Private oil & gas explorer Cairn India is expected to report a 110 percent growth in second quarter consolidated net profit at Rs 2,300 crore compared to Rs 1,093 crore in previous quarter, according to the average of estimates of analysts polled by CNBC-TV18.
The likely jump in profit on sequential basis is because in Q1FY15, Cairn saw an exceptional item of Rs 1,627 crore pertaining to a change in depreciation policy that dented the bottomline.
Hence, adjusted net profit may fall 15.5 percent to Rs 2,300 crore from Rs 2,720 crore during the same period.
Analysts feel the profit may find some support from marginal decline in DD&A (depreciation, depletion and amortisation) charges on sequential basis due to lower production and forex gains on surplus USD funds.
Forex gains are expected to be close to Rs 150 crore in Q2FY15 against Rs 99 crore in Q1FY15.
The quarter-on-quarter comparison is more meaningful due to increase in government profit petroleum (share) by 10 percent FY15 onwards.
Analysts believe sales and EBITDA during the quarter may be lower Q-o-Q on account of weakness in crude prices.
Net sales is seen going down 12 percent to Rs 3,960 crore in the quarter ended September 2014 compared to Rs 4,483 crore in June quarter. Operating profit may slip 8.5 percent sequentially to Rs 2,800 crore but margin may expand 300 basis points to 71 percent in the quarter gone by.
Oil and gas production in Rajasthan is expected to decline from 183 kbpd to 166 kbpd (thousand barrel per day). Additionally planned/unplanned shutdowns in the month of July and August may be leading to production declines.
Company had planned shutdown in July which hit production by 1 percent Y-o-Y and also had an unplanned shutdown in August which impacted production by 17 percent Y-o-Y during the month.
Average crude realisation is expected to decline to around USD 90 a barrel compared USD 98.2 a barrel Q-o-Q and USD 96 a barrel Y-o-Y.
Key things to watch out for are forex gains, production ramp-up from Rajasthan block (it has government nod to ramp up till 300 kbpd), reserve updates with ongoing 100 well exploration program at Rajasthan, and clarity on the cash utilisation.
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