cil corporate presentation - march08
TRANSCRIPT
Corporate Presentation - March 2008
CAIRN INDIA
CORPORATE PRESENTATION
March 2008
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08S0245BG24
Corporate Presentation - March 2008
Disclaimer
These materials contain forward-looking statements regarding Cairn India, 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 India undertakes no
obligation to revise any such forward-looking statements to reflect any changes in Cairn India’s expectations
with regard thereto or any change in circumstances or events after the date hereof.
Corporate Presentation - March 2008 3
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Cairn in India
DELHI
INDIA
NEPAL
DHAKA
BANGLADESH
KATHMANDU
VISION
India is prospective for hydrocarbons
Rapidly growing energy markets
Favourable investment climate
FOCUS
Sustained investment and re-investment
in the region for more than a decade
Rajasthan – new world-class oil province
established
EDGE
Knowledge / Expertise / Relationships
Consistent strategy and material acreage
position
Partnership with Indian stakeholders
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Track Record of Discoveries
Oil and Gas Found Every Year Since 1998Oil and Gas Found Every Year Since 1998
More than 40 discoveries to dateMore than 40 discoveries to date
Rajasthan - NE, NI-north, NP, Shakti North East, Kameshwari West-2 & -3, Barmer Hill
reservoir in Mangala & Aishwariya. KG Deepwater – W-1, E-1 and ultra-deep water UD-12006
Rajasthan - NI, Vijaya & Vandana, NC-West, GSV-1, Bhagyam South and NR4; KG
Deepwater: U-1, A-1 and D-12005
Rajasthan - Mangala, Aishwariya, Shakti, Bhagyam2004
Rajasthan – Kameshwari, Cambay – CB-X2003
Rajasthan – Guda extension, Raageshwari2002
KG Deepwater discoveries - Annapurna, Padmavati, Kanaka Durga and ‘DWN-N’ &
Rajasthan – Saraswati2001
Cambay discoveries - Lakshmi, Gauri, Ambe2000
Rajasthan - Guda1999
Ravva satellite gas discoveries - RD5, RG & RH1998
Rajasthan – Saraswati Crest-1, Kameshwari West-6; Ravva - RX-10 and RX-82007
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Overview of Assets
RJ-ON-90/1
CB/OS-2
RAVVA
Gross Production62,011 boepd*
Gross Production13,824 boepd*
Gross production target >150,000 bopd
50%ONGC
Cambay (CB/OS-2)
10%Tata
40%Cairn (Operator)
25%Videocon
40%ONGC
Ravva
12.5%Ravva Oil
22.5%Cairn (Operator)
70%Cairn (Operator)
Rajasthan – Exploration (RJ-ON-90/1)
30%ONGC
Rajasthan – Development
100%Cairn (Operator)
14 blocks, 2 producing: Ravvaand CB/OS-2
Operated gross fieldproduction 75,835 boepd(working interest 19,482boepd)
11 offshore platforms and2 processing plants
Rajasthan block underdevelopment
Exploration ongoing in allblocks except CB/OS-2
5 operated
Note : * 9mths 07 figures
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Unique Skill Set
Development
Fast track development
Lakshmi gas fielddiscovery in May 2000and first gas by October2002
Ravva developed froma 3,700 bopd field to35,000 bopd field in 26months (currentproduction ~ 50,000bopd)
Rajasthan fielddevelopment plan(FDP) approved within30 months fromdiscovery
Exploration
More than 40 hydrocarbondiscoveries
Onshore
Offshore
Deep
Shallow
Production
Operates the largestproducing fields in IndianPrivate Sector
Field direct opex of Ravvaand CB/OS-2 is around$1.5/boe
Pioneer in India for use ofthe latest technologies toextend production life
Gas sales contract withpublic and private buyers
Oil sales to four majorrefineries across India
Efficient salesmanagement of morethan $1.6 bn grossannual revenues
Sales
Strong operating track record across all aspects of E&P activitiesStrong operating track record across all aspects of E&P activities
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Key Strategic Initiatives
Intend to executeRajasthan blockdevelopment – Firstproduction Mangala2009
Production fromBhagyam and Shaktifields and theAishwariya field to follow
All of the majorregulatory clearanceshave been obtained
Continue to explore forhydrocarbons in basinsthroughout India
Have identified anumber of leads andprospects in otherblocks in India
Actively pursuingstrategies using state-of-the-art technology tohelp identify potentialleads
Aim to sustain currentproduction volumes atthe Ravva and CB/OS-2(Lakshmi and Gauri)fields
Currently developingthe Lakshmi fieldsseparately for crude oilproduction
Maintain low operatingcost base
Identify newopportunities for
growth in reservesand production
Execute RajasthanExecute Rajasthan
block Northernblock Northern
Fields developmentFields development
Sustain productionSustain production
and maintain lowand maintain low
operating costs inoperating costs in
existing producingexisting producingfieldsfields
Significant resourcebase in the Rajasthanblock
Early application ofEnhanced Oil Recovery(EOR)
Maximise PotentialMaximise Potential
in Rajasthanin Rajasthan
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Corporate Presentation - March 2008
Cairn Group Structure
Cairn IndiaBSE / NSE
90%31%*
69%
*
Cairn Energy PLC
LSENew Investors
CapricornEnergy
Foundation for an Indian oil and gas company
Well positioned to take advantage of Indian growth opportunities
Strong development and operational expertise
Executive and management decision makers based in India
Re-focuses management tocreate value via the "drill bit"
More geared to explorationsuccess
Non-compete agreement with Cairn Energy PLC for three years
3 non-executive directors out of 9 (including Chairman) to be nominees of Cairn Energy PLC
Cairn India
Shareholding:
Retail
3% Institutions
18%
Petronas
10%
Cairn Energy PLC
69%
Note: Shareholding as on 31st Dec 2007
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Corporate Presentation - March 2008
Current Highlights
First oil production from Mangala on schedule second half of 2009
Rajasthan planned production of more than 150,000 bopd from Northern Fields
Preparation of Mangala FDP addendum underway; will contain a recommendation to increasethe plateau production potential of 125,000 bopd
FDP for Bhagyam is awaiting approval by the GOI on the basis of a planned plateauproduction rate of 40,000 bopd
Aishwariya FDP, approved by GOI; planned plateau production rate of 10,000 bopd
Declaration of Commerciality submitted for 3 discovered fields in Rajasthan NorthernAppraisal Area
Government of India (GoI) ‘Rights of Use’ (RoU) approval for Rajasthan-Gujarat pipeline
State Governments of Rajasthan and Gujarat recommended the competent authorities tocommence the process to secure access to land for pipeline
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Corporate Presentation - March 2008
RAJASTHANBLOCK RJ-ON-90/1
November 2007
Overview - Rajasthan Block
Gas
Oil
World class oil discoveries in Rajasthan - First Oil second half of 2009
>140 w ells drilled, >24 discoveries to date
4 f ields currently under development Mangala, Aishw ariya, Raageshw ari
and Sarasw ati
Resource base > 3.6 billion boe
Total spend to end December 2007 ~ US$950 million
Planned Production>150,000 bopd
Rajasthan Development Concept
Low Risk Development
Known technology
Shallow depth
Less than 25 wells to firstoil
Rigs under contract
Reservoir Connectivity
Good reservoirconnectivity
High sand content withlimited faulting
Well interference tests
Flow assurance
Hot water injection
Hot water jet pumps
Sustain deliverability
Artificial lift
Fluid Handling capacity
EOR opportunity
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Net (WI) Projected Production
boepd
19,482
~115,000
Gas Oil
9mths 2007 2010First full year of production
93%
7%
63%
37%
Maximise and sustain productionfrom current operational assets
Execute Main Rajasthandevelopments and optimisefurther growth potential throughEOR (2.2 mmbbls in place)
Optimise growth potential in,Barmer Hill, gas and smaller fields(1.4 mmbbls in place)
Future exploration growth acrossall Indian interests
Plateau extension through currentsuccessful infill well drillingprogramme
Strong Production Growth
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Continuing Application of Technology
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
DoC (June 2004) DoC (Aug. 2004)
Update
FDP (Oct. 2005) Dec 2007
MangalaSTOIIP
mmbbls
P50=1071
P50=829
P50=956
P50=1293
IPO Dec 2006
P50=1202
2D
Se
ism
ic, P
HIE
, S
WE
(
2 W
ells
)
Po
st S
TM
3D
Se
ism
ic, P
HIE
, S
WE
( 7
We
lls
)
Pre
ST
M 3
D S
eis
mic
, P
HIE
, S
WT
, D
S D
ata
( 9
We
lls
)
Po
st S
TM
3D
Se
ism
ic, P
HIE
, S
WE
, D
S D
ata
( 7
We
lls
)
Ad
ditio
na
l 2
D S
eis
mic
, P
HIE
, S
WE
(
7 W
ells
)
Dec 2007: Mangala reserves update submitted to DGH
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Corporate Presentation - March 2008
Enhanced Oil Recovery (EOR) Update
Laboratory Core Flood Experiments completed forMangala and Bhagyam Incremental recoveries:
Polymer Flood: 15% of STOIIPAlkali-Surfactant-Polymer (ASP) Flood:30% of STOIIP
Chemical Flood Simulation studies for Mangalaunderway
Potential for increased off take and plateauextensionReduced water production & injectionSignificant potential for addition of reserves
Techno-EconomicsRobust under wide range of costs & oil price
Forward planClosely spaced ASP pilot during 2009-10
Assess performance under field conditionsStaged field-wide expansion
OIL
SA
TU
RA
TIO
N
I1
I2
I3
I4
I5
I6
I7
P1
P2
P3
P4
P5
P6
P7
P8
ASP Flood
I1
I2
I3
I4
I5
I6
I7
P1
P2
P3
P4
P5
P6
P7
P8
Water Flood
Improvement in Recovery Efficiency
Top Figure: Demonstrates sweep efficiency obtained during scaled sector simulationmodeling for Mangala waterflood and ASP processes.Bottom Figure: Sector modeling results have been upscaled to estimate full-field chemicalflood (Polymer and ASP) recoveries.
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Corporate Presentation - March 2008
Target First Oil second half of 2009
All approvals in place
(Field Development Plan, Environmental Consent, Consent to Establish etc)
Land acquisition for phases 1 & 2 complete
FEED complete, detailed engineering well underway
Civil works commenced
Contracts awarded for
Road construction
Civil Construction for Mangala
Pumps (various)
Drilling rigs
Main construction contract for upstream
Contracts in process
Power generation package
Control systems
Project Organisation fully in place
Rajasthan Upstream
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Rajasthan: Progress on Evacuation
Alignment on crude pricing
formula between Cairn and
ONGC as sellers
GoI to facilitate pricing withNominees within a controlledprocess and time frame
Negotiation on benchmarkcrude in process
IssuesIssues
MRPL is the GoI nominee
Discussions with MRPL and
other refiners
GoI to appoint multipleNominees to lift remaining Crude
ONGC and Cairn alignment on
moving delivery pointDelivery Point
GoI decision on pipeline costrecovery awaited
Proposed Pipeline route
identified
ROU Granted & Competent
Authority established
PipelineAcquisition of land ROU processinitiated
Pricing
Off-take
Current Status Next Steps
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Mundra
Salaya
Viramgam
Jamnagar
Gujarat
Rajasthan
Mangala
DELHI
Panipat
Mathura
Mangala toSalaya591 km
Mangala toViramgam
325 km
Kandla
Kot
Refinery
Existing Pipelines
Pipeline Route
Koyali
Tankers toCoastal
Refineries
Bhatinda
Rajasthan Midstream: Proposed Pipeline
Refineries Location
Current
Capacity
(MMTPA)
Capacity in
2009-10
(MMTPA)
PSUOn Land 34 52
Coastal 55 60
Private Sector Coastal 41 75
Total 130 187
Proposed pipeline gives access to 75% of IndiaProposed pipeline gives access to 75% of India’’s refinings refining
capacitycapacity
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Rajasthan Midstream: Pipeline
Cairn India responsible for 70% of pipeline costs with JV partner ONGC taking up
remaining 30%
Rights of use (ROU) approved for Rajasthan-Gujarat pipeline
All major contracts awarded for line pipe, engineering procurement contract
and heat management system
Working together with internationally recognized pipeline design engineers JP Kenny
FEED completed
Pipeline opex costs estimated at around US$1/bbl
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Exploration - Highlights
Exploration CapabilitiesExploration Capabilities Exploration: Commitment to Future GrowthExploration: Commitment to Future Growth
Pioneer in India’s exploration industry
3 out of the 7 landmark discoveries were made by Cairn
India from 2000-2005
Lakshmi Gas field in Cambay - 2000
Annapurna Gas field - Deepwater KG Basin – 2001
Mangala Oil Field - Rajasthan – 2004
Success rate of 1 in 3 wells in exploration
Success rate of 39% in Rajasthan
Focus on organic growth through exploration
Maximizing returns on Ravva and Rajasthan through
exploration activities
Cumulative exploration expenditure
2007-2009 = $150m
Plans to drill 13-15 wells per year
Continue to grow and renew exploration portfolio
through licensing rounds; farm-ins and trades
Bids submitted for 2 blocks in Sri Lankan licensing round
Reviewing NELP VII data package
Focus on India – Replace Production – Early Entry – Significant Equity and Acreage
Focus on both mature and frontier/relatively unexplored areas
Operatorship Onshore and Shallow Water – Selective Partnerships with Edge
Maintain balanced portfolio of risk, reward and exposure
EXPLORATIONEXPLORATION
STRATEGYSTRATEGY
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Summary of Recent & ForthcomingExploration Activity
RJ-ONN-2003/1
Drilling expected 2008
GS-OSN-2003/1Entered 2ndExploration period,drilling possible inQ1’09
VN-ONN-2003/12D seismicexpected in2008
RJ-ON-90/1
Further drilling up till 5wells in Q4 2008
GV-ONN-97/1
Ongoing drillingof final spud well
GV-ONN-2003/1
2D seismic in late2008
GV-ONN-2002/1
Drilling in 2008
RAVVA
Appraisal drillingcompleted, extended welltesting ongoing
KG-DWN-98/2UD discovery Q4 2006plus2 exploration wells in2007. Appraisal plan inpreparation; drilling and3D seismic in 2008/09
KG-ONN-2003/1
2D Seismiccommenced in Jan08,3D expected in Q2’08
KK-DWN-2004/1
2D programmeexpected in 2008 PR-OSN-2004/1
2D programmeplanned for Q22008
2008 Exploration Activity: >13 wells, 5 seismic programmes2008 Exploration Activity: >13 wells, 5 seismic programmes
3 wells from early2008
CB-ONN-2002/1
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Ravva
RX-8ZRX-3RX-6
RX-8 Oil and Gas Discovery50m net pay in 4 pay zonesContinued resource growth at Ravvaand significant exploration upsideEastward extension of primary
M30 reservoir and discovery of new deeper Early Miocene pay
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Rajasthan Northern Appraisal Area
Declaration of Commercialitysubmitted for 3 discovered fields
Kameshwari West-2 (oil and gas)Kameshwari West-3 (gas)Kameshwari West-6 (gas)
Northern Appraisal Area completedand 5 wells drilled
Kameshwari West-2Oil DiscoveryColumn height: 27 mNet Pay: 18 m
Kameshwari-6
Kameshwari-West-3
Kameshwari-West-2
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Financial Highlights*
Millions
* Conversion Rate: For Q 1 2007 – Rs.44.1/USD; For Q 2 2007 – Rs.41.3 /USD; For Q3 2007-Rs. 39.85/USD@ Production cost /boe are based on working interest# Includes other income US $ 8.2 m for Q 1, US $ 8.5 m for Q 2 ‘2007 and US $ 8.6m for Q 3’2007
Cash flow operations worked out as PAT prior to non-cash expenses( non –cash employee cost ,DD&A, exploration cost anddeferred tax)
Cash cost includes Production cost, G&A and finance costs.
Financial Summary
Q1 2007 Q2 2007 Q3 2007
Working Interest based boepd 19,811 19,775 18,871
Average Realised Price
Gas per mcf($) 4.07 4.35 4.03
Oil per bbl ($) 61.04 71.11 77.20
Per boe ($) 42.25 50.45 58.38
Production cost/boe ($)@ 6.10 4.60 5.61
$54$54
$41
$3$3
$2
$17
$19
$10
$0
$10
$20
$30
$40
$50
$60
$70
$80
Q 1 2007 Q 2 2007 Q 3 2007
Cash flow from operations Tax Cash cost
$67.5 m #
(revenue)$61.7 m #
(revenue)
$74.1 m #
(revenue)
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First Oil from Mangala on schedule for second half of 2009
Preparation of Mangala FDP addendum underway; will contain a
recommendation to increase the plateau production potential of 125,000 bopd
Government of India (GoI) ‘Rights of Use’ (RoU) approval for Rajasthan-Gujarat
pipeline
State Governments of Rajasthan and Gujarat recommended the competent
authorities to commence the process to secure access to land for pipeline
All major contracts awarded for line pipe, engineering procurement contract and
heat management system
More than five fold production increase by 2010
Ongoing cash flow from current operations in Ravva and Cambay Basin
Established and growing resource base
EOR potential for recovery increase and plateau extension
Summary
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Growth In India
Rising reserves & resources
Increasing production from Rajasthan
Leverage to oil price
Strategic position
Right place ……. right time