BackCairn to undertake ‘resource optimization’ to offset crude price fall
Cairn reported a 53% drop in its net profit in Q3 as the price of crude oil fell by 45.7% in the first nine months of the current fiscal year
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Mumbai: Cairn India Ltd, India’s biggest private onshore crude oil producer, has undertaken resource optimization to offset the impact of a sharp fall in crude prices during the current fiscal year.
In an emailed statement, issued after a report on CNBC TV18 that the company has laid off 250 people, Cairn India said, “The past few months have brought significant changes in the global oil and gas space. The reductions in crude oil prices have deleteriously impacted the sector, globally. At Cairn, we are aligning our working to enable a sustainable competitive business and to deliver our business goals. While we continue to focus on our key projects to deliver on our commitment, we are simultaneously working on resource optimization to drive efficiencies for value generation, in the current environment."
According to the company’s annual report, as on fiscal 2014 end, Cairn India had 1,643 permanent employees and 7,696 temporary employees. For the third quarter, its employee compensation stood at ₹ 274.12 crore, which was 2.2% of its net profit of ₹ 12,431.79 crore.
While it could not be confirmed whether the company has laid off employees, there has been no cut in the company’s crude oil production forecast for the current fiscal or its capex plans.
Cairn India has three main oil producing assets across India—Barmer in Rajasthan, Cambay basin in Gujarat and Ravva basin in Andhra Pradesh.
Cairn reported a 53% drop in its net profit in the third quarter as the price of crude oil fell by 45.7% in the first nine months of the current fiscal year. For the third quarter, the company earned $68.70 per barrel on crude oil, down from $96.5 per barrel a year ago.
In an interview on 30 January, Tom Albanese, chief executive officer, of Sesa Sterlite, had said that the company will review its capex plans, without specifying whether capex plans at Cairn would be altered.
“Our total capex spend previously guided was around $2 billion between oil and gas business, aluminium business, power, zinc and other businesses. But as a consequence of the slump in prices globally, particularly oil and iron ore prices, we are undertaking a very rigorous capital review and we would expect that there would be a considerable reduction in that capital expenditure from what has been previously guided to the market," he had said.
Cairn India is in the midst of a $3 billlion capital expenditure programme under which the company plans to increase its production to 300,000 barrels per day and develop its new gas resource in the Barmer basin.
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