Financial Modeling
Cairn India Model
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Overview of Cairn India
• One of the largest oil & gas exploration and production
companies in India with a portfolio of 8 blocks
• Its projects are located in four strategically focused
areas: one in Rajasthan; two on the west coast of
India; five on the east coast of India (including one in
offshore Sri Lanka) and one in offshore South Africa
• Cairn India contributes significantly to India’s quest for
energy security and accounts for more than a fifth of
India’s domestic crude oil production
• A low cost operator and a pioneer in the innovative
application of technologies, Cairn India is also credited
with building the world’s longest continuously heated
and insulated crude oil pipeline, and executing the
world’s largest polymer flood project
• Has world-class asset portfolio with proven expertise
across exploration, development and production to
create significant value for all stakeholders
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Timeline of Cairn India
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Rajasthan - Mangala, Bhagyam, Aishwariya
• The Mangala, Bhagyam and Aishwariya (MBA), among
others, constitute Cairn’s three largest finds in Rajasthan
• Mangala field, is considered to be the largest onshore
hydrocarbon finds in India in more than two decades
and was followed by discoveries of the Aishwariya and
Bhagyam
• Till date 38 discoveries have been made in the Rajasthan
block
• The MBA fields have gross ultimate oil recovery of over
1 bn bbls from primary, secondary and Enhanced Oil
Recovery (EOR) methods
Mangala Processing Terminal
• The MPT processes crude oil produced from the
Rajasthan assets
• Following processing, the crude oil is transported to
refineries through a 24" diameter continuously heated
and insulated pipeline.
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World class reserve base and low cost producer
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Reserves and resources
• Oil reserves denote the amount of crude oil that can be technically recovered at a cost that is financially feasible at the present price of oil
• Oil resources includes all oil that can be technically recovered at any price
• Proven reserves (1P): Has >90% probability of being extracted
• Probable reserves (2P): Has 50% - 90% probability of being extracted
• Possible reserves: Has 10%-50% probability of being extracted
Developed and undeveloped reserves
Reserve Replacement Ratio = New addition of reserves / Production
Reserve Life = Closing reserves / Production
Closing reserves = opening reserves – production + additions
UNITS conversion
• 1 bcf = 1,78,250 mmbbls
• 1 boe = 6,000 cubic feet
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Assumptions
• Profit petroleum as a % of Revenue: 20%
• Discount to Brent: 10%
• Cess Crude per boe: 750/-
• Royalty: 15.5%
• Reserve Replacement ratio (Oil): 40%
• Reserve Replacement ratio (Gas): 50%
Price and FX assumptions
2017 2018 2019 2020 2021
Brent Price $/bbl 50 55 55 60 60
FX Rate (INR/$ 67 67.5 68 68.5 69
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