LONDON, July 3: British oil explorer Cairn Energy Plc said on Monday it had signed up for $1 billion of funds to help drive its exploration plans in Rajasthan, India, but its shares slipped after some drilling disappointment.
Cairn also said India's government had given its development plans for the Mangala, Aishwariya, Saraswati and Raageshwari fields the final official nod and that it was still planning to float its Indian arm in Bombay by early next year.
The four fields are located in Block RJ-ON-90/1.
Cairn recently estimated there were more than 3.5 billion barrels of oil in place in its key Rajasthan exploration block in northwest India, up from about 2.5 billion previously.
''Obtaining government approval ... and securing finance for the first phase of the developments is a significant achievement on the path to first oil,'' Cairn Chief Executive Bill Gammell said in a statement.
Cairn said in March that it was considering a partial flotation of its core Indian exploration and production business and that it would return any proceeds from the listing to shareholders.
Cairn said the IPO of Cairn India was still on track to complete by the end of this year, or by end-March 2007.
However, shares in Cairn dipped a moderate 3 percent in early trade on Monday, with analysts blaming the fall on the early ''mixed results'' it reported from three appraisal drills on the northern end of the NP structure in Rajasthan.
Cairn said it signed the $1 billion bank facility with the World Bank's private sector arm, International Finance Corporation, and Britain's Royal Bank of Scotland, among other banks. Around $850 million is earmarked for Rajasthan.
The company also reported that entitlement production for the first half of 2006 came to around 27,300 barrels of oil equivalent per day (bopd), slightly behind the 27,900 bopd reported for the same period the year earlier.
''Appraisal work on the NP structure, the largest un-appraised structure in Rajasthan has been disappointing with two dry wells and a third finding a relatively small quantity of low quality oil,'' Merrill Lynch analyst Andrew Knott said in a note.
Oriel Securities analyst Richard Rose said he was still concerned about the timing of Rajasthan oil flows.
''We believe there is still execution risk in delivering production from North Rajasthan on a timely basis but the shares are likely to remain firm as long as the Indian market steadies during the second half of the year ahead of the IPO,'' Rose said.
Cairn said in the trading update that the final development plans for the Bhagyam, Shakti and Guda fields were expected to be submitted by the end of this year, and that first oil from Mangala was still due by end-2008.
By 1137 GMT, Cairn Energy shares were 2 percent weaker at 21.48 pounds each, valuing the business at around 3.4 billion pounds ($6.3 billion).
The firm expects to publish its results for the half year to end-June in early September.