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December date for Cairn flotation

London, Sept. 5 (PTI): Cairn Energy Plc today said it would launch an initial public offering (IPO) of its Indian operations in December this year and invest $2 billion in bringing to production its oil discoveries in Rajasthan.

According to the Scottish explorer, an independent valuer D&M has certified the in-place oil reserves in its Rajasthan block at 3.4 billion barrels, a shade lower than its own assessment of 3.65 billion barrels.

Degolyer and Mcnaughton (D&M) has estimated 3.4 billion barrels of oil equivalent (BoE) in place in Rajasthan, Cairn Energy chief executive Bill Gammell said.

The company’s exploration director Mike Watts said according to Cairn's assessment, the six fields in the northern part of the block contain 2.2 billion barrels of oil reserves and 15 other discoveries in the Barmer district block contain 1.4 billion barrels in-place reserves.

Outlining the flotation plan, Cairn Energy finance director Kevin Hart said, “We plan to file a draft red herring prospectus for the IPO by September 25... Pricing will be decided by November end.”

Cairn Energy will spin off its Indian operations that include 21 oil discoveries in Rajasthan with a total reserve of 3.5 billion barrel, the 60,000 barrels per day from Raava field off Andhra coast and oil and gas fields in offshore Gujarat, into a subsidiary — Cairn Energy India. The subsidiary will be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) by December 2006.

He said Cairn Energy would retain majority shareholding in the Indian subsidiary and the IPO would be of a maximum 49.9 per cent equity.

“The partial IPO for Cairn India on BSE and NSE in December 2006 is on track,” Gammell said.

Hart said the money raised through the IPO would be ploughed back to Cairn Energy’s shareholders possibly in the form of dividend and part of the proceeds would be retained by the Indian subsidiary for its operations.

The UK-based parent firm would also retain part of the IPO proceeds for exploration activities. He, however, did not say how much the company planned to raise through the IPO.

Cairn would invest around $2 billion in developing four main northern fields — Mangala, Aishwariya, Bhagyam and Raageshwari — in the Rajasthan block, he said.

Watts said first oil production from Mangala field, the largest of the 21 discoveries in the Rajasthan block, has now been rescheduled to 2009. Earlier, it had projected first oil in the last quarter of 2008.

The rescheduling had been done primarily taking into account the lead time required for ordering equipment and building pipeline to evacuate the crude to a refinery.

The initial output would be 100,000 barrels per day peaking to around 150,000 barrels per day from 2009 to 2012, he said, adding that southern fields would start producing 2,000 to 3,000 barrels per day of crude by end-2006 and truck it to refineries.

After the pipeline is built, the southern fields of Saraswati and Raageshwari would produce 5,000 to 15,000 barrels per day crude.

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