Cairn informs regulator of oil strike at Krishna-Godavari basin
23 Aug 2010
Cairn Energy today said that it has informed the directorate general of hydrocarbons (DGH) that its Indian unit Cairn India has struck oil and gas in the Krishna-Godavari basin, which the company had announced on 16 August 2010.
In a regulatory filing to the Bombay Stock Exchange, the Edinburgh-based Cairn Energy today said that it has notified the DGH of a discovery of oil and gas in the Nagayalanka-1z well, located in the onshore block KG-ONN-2003/1.
Under Indian laws, all resource increase announcement have to be first verified and cleared by a panel led by the DGH, before the company can make a public announcement.
It seems that in theis case, without first informing the DGH, Cairn Energy went public with its announcement just a day after it struck a deal to sell a 51 to 60 per cent stake in Cairn India to Anil Agrawal-led UK-listed Vedanta Group for around $9.5 billion. (See: Vedanta offers to acquire 20 per cent in Cairn India for $3 billion)
The KG-ONN-2003/1 block is situated in the Krishna-Godavari basin and was awarded under NELP V bidding round. Cairn India is the operator of the block holding a 49 per cent interest in the block, while state-owned Oil and Natural Gas Corp (ONGC) holds the balance 51 per cent.
The company has not revealed the reserves of the discovery since this would be known after it drills more wells for appraisal.
Cairn India is India's second-largest private sector upstream oil company (by reserves) and a world-class asset. Its key producing asset represents 25 per cent of India's total oil production.
The company is on the Bombay Stock Exchange and the National Stock Exchange and had a market capitalisation of Rs67,443 crore ($14.2 billion) on the day prior to the announcement of the offer.