Some analysts expect Cairn India to upgrade crude oil reserves in its prolific Rajasthan field in the next two-three quarters led by higher exploration and drilling activities.
It may be noted that the government allowed the company to conduct additional exploration in place. The company is targeting several prospects identified but not yet drilled.
Therefore, analysts at HSBC believe significant reserve upside is likely over the next one to two years. Their analysis indicates an in-place oil volume can potentially more than double from the current guidance of 7 billion barrels of oil equivalent on account of upside from the top layer called the Barmer formation, which is similar to shale oil, and additional geological features that are yet to be fully explored.
Over the next three years, the company plans to invest $3 billion for drilling activities ($1 billion a year). A majority is for tapping the Rajasthan block as Cairn plans drilling 450 wells, including 100 exploration wells.
The company expects to produce 200,000-215,000 barrels of oil per day (bpd) during 2013-14 against current production levels of 175,000 bpd. Out of this, the Mangala fields in the block may produce 150,000 bpd, the Bhagyam field (currently producing 25,000 bpd) may yield 40,000 bpd in the second half of 2013-14.
The Aishwariya field that started production in March 2013 may see oil production reaching 10,000 bpd; balance from Barmer Hill (field development plan approval is still awaited).
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