Roundup..Cairn energy shares weak (AFX)

LONDON (AFX) - Cairn Energy PLC saw its share prices slip as the gas reserves cut in Bangladesh and the still unresolved pipeline issue in India offset the UK group's plan to return cash to investors in the second quarter.Proved and probable reserves at the Sangu gas field, offshore Bangladesh, have been cut by 187 bln cubic feet to reflect the steady fall in production and the group's decision to re-classify some of the potential resources to the broader proved, probable and possible category.The reduction put booked reserves at Sangu at around 142 bcf, or 6 pct of Cairn's overall reserves, Cairn said in an operational update.The steady fall in Sangu's output is partly behind the 13 pct decline in the group's overall production in 2006 to 24,500 barrels of oil equivalent per day.Cairn will publish revised reserves figures alongside annual results on March 27.In India, Cairn has yet to sort out the pipeline issue with the state-owned Oil and Natural Gas Corp, disappointing analysts who are worried that any delay in the 340 mln usd pipeline project could further push back the 2009 start-up of the Mangala field, its largest oil find in Rajasthan.In the update, Cairn only repeated its earlier statement that talks between Cairn India Ltd, its 69 pct-owned unit, and ONGC are progressing and a resolution will likely be achieved in the first half. Cairn has already delayed first oil target at Mangala twice from the original late-2007 to 2008, then to 2009."Constructive talks continue. We're confident (the issue) will be resolved," said a Cairn spokeswoman, declining to comment on media reports in India claiming the pair have agreed to jointly build the pipeline, with Cairn taking the lead with a 70 pct stake and ONGC holding the remaining 30 pct.The Sangu reserves and pipeline news kept Cairn shares weak, offsetting the group's decision to distribute part of the proceeds from the Cairn India's initial share sale to shareholders in the second quarter.The offer raised 1.9 bln usd, about 600 mln usd of which will be retained by Cairn India. The remaining 1.3 bln usd will be returned to investors and fund various projects of the PLC.Apart from giving a timeline, Cairn failed to say how much it hopes to return to investors and in what form the cash will be paid (i.e. dividends or share buybacks).At 12.08 pm, Cairn shares were off 7 at 1,693 pence.Investec Securities, in a note, called the trading statement "uninspiring" and has placed its 19 stg net asset value for the shares under review following the reserves downgrade."Rajasthan rumbles on, but still no definite detail on the pipeline and the Q2 cash return to shareholders," it said, adding it kept a 'hold' on the stock.The additional oil discovery in Rajasthan could have been a 'bright spot' in the update, but analysts found the flow rate too small to get them excited about it.The latest find in Rajasthan was located in Shakti North East, located 6 kilometres north-east of the Shakti-1 discovery.The well, known as Shakti-NE-1, encountered about "six metres of net pay of oil". It flowed about 83 barrels of oil per day, Cairn said.