Daily Telegraph: India fall eclipses Cairn's oil boost
By Christopher Hope, Business Correspondent (Filed: 18/05/2004)
Investors' concerns about the new left of centre government in India overshadowed news from Cairn Energy that its new find in Rajasthan will yield more oil than expected.
Cairn's shares have jumped by more than 170pc since January when it unveiled the discovery of an enormous oil field in northern India, transforming the Scottish company into Britain's biggest independent oil and gas business.
Yesterday Cairn said that the 1.1billion barrel "Mangala" field was now likely to yield between 100m barrels and 275m barrels - 75m more than previously thought - after Cairn had drilled three out of six wells there.
Sources said the tests had showed that the field was a classic "upside down pudding bowl" structure, with no obvious technical difficulties.
Bill Gammell, chief executive, said: "Confirmation of the widespread distribution of excellent high quality reservoirs in the northern part of the Block is now emerging on both a field and regional scale. This augurs well for our future activities."
Cairn was particularly pleased that the recoverability rate had jumped from 18pc to 25pc of the total reserves because of the revision.
News of the increase sparked Cairn's shares to jump 67 in early trading before concerns about India's new government pegged back the shares to close up 2 at 995p.
Al Stanton, analyst at Deutsche Bank, said that there were fears a new energy minister who could view Cairn's find differently.
Shares on the Bombay Stock Exchange yesterday posted their biggest ever "intra-day" fall over concerns that the new government could roll back economic reforms.
He said: "There are concerns about India generally and that has an impact on the shares. It is just nervousness about investments in India."
Mr Stanton added that some investors were also profit-taking, because they had priced in the possibility of more recoverable oil from the Mangala field.
The find has been a source of continued embarrassment to Shell, which sold its share in the field to Cairn for $7.25m (£4m) 18 months ago.