Cairn gets 'rights of use' for Rajasthan oil pipeline; Seeks shareholder nod to raise $1 billion overseas
By Our Corporate Bureau | 12 Sep 2007
Sir Bill Gammell, former rugby player-turned-entrepreneur and chief executive of the Edinburgh-based oil and gas company Cairn Energy, disclosed yesterday that the oil firm's Indian subsidiary Cairn India had won approval for its planned pipeline from the company's Rajasthan oilfields.
Cairn India has secured initial approval for the rights over the land needed to build a pipeline to transport the oil to the closest port and is now seeking shareholder approval to raise $1 billion in overseas funding, through global or American depositary receipts or convertible bonds.
The Indian government has granted a 'rights of use' approval for the proposed pipeline, and Cairn is confident that it will secure full approval within weeks. Sir Bill said the company had made a profit of £750 million ($1.52 billion / Rs6200 crore) in the first six months of the year, thanks to a £758 million one-off gain after it sold Cairn India shares in an initial public offering (IPO).
Cairn said it was on track to start production from its Rajasthan oilfields in 2009. The company's shares soared almost 4 per cent to £18.48 on the news. The IPO was to finance the development of the Rajasthan field, which is expected to produce 150,000 barrels of oil a day.
The company's other subsidiary, Capricorn, has made two bids for exploration blocks in Greenland, as high oil prices and dwindling discoveries are forcing oil companies into increasingly remote regions like the Arctic. Capricorn bought Plectrum Petroleum for about £23.4 million ($47.50 million) and MedOil for around £12.4 million ($25.17 million).
Dyas BV, an active investor in oil and gas joint ventures, had agreed to buy a 10 per cent stake in Capricorn for about £45m ($91.35 million). The company generated £42.8 million in cash in the half-year, though Sir Bill is forecasting that it will start to "fully cash in" on its ventures only in 2009 and 2010.
The company also said it "looks forward to" the outcome of its Bangladesh exploration drilling campaign.
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