Cairn India Net Plunges 99% as Oil Prices Trade Near 12-Year Low

  • Company sells oil at average of $35 a barrel vs $68.7
  • Quarterly sales fall 42 Percent to 20.4 billion rupees

Cairn India Ltd., a crude oil producer owned by billionaire Anil Agarwal, posted a 99 percent decline in third-quarter profit as oil prices collapsed to near 12-year lows.

Group net income fell to 86.9 million rupees ($1.3 million) in the three months ended Dec. 31, from 13.5 billion rupees a year earlier, the company said Friday in a stock exchange filing. That fell short of the 2.08 billion-rupee mean of 15 analyst estimates compiled by Bloomberg. Sales decreased 42 percent to 20.4 billion rupees.

Cairn India, which produced about 27 percent of the country’s domestic crude output during the financial year to March 2015, slashed spending this year and relinquished exploration rights in Sri Lanka as Brent crude dropped. Drillers globally have reduced spending on exploration and deferred new projects amid declining profit and revenue, leading to over a quarter of a million job cuts.

“These are challenging times for Cairn India as oil prices are low and output from its fields remains flat,” Dhaval Joshi, an analyst at Emkay Global Financial Services Ltd. said before of the earnings. “In the current environment, there is no trigger for the stock unless there’s a revival in prices.”

Selling Price

The company sold oil at an average price of $35 a barrel in the third quarter, compared with $68.7 a year earlier. The crude decline prompted the oil producer to cut its capital expenditure plans for the year ending March 31 to $300 million from an initial projection of $1.2 billion.

The company based in Gurgaon, near New Delhi, had 184.70 billion rupees of cash and cash equivalents as of Dec. 31. Total expenses at Cairn India fell about 4 percent to 22.7 billion rupees. The company produced 202,668 barrels of oil equivalent a day during the quarter. Production from its flagship Rajasthan block was 170,444 barrels a day, according to the statement.

Cairn India shares rose 2.6 percent to 112.85 rupees at the close in Mumbai, compared with a 2 percent gain in the benchmark S&P BSE Sensex. The earnings were announced after trading ended. The stock collapsed 43 percent in 2015, capping a second annual loss.

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