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Wednesday, March 15, 2006

Cairn Energy plans IPO of Indian unit

UK-based oil firm, Cairn Energy, which discovered India's biggest oil field in Rajasthan, plans to sell at least 25% of its shares in its Indian business through an initial public offer, IPO, reports The Hindu Business Line.

"We intend to examine a partial initial public offering of our Indian exploration and production business on the Bombay Stock Exchange, BSE," said Bill Gammel, Chief Executive, Cairn Energy.

The company estimates in-place reserves in excess of 3.5 billion barrels in the Rajasthan block - the biggest oil find in India in the last two decades. It upgraded recoverable reserves from Mangala, Bhagyam and Aishwariya - three of the dozen discoveries in the Rajasthan block - by 20% to 606-795 million barrels.

Denying any plans to completely sell-off the Indian business, Gammell said on the company website that Cairn remained in discussion with state-owned Oil and Natural Gas Corporation, ONGC, for a possible stake sale.

Sources said that Cairn was asking for USD 3.8 billion, ONGC was willing to pay only USD 2-2.2 billion. Besides Rajasthan block, Cairn also has 22.5% stake in the 50,000 barrels per day Ravva oilfield and is the operator of Cambay Basin block CB/OS-2, home to 130 million standard cubic feet per day producing Lakshmi and Gauri gas fields and a potential oilfield.

On the IPO, he said that the company might offer a minimum 25% of the equity shares and a maximum of 80%. "It depends on market conditions. It depends on appetite and it depends on value."

The IPO, he said, may happen before oil production commences in Rajasthan fields in 2008.

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