Vedanta Resources plc 16 Berkeley Street London W1J 8DZ

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Vedanta Resources Plc Production Release for the Third Quarter And Nine months ended 31st December 2016 16 Jan 2017 Q3 Highlights

Operations

  • Zinc India:

    • Mined metal production up 44% q-o-q in line with mine plan

    • Integrated metal production increased q-o-q: zinc 38%, lead 26% and silver 10%

    • Environment clearances received for expansion of Zawar and Sindesar Khurd mines

  • Aluminium:

    • Continued ramp up of Jharsuguda-II and BALCO-II smelters; third line of the 1.25 mtpa Jharsuguda-II smelter commenced ramp up in December 2016

    • Supply of coal has commenced from the 6mtpa coal linkages secured earlier this year

  • Power:

    • 1,980MW TSPL plant fully operational with 77% plant availability

  • Oil & Gas:

    Rajasthan production impacted by planned shutdown; strong performance from Mangala EOR with production level of 55,000 barrels per day despite shutdown

  • Iron Ore:

    • Expected to achieve annual mining cap at Karnataka and Goa in the current month; received additional mining allocation in Goa for FY 2017

  • Copper - Zambia:

    • Lower integrated volumes due to lower equipment availability and lower grades

      Corporate

  • S&P upgraded rating to B+ with stable outlook

  • Vedanta Limited - Cairn India merger approved by all sets of shareholders; expected to complete by Q1 CY2017

Tom Albanese, Chief Executive Officer, Vedanta Resources plc, said: "We have made substantial operational progress during the quarter with the enhancement of production from Zinc India and the ramp up of our Aluminium capacities. The 1,980 MW TSPL power plant continues to operate at a high availability of 77%. In our Oil and Gas business, the EOR program at the Mangala oil field in Rajasthan continued to yield positive results. We are very excited about our Gamsberg Zinc project in South Africa where pre-stripping is well underway and first ore is expected in mid CY2018. Though we had some operational challenges at Copper Zambia during the quarter, we continue to be focused on the turnaround of this asset. We will continue our sustained focus on costs alongside rising capacity utilizations thus driving free cash flow growth."

Oil & Gas

Q3

Q2

Nine months period

Particulars

FY2017

FY2016

%

change YoY

FY2017

% change QoQ

FY2017

FY2016

%

change YoY

OIL AND GAS

Average Daily Total Gross Operated Production (boepd) 1

191,230

211,843

(10%)

206,230

(7%)

201,286

214,663

(6)%

Average Daily Gross Operated Production (boepd)

181,818

202,668

(10%)

196,399

(7%)

191,674

205,909

(7)%

Rajasthan

154,272

170,444

(9%)

167,699

(8%)

162,957

170,258

(4)%

Ravva

18,172

21,703

(16%)

18,823

(3%)

18,874

25,430

(26)%

Cambay

9,375

10,521

(11%)

9,877

(5%)

9,843

10,221

(4)%

Average Daily Working Interest Production (boepd)

115,829

128,402

(10%)

125,575

(8%)

122,254

128,991

(5)%

Rajasthan

107,990

119,311

(9%)

117,390

(8%)

114,070

119,180

(4)%

Ravva

4,089

4,883

(16%)

4,235

(3%)

4,247

5,722

(26)%

Cambay

3,750

4,208

(11%)

3,951

(5%)

3,937

4,089

(4)%

Total Oil and Gas (million boe)

Oil & Gas- Gross

16.73

18.65

(10%)

18.07

(7%)

52.71

56.62

(7)%

Oil & Gas-Working Interest

10.66

11.81

(10%)

11.55

(8%)

33.62

35.47

(5)%

Third quarter FY 2017 vs. previous quarters

For Q3 FY2017, average gross production across assets was resilient at 181,818 barrels of oil equivalent per day (boepd). Production was lower primarily due to planned maintenance shutdown in Rajasthan and natural decline in offshore assets.

Gross production from Rajasthan block averaged 154,272 boepd for the quarter, lower mainly due to the planned maintenance shutdown at the Mangala Processing Terminal which will help maintain asset integrity and improve the plant performance.

We had encouraging results from Mangala Enhanced Oil Recovery (EOR), driven by enhanced well productivity and production optimization activities. The production from EOR increased to an average of 55 kboepd in Q3 FY2017 from 52 kboepd in Q2 FY2017. Continued reservoir management including production optimization helped maintain steady production from Bhagyam and Aishwariya. Gross production from Development Area-1 (DA-1) and Development Area-2 (DA-2) averaged 141,177 boepd and 13,095 boepd, respectively.

Production from Ravva and Cambay was also firm at 18,172 and 9,375 boepd, respectively. Production optimization activities helped offset the natural decline in the blocks. Ravva and Cambay facilities recorded an excellent uptime of 99.9% and 99.8%, respectively.

Gas production from RDG was lower at an average of 21 mmscfd in Q3 FY2017 compared to 33 mmscfd in Q2 FY2017. Gas sales also declined quarter-on-quarter to 4 mmscfd from 17 mmscfd. The sales have been temporarily suspended due to a technical issue between the gas transporter and the buyers. Cairn is closely engaged with various stakeholders to address the issue and enable the resumption of the sales at the earliest

Nine months FY 2017 vs. nine months FY 2016

Gross production declined by 7% on year-on-year basis primarily due to lower volumes from offshore assets and planned maintenance shutdown in Rajasthan during the current year, partially offset by volume ramp up from the EOR project at Mangala and continued effective reservoir management across assets.

Zinc India

Particulars

Q3

Q2

Nine months ended

FY2017

FY2016

%

change YoY

FY2017

%

change QoQ

FY2017

FY2016

%

change YoY

Zinc India(kt)

Mined metal content

276

228

21%

192

44%

595

700

(15)%

Refined Zinc - Total

205

206

0%

150

37%

457

605

(24)%

Refined Zinc - Integrated

205

206

0%

149

38%

456

605

(25)%

Refined Zinc - Custom

-

-

-

1

-

1

-

0%

Refined Lead - Total 2

39

35

10%

31

26%

94

107

(12)%

Refined Lead - Integrated

39

35

10%

31

26%

94

102

(8)%

Refined Lead - Custom

-

-

-

-

-

-

5

-

Silver - Total (in mn ounces) 3

3.79

3.73

2%

3.45

10%

10.08

9.73

4%

Silver- Integrated (in mn ounces)

3.79

3.73

2%

3.45

10%

10.08

9.64

5%

Silver- Custom (in mn ounces)

-

-

-

-

-

-

0.09

-

Third quarter FY 2017 vs. previous quarters

Mined metal production was 276,000 tonnes, higher by 21% compared with Q3 FY2016 and 44% sequentially. The sequential increase was on account of higher volumes from Rampura Agucha open cast mine in accordance with mine plan and the y-o-y increase was driven by higher volumes from Rampura Agucha underground and open cast mines. We are on track to achieve stated guidance of higher mined metal production in FY2017 compared to FY2016.

Integrated zinc metal production during the quarter was at 205,000 tonnes, up 38% from previous quarter, and flat y-o-y on account of accretion of mined metal inventory. Integrated saleable lead metal production during the quarter was 39,000 tonnes, up 26% sequentially and 10% y-o-y. The y-o-y increase was in line with mined metal production, while the sequential increase was on account of enhanced smelter efficiencies. Integrated silver production during the quarter increased by 10% to 3.79 million ounces from previous quarter and 2% y-o-y.

Vedanta Resources plc published this content on 16 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 17 January 2017 05:05:02 UTC.

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