Cairn India
Cairn India has a portfolio of nine blocks, located in four strategically focused areas: one in Rajasthan; two on the west coast of India; five on the east coast of India (including one in Sri Lanka) and one in South Africa. Cairn India is the operator in all the blocks except KG-ONN-2003/1, where as per the PSC, Cairn India is the operator during the exploration phase and ONGC becomes the operator in the development and production phase.
The company as at 30th Sept 2013, clocked in a group production at 213,299 boepd, which is very much on track to meet year-end target of over 225,000 boepd from all producing assets. Its Rajasthan block completed four years of oil production, crossing the 180 mmboe from Thar’s oil fields. In H1FY14, the company reported a NPM of 74.7% v/s 69.2% (YoY), with net profit coming in at Rs.6512 crore, up 6%. Its current cash flow from operations is at Rs.2,856 crore. Its net Cash in hand is at US$ 3.2 billion. Cash earnings for the first half of FY14 stood at Rs.29.50. It is this strong free cash flow and balance sheet which makes Cairn a very strong exploration & production company. Cairn India sells crude at a price which is 13% lower than average Brent price. Crude price is only expected to go up once world economies bounce back and the benefit of this is sure to get percolated to the earnings of Cairn. It does not have any kind of subsidy sharing and that make perfect economic sense. Cairn has the infrastructure to ramp up production and meet its targets, making it a very good portfolio buy.