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Cairn plans IPO of Indian unit

Cairn Energy plans to sell at least 25% of its shares in its Indian business through an initial public offer (IPO).

india Updated: Mar 14, 2006 14:47 IST

UK-based oil firm Cairn Energy, which discovered India's biggest oil field in Rajasthan, plans to sell at least 25 per cent of its shares in its Indian business through an initial public offer (IPO).

"We intend to examine a partial initial public offering of our Indian exploration and production business on the Bombay Stock Exchange," said Bill Gammel, Chief Executive, Cairn Energy.

The company estimates in-place reserves in excess of 3.5 billion barrels in the Rajasthan block -- the biggest oil find in India in the last two decades. It upgraded recoverable reserves from Mangala, Bhagyam and Aishwariya - three of the dozen discoveries in the Rajasthan block - by 20 per cent to 606-795 million barrels.

Denying any plans to completely sell-off the Indian business, Gammell said on the company website that Cairn remained in discussion with state-owned Oil and Natural Gas Corp (ONGC) for a possible stake sale.

Sources said Cairn was asking for $3.8 billion while ONGC was willing to pay only $2-2.2 billion.

Besides Rajasthan block, Cairn also has 22.5 per cent stake in the 50,000 barrels per day Ravva oilfield and is the operator of Cambay Basin block CB/OS-2, home to 130 million standard cubic feet per day producing Lakshmi and Gauri gas fields and a potential oilfield.

On the IPO, he said the company may offer a minimum 25 per cent of the equity shares and a maximum of 80 per cent. "It depends on market conditions. It depends on appetite and it depends on value."

The IPO, he said, may happen before oil production commences in Rajasthan fields in 2008.

"The material increase in both oil in place and reserves at Mangala and Bhagyam confirms the work class nature of these fields," he said.

"We now believe the time is right to examine methods of increasing the local autonomy of our Indian business, in line with our strategy of adding value for shareholders and are in recognition of the superb growth opportunities available in India," he added.

The UK company had registered profit of $79.1 million in 2005 compared to a loss of $15.7 million a year earlier, the release said.

First Published: Mar 14, 2006 14:47 IST