We hosted Cairn India (CIL) on a non-deal roadshow in Singapore last week. While the timelines on oil production from Rajasthan remain unchanged, there is likely to be more news flow on exploration in the short term. In the next six months, seven exploration wells are set to be drilled - six by CIL in its own blocks and one by ENI. Since our DCF valuation does not assume any new exploration success, any positive news on this could add to our valuation.
CIL was represented by 1) Santosh Chandra - Director, Drilling and Petroleum Engineer, and 2) Anurag Chandra - Group Treasurer.
Details
Rajasthan project on track
CIL reiterated it is on track to start producing oil from the Rajasthan block by 2H09, and expects plateau production from the Mangala-Bhagyam-Aishwariya (MBA) fields to be 175kbd. Management said the pipeline from Mangala to Viramgam would be ready in 1H09 and from Viramgam to Salaya in 2H09. All major contracts have already been awarded and pricing for most has been locked in fully.
It sees the greatest reserves potential in the Rajasthan block, in terms of reserves addition from the 1.7bn boe of in-place oil in the small field and tight reservoirs within the block. This would be implemented through the use of enhanced oil recovery (EOR) techniques, which could raise the production plateau and/or extend the plateau period.
Exploration news likely
CIL had ordered two rigs for its Rajasthan oil development, which have arrived. Since the development process will start only next year, management said the rigs would be used for further exploration. The first rig has reached Kolkata and would be used to drill one exploration well in Bihar (block GV-ONN-2002/1, CIL stake 50%), followed by two exploration wells in onshore KG basin (block KG-ONN-2003/1, CIL stake 49%). The second rig would drill three exploration wells in the Rajasthan block.
CIL was represented by 1) Santosh Chandra - Director, Drilling and Petroleum Engineer, and 2) Anurag Chandra - Group Treasurer.
Details
Rajasthan project on track
CIL reiterated it is on track to start producing oil from the Rajasthan block by 2H09, and expects plateau production from the Mangala-Bhagyam-Aishwariya (MBA) fields to be 175kbd. Management said the pipeline from Mangala to Viramgam would be ready in 1H09 and from Viramgam to Salaya in 2H09. All major contracts have already been awarded and pricing for most has been locked in fully.
It sees the greatest reserves potential in the Rajasthan block, in terms of reserves addition from the 1.7bn boe of in-place oil in the small field and tight reservoirs within the block. This would be implemented through the use of enhanced oil recovery (EOR) techniques, which could raise the production plateau and/or extend the plateau period.
Exploration news likely
CIL had ordered two rigs for its Rajasthan oil development, which have arrived. Since the development process will start only next year, management said the rigs would be used for further exploration. The first rig has reached Kolkata and would be used to drill one exploration well in Bihar (block GV-ONN-2002/1, CIL stake 50%), followed by two exploration wells in onshore KG basin (block KG-ONN-2003/1, CIL stake 49%). The second rig would drill three exploration wells in the Rajasthan block.
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