Cairn India Profit More Than Halves on Slump in Crude Oil PricesRakteem Katakey
Cairn India Ltd.’s third-quarter profit fell 53 percent as the slump in crude prices crimped earnings at the operator of the nation’s biggest oil field on land.
Group net income fell to 13.5 billion rupees ($219 million) in the three months ended Dec. 31 from 28.8 billion rupees a year earlier. The profit missed the 15.7 billion-rupee median of 26 analyst estimates compiled by Bloomberg. Net sales at the company, controlled by billionaire Anil Agarwal’s Vedanta Resources Plc, fell 30 percent to 35 billion rupees.
Brent crude fell 39 percent in the quarter, the biggest loss in six years, bringing down revenue and profit for oil producers and forcing drillers in the U.S. to cut spending, staff and dividends. Plunging crude will affect Cairn India’s plan to spend $3 billion over the next three years to drill more wells in its biggest deposit in the country.
Cairn India shares were little changed today at 238.50 rupees at the close in Mumbai, compared with a 0.4 percent gain in the S&P BSE Sensex. The stock lost 26 percent in the past year, while the benchmark index gained 36 percent. The earnings were announced after trading ended.
The company, based in Gurgaon near New Delhi, sells its crude oil linked to Brent unlike its state-run rival Oil & Natural Gas Corp., which is forced by the government to give discounts to refiners including Indian Oil Corp. to partly compensate them for selling cooking gas and kerosene below cost.
Cairn India’s production fell 2.5 percent to 218,900 barrels of oil equivalent a day during the quarter. Output from its flagship Rajasthan block declined 3.4 percent to 180,010 barrels a day, according to the statement.