Expect to get govt nod on stake sale to Vedanta: Cairn

Expect to get govt nod on stake sale to Vedanta: Cairn

Cairn had on August 16 announced sale of as much as 51 per cent stake in Cairn India to the London-listed mining group for up to USD 8.48 billion.

"Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the government of India in a positive and constructive manner," company Chief Executive Bill Gammell said while announcing the full year 2010 financial results.

Oil ministry is likely to take to the Cabinet Cairn's conditional application for government nod next week. Cairn, after repeated reminders, had on November 23 applied for the sale of a 51 per cent stake to Vedanta, but with a rider that government consent was not mandatory and that the corporate deal involving a share transfer does not trigger partner ONGC's preemption rights.

ONGC by virtue of its stakes in eight out of 10 properties of Cairn India claims pre-emption rights. Earlier this month, Cairn said it hoped to complete the transaction by April 15. Gammell said the planned sale would lead to a significant return of capital to shareholders while maintaining balance sheet strength and flexibility.

Cairn today reported revenues in full year 2010 surged to USD 1.6 billion as compared to USD 234 million in the previous year, it said in a press statement. It said profit after tax in 2010 was USD 483 million. After adjusting USD 38 million for exceptional items and USD 638 million towards adjustments for sale of majority stake in Cairn India, the net profit stood at USD 1.08 billion as opposed to restated net profit of USD 53 million in 2009.

Startup of piped oil production from Cairn India's Mangala oilfield in Rajasthan contributed to the record revenues. "Rajasthan crude is now transported to a number of Indian refineries by the world's longest continuously heated pipeline," Cairn Energy, whose mainstay assets are in India, said.

While currently output is around 125,000 barrels per day (bpd) but the total resource base supports a combined potential production of 240,000 bpd. "The potential completion of the Vedanta transaction would uniquely position Cairn to return significant value to shareholders, while retaining the financial flexibility to continue to focus on Cairn's core expertise in exploration," the statement said. "2011 looks set to be an exciting year for Cairn as we continue to pursue future growth opportunities," it added.