Corporate Presentation

Corporate Presentation - March 2008
CAIRN INDIA
CORPORATE PRESENTATION
March 2008
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.
08S0245BG24
2
3
Corporate Presentation - March 2008
Cairn in India
VISION
India is prospective for hydrocarbons
Rapidly growing energy markets
Favourable investment climate
DELHI
NEPAL
KATHMANDU
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
08S0245BG24
DHAKA
INDIA
BANGLADESH
4
Corporate Presentation - March 2008
Track Record of Discoveries
Oil and Gas Found Every Year Since 1998
1998
Ravva satellite gas discoveries - RD5, RG & RH
1999
Rajasthan - Guda
2000
Cambay discoveries - Lakshmi, Gauri, Ambe
2001
KG Deepwater discoveries - Annapurna, Padmavati, Kanaka Durga and ‘DWN-N’ &
Rajasthan – Saraswati
2002
Rajasthan – Guda extension, Raageshwari
2003
Rajasthan – Kameshwari, Cambay – CB-X
2004
Rajasthan - Mangala, Aishwariya, Shakti, Bhagyam
2005
2006
2007
Rajasthan - NI, Vijaya & Vandana, NC-West, GSV-1, Bhagyam South and NR4; KG
Deepwater: U-1, A-1 and D-1
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-1
Rajasthan – Saraswati Crest-1, Kameshwari West-6; Ravva - RX-10 and RX-8
More than 40 discoveries to date
08S0245BG24
5
Corporate Presentation - March 2008
Overview of Assets
14 blocks, 2 producing: Ravva
and CB/OS-2
Operated gross field
production 75,835 boepd
(working interest 19,482
boepd)
11 offshore platforms and
2 processing plants
Raj asthan – Exploration (RJ-ON-90/1)
Cairn (Operator)
100%
Raj asthan – Dev elopment
Cairn (Operator)
70%
ONGC
30%
Gross production target
>150,000 bopd
Rajasthan block under
development
RJ-ON-90/1
Exploration ongoing in all
blocks except CB/OS-2
5 operated
CB/OS-2
Gross Production
13,824 boepd*
Gross Production
62,011 boepd*
Cambay (CB/OS-2)
Cairn (Operator)
40%
ONGC
50%
Tata
10%
Note : * 9mths 07 figures
08S0245BG24
RAVVA
Rav v a
Cairn (Operator)
22.5%
ONGC
40%
Videocon
25%
Rav v a Oil
12.5%
6
Corporate Presentation - March 2008
Unique Skill Set
Exploration
More than 40 hydrocarbon
discoveries
Onshore
Offshore
Deep
Shallow
Development
Fast track development
Lakshmi gas field
discovery in May 2000
and first gas by October
2002
Ravva developed from
a 3,700 bopd field to
35,000 bopd field in 26
months (current
production ~ 50,000
bopd)
Production
Operates the largest
producing fields in Indian
Private Sector
Field direct opex of Ravva
and CB/OS-2 is around
$1.5/boe
Pioneer in India for use of
the latest technologies to
extend production life
Rajasthan field
development plan
(FDP) approved within
30 months from
discovery
Strong operating track record across all aspects of E&P activities
08S0245BG24
Sales
Gas sales contract with
public and private buyers
Oil sales to four major
refineries across India
Efficient sales
management of more
than $1.6 bn gross
annual revenues
7
Corporate Presentation - March 2008
Key Strategic Initiatives
Execute Rajasthan
block Northern
Fields development
Intend to execute
Rajasthan block
development – First
production Mangala
2009
Production from
Bhagyam and Shakti
fields and the
Aishwariya field to follow
All of the major
regulatory clearances
have been obtained
08S0245BG24
Maximise Potential
in Rajasthan
Significant resource
base in the Rajasthan
block
Early application of
Enhanced Oil Recovery
(EOR)
Sustain production
and maintain low
operating costs in
existing producing
fields
Aim to sustain current
production volumes at
the Ravva and CB/OS-2
(Lakshmi and Gauri)
fields
Currently developing
the Lakshmi fields
separately for crude oil
production
Maintain low operating
cost base
Identify new
opportunities for
growth in reserves
and production
Continue to explore for
hydrocarbons in basins
throughout India
Have identified a
number of leads and
prospects in other
blocks in India
Actively pursuing
strategies using stateof-the-art technology to
help identify potential
leads
9
8
Corporate Presentation - March 2008
Cairn Group Structure
Cairn India
Shareholding:
69
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
%
Institutions
18%
Petronas
10%
Cairn India
BSE / NSE
90
31%*
%*
LSE
Cairn Energy PLC
69%
Retail
3%
Cairn Energy PLC
New Investors
Capricorn
Energy
Re-focuses management to
create value via the "drill bit"
More geared to exploration
success
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
08S0245BG24
Note: Shareholding as on 31 st Dec 2007
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 increase
the plateau production potential of 125,000 bopd
FDP for Bhagyam is awaiting approval by the GOI on the basis of a planned plateau
production 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 Northern
Appraisal Area
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
08S0245BG24
9
10
Corporate Presentation - March 2008
Overview - Rajasthan Block
World class oil discoveries in Rajasthan - First Oil second half of 2009
>140 w ells drilled, >24 discoveries to date
4 fields 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
BLOCK RJ-ON-90/1
November 2007
Rajasthan Development Concept
Low Risk Development
Known technology
Shallow depth
Less than 25 wells to first
oil
Rigs under contract
Reservoir Connectivity
Good reservoir
connectivity
High sand content with
limited faulting
Well interference tests
Flow assurance
Hot w ater inj ection
Hot w ater j et pumps
Sustain deliverability
Artificial lift
Fluid Handling capacity
EOR opportunity
Oil
Gas
08S0245BG24
11
Corporate Presentation - March 2008
Strong Production Growth
Net (WI) Projected Production
~115,000
Maximise and sustain production
from current operational assets
boepd
Execute Main Rajasthan
developments and optimise
further growth potential through
EOR (2.2 mmbbls in place)
93%
19,482
Future exploration growth across
all Indian interests
63%
37%
7%
2010
Plateau extension through current
successful infill well drilling
First full year of production
programme
9mths 2007
Gas
08S0245BG24
Optimise growth potential in,
Barmer Hill, gas and smaller fields
(1.4 mmbbls in place)
Oil
12
Corporate Presentation - March 2008
Continuing Application of Technology
Mangala
STOIIP
mmbbls
1700
Dec 2007: Mangala reserves update submitted to DGH
1600
1500
1400
1300
900
700
600
500
400
300
200
100
2D Seismic, PHIE, SWE
( 2 Wells )
800
P50=82
9
Additional 2D Seismic, PHIE, SWE
( 7 Wells )
1000
P50=95
6
Post STM 3D Seismic, PHIE, SWE
( 7 Wells )
1100
P50=107
1
P50=120
2
Pre STM 3D Seismic, PHIE, SWT, DS Data
( 9 Wells )
1200
Post STM 3D Seismic, PHIE, SWE, DS Data
( 7 Wells )
P50=1293
0
DoC (June 2004)
08S0245BG24
DoC (Aug. 2004)
Update
FDP (Oct. 2005)
IPO Dec 2006
Dec 2007
13
Corporate Presentation - March 2008
Enhanced Oil Recovery (EOR) Update
Improvement in Recovery Efficiency
P1
P1
I1
I1
P2
P2
I2
I2
P3
P3
I3
I3
P4
P4
I4
I4
P5
P5
I5
Chemical Flood Simulation studies for Mangala
underway
Potential for increased off take and plateau
extension
Reduced water production & injection
Significant potential for addition of reserves
I5
P6
P6
I6
P7
I6
P7
I7
I7
P8
Water Flood
P8
ASP Flood
Techno-Economics
Robust under wide range of costs & oil price
Forward plan
Closely spaced ASP pilot during 2009-10
Assess performance under field conditions
Staged field-wide expansion
Top Figure: Demonstrates sweep efficiency obtained during scaled sector simulation
08S0245BG24
modeling for Mangala waterflood and ASP processes.
Bottom Figure: Sector modeling results have been upscaled to estimate full-field chemical
flood (Polymer and ASP) recoveries.
OIL SATURATION
Laboratory Core Flood Experiments completed for
Mangala and Bhagyam Incremental recoveries:
Polymer Flood: 15% of STOIIP
Alkali-Surfactant-Polymer (ASP) Flood:
30% of STOIIP
Corporate Presentation - March 2008
Rajasthan Upstream
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
08S0245BG24
14
15
Corporate Presentation - March 2008
Rajasthan: Progress on Evacuation
Issues
Off-take
Delivery Point
Pipeline
Pricing
08S0245BG24
Current Status
Next Steps
MRPL is the GoI nominee
Discussions with MRPL and
other refiners
GoI to appoint multiple
Nominees to lift remaining Crude
ONGC and Cairn alignment on
moving delivery point
GoI decision on pipeline cost
recovery awaited
Proposed Pipeline route
identified
ROU Granted & Competent
Authority established
Acquisition of land ROU process
initiated
Alignment on crude pricing
formula between Cairn and
ONGC as sellers
GoI to facilitate pricing with
Nominees within a controlled
process and time frame
Negotiation on benchmark
crude in process
16
Corporate Presentation - March 2008
Rajasthan Midstream: Proposed Pipeline
Bhatinda
Refineries
Location
On Land
Current
Capacity
(MMTPA)
34
DELHI
Capacity in
2009-10
(MMTPA)
Total
Mathura
Rajasthan
52
PSU
Private Sector
Panipat
Mangala
Coastal
55
60
Coastal
41
75
130
187
Proposed pipeline gives access to 75% of India’
India’s refining
capacity
Kot
Viramgam
Kandla
Mundra
Salaya
Jamnagar
Gujarat
Mangala to
Viramgam
325 km
Koyali
Pipeline Route
Tankers to
Coastal
Refineries
08S0245BG24
Mangala to
Salaya
591 km
Existing Pipelines
Refinery
Corporate Presentation - March 2008
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
08S0245BG24
17
18
Corporate Presentation - March 2008
Exploration - Highlights
EXPLORATION
STRATEGY
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
Exploration Capabilities
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
08S0245BG24
Exploration: Commitment to Future Growth
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
19
Corporate Presentation - March 2008
Summary of Recent & Forthcoming
Exploration Activity
2008 Exploration Activity: >13 wells, 5 seismic programmes
RJ-ON-90/1
Further drilling up till 5
w ells in Q4 2008
GV-ONN-97/1
VN-ONN-2003/1
2D seismic
expected in
2008
Ongoing drilling
of final spud w ell
GV-ONN-2003/1
2D seismic in late
2008
RJ-ONN-2003/1
Drilling expected 2008
GV-ONN-2002/1
Drilling in 2008
CB-ONN-2002/1
3 w ells from early
2008
RAVVA
GS-OSN-2003/1
Entered 2nd
Exploration period,
drilling possible in
Q1’09
KG-ONN-2003/1
2D Seismic
commenced in Jan08,
3D expected in Q2’08
KK-DWN-2004/1
2D programme
expected in 2008
08S0245BG24
PR-OSN-2004/1
2D programme
planned for Q2
2008
Appraisal drilling
completed, extended w ell
testing ongoing
KG-DWN-98/2
UD discov ery Q4 2006
plus
2 exploration w ells in
2007. Appraisal plan in
preparation; drilling and
3D seismic in 2008/09
20
Corporate Presentation - March 2008
Ravva
RX-6
RX-3
RX-8Z
RX-8 Oil and Gas Discovery
50m net pay in 4 pay zones
Continued resource growth at Ravva
and significant exploration upside
Eastward extension of primary
M30 reservoir and discovery of
new deeper Early Miocene pay
08S0245BG24
21
Corporate Presentation - March 2008
Rajasthan Northern Appraisal Area
Declaration of Commerciality
submitted for 3 discovered fields
Kameshwari West-2 (oil and gas)
Kameshwari West-3 (gas)
Kameshwari West-6 (gas)
Northern Appraisal Area completed
and 5 wells drilled
Kameshwari-6
Kameshwari-West-3
08S0245BG24
Kameshwari West-2
Oil Discovery
Kameshwari-West-2 Column height: 27 m
Net Pay: 18 m
22
Corporate Presentation - March 2008
Financial Highlights*
Millions
$74.1 m #
(revenue)
$80
$70
$67.5 m #
(revenue)
$61.7 m #
(revenue)
$3
$3
$19
Q1 2007
Q2 2007
Q3 2007
19,811
19,775
18,871
Gas per m cf($)
4.07
4.35
4.03
Oil per bbl ($)
61.04
71.11
77.20
Per boe ($)
42.25
50.45
58.38
6.10
4.60
5.61
$17
$10
$60
Financial Summary
Working Interest based boepd
$50
$2
$40
Average Realised Price
$30
$54
$20
$54
$41
$10
Production cost/boe ($) @
$0
Q 1 2007
Q 2 2007
Cash flow from operations
Q 3 2007
Tax
Cash cost
* 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 and
deferred tax)
Cash cost includes Production cost, G&A and finance costs.
08S0245BG24
Corporate Presentation - March 2008
Summary
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
08S0245BG24
23
Corporate Presentation - March 2008
Growth In India
Rising reserves & resources
Increasing production from Rajasthan
Leverage to oil price
Strategic position
Right place ……. right time
08S0245BG24
24