Cairn Energy Plc, a stakeholder in the operator of India’s biggest onshore oilfield, is working with the newly elected government to resolve a tax dispute involving its $1.1 billion asset.
“We’re focusing every effort on the continuing engagement,” Simon Thomson, chief executive officer at the Scottish explorer, said today on a conference call.
Cairn has been interacting with the Indian tax department since January after the authorities decided to audit its finances for the year ended March 2007 and barred it from selling its 9.8 percent stake in Cairn India Ltd. Indian Prime Minister Narendra Modi, who came to power in May, pledged a stable and predictable tax regime in his first budget and Finance Minister Arun Jaitley last month set up a panel to review retroactive claims.
“There were some provisions in that budget in respect to dealing with the retrospective tax issue,” Thomson said. “We are waiting for clarification on those provisions.”
Cairn shares slipped 0.1 percent to 187.30 pence in London. The stock has declined almost 31 percent this year.
Cairn, based in Edinburgh, Scotland, said today it plans to spend about $1 billion to develop the Catcher and Kraken fields in the North Sea. The company had $1.1 billion in cash as of June 30 and reported a loss of $62.1 million in the first half of the year, according to its statement.
“We are fully funded to deliver our Catcher and Kraken developments and indeed our exploration program, notwithstanding the situation in India,” the CEO said.
The company plans to reduce its stake in an exploration project off Greenland, where it’s a partner with Statoil ASA, he said. It is also trying to trim costs and “ensure that we are the right size” for business as it plans to end a year-long drilling program before 2015, Thomson said, declining to give any details on layoffs.