Oil hopes swell for Cairn Energy

Cairn's recent finds have been some of the biggest in the world

Oil firm Cairn Energy has raised its estimates of oil at its three key Indian fields, as it unveiled a modest rise in half-year profits.

Cairn said total potential production at the Rajasthan fields was now over 150,000 barrels per day.

Pre-tax profits rose to £31.1m ($56.4m) from £30.9m at the same time in 2004.

Cairn shares have risen by a third in value over the last year on the back of discoveries in Rajasthan, giving the firm a market value of about £3bn.

Edinburgh-based Cairn said it looked forward to "an increasing resource and production base at a time when oil prices and interest in India have never been higher".

'Big play'

The fields at Mangala, Bhagyam and Aishwariya have proved and probable reserves of between 514 million and 685 million barrels, the company said.

Rajasthan remains the catalyst for Cairn's continued growth in South Asia Bill Gammell, chief executive See Cairn's share price

"To put that in perspective, at today's crude oil price that's between $30bn and $45bn worth of crude in value, so this is a very big play for us," said Cairn's chief executive Bill Gammell.

"Rajasthan remains the catalyst for Cairn's continued growth in South Asia," he added.

Meanwhile, some analysts are speculating that Cairn's success might whet the appetites of potential bidders.

The attraction of a company which has access to half a billion barrels of crude in the world's third-fastest growing energy market could prove irresistible to the big oil companies.

"We still see fundamental valuation upside and also do not rule out an mergers and acquisitions play," said Mark Iannotti at Merril Lynch.