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Cairn India has increased estimates of its Rajasthan resource base and Mangala field’s production potential. Gross discovered resource base estimate for Rajasthan block has been increased to 4 billion barrels of oil equivalent (boe) from 3.7 billion boe earlier.

 

Additionally, gross risked exploration resource estimate has been pegged at about 2.5 billion boe, taking the recoverable resources to 250 million boe from 35 million boe earlier. With this, Rajasthan’s total 2P (proved and probable) and contingent base stands at around 1.4 billion boe, up from 1 billion boe earlier.

 

According to the management, production can be increased to 210,000 barrels of oil per day (bopd) from the MBA fields, currently under development. Earlier production estimate was at 175,000 bopd.

 

At Rs 292.80, the stock trades at 10.8 times its estimated earnings for 2011. It is the most levered play on crude. Increase in crude price by $1 per barrel is likely to increase Cairn’s earnings per share by about Rs 0.6 per share.

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Company Name CMP
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