Cairn Energy discovers gas reserves in western India

Aug 07, 2001 02:00 AM

Cairn Energy, the Edinburgh oil and gas exploration company, announced the discovery of gas reserves in western India which it said could be worth £ 71 mm to the company. It said that exploratory drilling at the offshore Lakshmi gas field, near Gujarat, had led to the discovery of reserves expected to produce 103.3 mm cf of gas, or 17,000 bpd of oil equivalent. The find is estimated at 300-400 bn cf of gas.
Bill Gammell, Cairn's CEO, said that the discovery would increase the company's gas reserves by a third. He said that the decision to drill had been taken in May and an appraisal well had now confirmed that the field was commercial.
"From the company's point of view it is very good news. Our share of the reserve is worth around $ 100 mm and the original drilling cost $ 4 mm It adds about one third to our existing reserve; the gross value of the discovery is around $ 250 mm. "We will drill development wells in summer next year and we expect to begin production by early 2002.

Mr Gammellsaid he was hopeful of finding more reserves after further exploratory drilling in the region. Cairn is the operator of the Lakshmi venture, holding a 75 % stake, along with TATA Petrodyne, which has 15 % stake, and the state-owned Indian company ONGC, with 10 %.
ONGC has a right to increase its stake to 40 % in the event of a successful discovery and it is expected that this will happen, reducing Cairn's stake to 50 % and TATA's to 10 %. This would not diminish the value of the discovery to Cairn Energy, Mr Gammell said. Mr Gammell is a close friend of George W. Bush, the US president.
They met in 1959 when George Bush Sr sent his 13-year-old son, "Dubya", to holiday at the Gammell's family farm in Perthshire. Cairn Energy operates mainly in India and Bangladesh, where it has a net acreage of about 15,000 sq km (3.7 mm acres) as well as a small position in the North Sea. The company participates in production from the Gryphon oil field in the North Sea and in gas production in fields offshore The Netherlands.

Source: Businessam.co.uk
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