crude oil production in FY15. Average gross operated production was 211,671 boepd for FY15. The Company sells its oil and gas to major PSU and private buyers in India.

The Company has a world-class resource base, with interest in seven blocks in India, one in Sri Lanka and one in South Africa. Cairn India's resource base is located in four strategically focused areas namely one block in Rajasthan, two on the west coast of India, five on the east coast of India (including one in Sri Lanka) and one in South Africa.

The blocks are located in the Barmer Basin, Krishna-Godavari Basin, the Palar-Pennar Basin, the Cambay Basin, the Mumbai Offshore Basin, the Mannar Basin and Orange Basin.

Cairn India's focus on India has resulted in a significant number of oil and gas discoveries. Cairn India made a major oil discovery (Mangala) in Rajasthan in the north west of India at the beginning of 2004. To date, thirty eight discoveries have been made in the Rajasthan block RJ-ON-90/1

In Rajasthan, Cairn India operates Block RJ-ON-90/1 under a PSC signed on 15 May, 1995 comprising of three development areas. The main Development Area (DA-1; 1,859 km2), which includes discoveries namely Mangala, Aishwariya, Raageshwari and Saraswati is shared between Cairn India and ONGC.  Further Development Areas (DA-2; 430 km2), including the Bhagyam, NI and NE fields and (DA-3; 822 km2) comprising of the Kaameshwari West Development Area, is shared between Cairn India and ONGC, with Cairn India holding 70% and ONGC having exercised their back in right for 30%.

In Andhra Pradesh and Gujarat, Cairn India on behalf of its JV partners operates two processing plants, with a production of over 36,000 boepd for FY15.

Block SL-2007-01-001 was awarded to Cairn Lanka in the bid round held in 2008. This offshore block is located in the Gulf of Mannar. The water depths range from 400 to 1,900 meter. The signing of the Petroleum Resources Agreement (PRA) to explore oil and natural gas in the Mannar Basin was undertaken in July 2008 in Colombo.

The farm-in agreement was signed with PetroSA on 16 August, 2012 in the 'Block-I' located in Orange basin, South Africa. The block covers an area of 19,898 sq km. The assignment of 60% interest and operatorship has been granted by the South African regulatory authorities.

For further information on Cairn India Limited, kindly visit www.cairnindia.com


Corporate Glossary

Cairn India

Cairn India Limited and/or its subsidiaries as appropriate

Company

Cairn India Limited

Cairn Lanka

Refers to Cairn Lanka (Pvt) Ltd, a wholly owned subsidiary of Cairn India

Cash EPS

PAT adjusted for DD&A, impact of forex fluctuation, MAT credit and deferred tax

CFFO

Cash Flow from Operations includes PAT (excluding other income and exceptional item) prior to non-cash expenses and exploration costs.

CPT

Central Processing Terminal

CY

Calendar Year

DoC

Declaration of Commerciality

E&P

Exploration and Production

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortisation includes forex gain/loss earned as part of operations

EPS

Earnings Per Share

FY

Financial Year

GBA

Gas Balancing Agreement

GoI

Government of India

GoR

Government of Rajasthan

Group

The Company and its subsidiaries

JV

Joint Venture

MC

Management Committee

MoPNG

Ministry of Petroleum and Natural Gas

NELP

New Exploration Licensing Policy

ONGC

Oil and Natural Gas Corporation Limited

OC

Operating Committee

PPAC

Petroleum Planning & Analysis Cell

PRA

Petroleum Resources Agreement

qoq

Quarter on Quarter

SL

Sri Lanka

Vedanta Group

Vedanta Resources plc and/or its subsidiaries from time to time

yoy

Year on Year

Technical Glossary

2P

Proven plus probable

3P

Proven plus probable and possible

2D/3D/4D

Two dimensional/three dimensional/ time lapse

Blpd

Barrel(s) of (polymerized) liquid per day

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

Tcf

Trillion standard cubic feet of gas

EOR

Enhanced Oil Recovery

FDP

Field Development Plan

MDT

Modular Dynamic Tester

Mmboe

million barrels of oil equivalent

Mmscfd

million standard cubic feet of gas per day

Mmt

million metric tonne

PRDS

Petroleum Resources Development Secretariat

PSU

Public Sector Utilities

SPM

Single Point Mooring

PSC

Production Sharing Contract

Field Glossary


Barmer Hill Formation

Lower permeability reservoir which overlies the Fatehgarh

Dharvi Dungar

Secondary reservoirs in the Guda field and is the reservoir rock encountered in the recent Kaameshwari West discoveries

Fatehgarh

Name given to the primary reservoir rock of the Northern Rajasthan fields of Mangala, Aishwariya and Bhagyam

Mannar Basin

Located in the Gulf of Mannar, situated on the NE shallow continental shelf of Sri Lanka

MBARS

Mangala, Bhagyam, Aishwariya, Raageshwari, Saraswati

Thumbli

Youngest reservoirs encountered in the basin. The Thumbli is the primary reservoir for the Raageshwari field

 

 For further information, please contact:

Communications


Roma Balwani

Tel: +91-22-6646-1000

President – Group Communications, Sustainability & CSR

gc@vedanta.co.in  



Investor Relations


Ashwin Bajaj

Tel: +91-22-6646-1531

Director – Investor Relations

vedantaltd.ir@vedanta.co.in  



Sunila Martis


Manager – Investor Relations




Vishesh Pachnanda


Manager – Investor Relations


About Vedanta Limited (Formerly Sesa Sterlite Ltd.)

Vedanta Limited (Vedanta Ltd) is a diversified natural resources company, whose business primarily involves exploring and processing minerals and oil & gas. The Company produces oil & gas, zinc, lead, silver, copper, iron ore, aluminium and commercial power and has a presence across India, South Africa, Namibia, Ireland, Australia, Liberia and Sri Lanka.

Vedanta Ltd, formerly Sesa Sterlite Ltd. is the Indian subsidiary of Vedanta Resources Plc, a London-listed company. Governance and Sustainable Development are at the core of Vedanta's strategy, with a strong focus on health, safety and environment and on enhancing the lives of local communities. Vedanta Ltd is listed on the Bombay Stock Exchange and the National Stock Exchange in India and has ADRs listed on the New York Stock Exchange.

For more information please log on to www.vedantalimited.com

Vedanta Limited
(Formerly known as Sesa Sterlite Limited)
Vedanta, 75, Nehru Road,
Vile Parle (East), Mumbai - 400 099
www.vedantalimited.com

Registered Office:
Sesa Ghor, 20 EDC Complex,
Patto, Panaji (Goa) - 403 001
CIN: L13209GA1965PLC000044

Disclaimer

This press release contains "forward-looking statements" – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should" or "will." Forward–looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.


[1] EUR numbers stated for development projects are as until 2030

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Source: PR Newswire (October 21, 2015 - 12:42 PM EDT)

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