Cairn India Cuts FY 2016 Capex to $500M from $1.2B Due to Low Oil Price
Cairn India Limited (CIL), one of the leading independent exploration and production companies in the world, announced Wednesday its guidance.
In continuation of our communication at the end of 3Q FY15 and in light of the current oil price environment, Cairn is taking a proactive approach to capital allocation and shareholder returns. The Company will be undertaking projects that are economically viable at current oil prices. Additionally management focus is on reengineering projects and re-negotiating contracts to improve project economics.
With close to $1.1 billion of capex invested in FY15, the Company is revising the capex for FY16 from the projected $1.2 billion to $500 million, while deferring the rest. 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.
The Company has received Management Committee approval for the Raag Deep Gas Project.
As always, the focus will be on free cash flow after capex and dividend payout.
Mr. Mayank Ashar, Managing Director and CEO of Cairn India commented:
“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.”
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