EconomyNext – Cairn India Limited (CIL) has announced it was cutting spending owing to sharply lower oil prices while a team is expected in Colombo next week for talks on the Mannar Basin gas find.
"In light of the current oil price environment, Cairn is taking a proactive approach to capital allocation and shareholder returns," the firm, an independent oil exploration and production company, said in a statement.
"The company will be undertaking projects that are economically viable at current oil prices."
Having spent almost 1.1 billion US dollars in capital spending in the 2015 financial year, Cairn said it has more than halved capex for FY16 from a projected 1.2 billion dollars to 500 million dollars, "while deferring the rest."
The company, which has onshore and offshore oil and gas wells in India, said its management focus is on "reengineering projects and re-negotiating contracts to improve project economics."
A Cairn India team was due in Colombo for talks with week but this has been put off till next week.
Cairn made two gas strikes in the Mannar Basin but an agreement with the Sri Lankan government on production and pricing has been delayed.
The Cairn statement said the company will "remain agile to make investments to enhance volumes. Despite the partial deferment of capex, the volumes will yet see growth in the coming fiscal."
Mayank Ashar, Managing Director of Cairn India said: “We would like to give confidence to our shareholders that we are more focused than ever to drive operational efficiencies in the current crude price environment.
"Our cash rich balance sheet and best-in-class cost profile provide a solid foundation to operate our high margin core fields. This gives us the optionality to be selective about growth projects in these challenging times.”