Cairn India Ltd. (CAIR)’s profit increased to the highest in five quarters as the operator of the nation’s biggest oilfield on land benefitted from a drop in the rupee to a record.
Group net income rose 46 percent to 33.9 billion rupees ($550 million), or 17.68 rupees a share, in the three months ended Sept. 30 from 23.2 billion rupees, or 12.15 rupees, a year earlier, according to a stock exchange filing today. That missed the 34.1 billion-rupee median of 33 analyst estimates compiled by Bloomberg. Sales rose 4.7 percent to 46.5 billion rupees.
The rupee’s 5.2 percent decline during the quarter against the dollar increased Cairn India’s earnings in the local currency. The explorer, acquired by Vedanta Resources Plc (VED) for $8.67 billion in 2011, plans to spend $3 billion in the next three years to discover oil pools and boost production at its biggest fields in Rajasthan state.
The shares rose 0.6 percent to 332.65 rupees in Mumbai. They’ve increased 4.3 percent this year, compared with a 7.4 percent gain in the benchmark S&P BSE Sensex. (SENSEX) The earnings were announced after trading closed.
Cairn India sells crude oil denominated in dollars. A drop in the value of the rupee increases the company’s earnings when converted to the local currency. The foreign-exchange gains in the quarter were 4.3 billion rupees, compared with a 7.9 billion-rupee loss a year earlier, according to today’s statement.
Total output from Cairn India’s fields rose 3 percent to an average 213,299 barrels of oil equivalent a day, according to the statement. Average production from the Rajasthan block was 175,478 barrels of oil equivalent a day in the quarter.
The company sold oil and natural gas at an average $95.3 a barrel of oil equivalent in the quarter, compared with $96.7 a year earlier, according to the statement. The average price of Brent traded in London was $109.65 a barrel in the quarter.
Cairn India sells crude at rates linked to Brent oil prices, unlike state-owned Oil & Natural Gas Corp. (ONGC), which is required to bear part of the country’s fuel subsidy. It discovered new oil in the Dharvi Dungar sands in Rajasthan’s Barmer district and is evaluating the size of the reserves, according to an April 9 stock exchange filing.
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