Mitchell Drilling wants to sell Indian arm for $60m

Vol 15, PW 24 (14 Jun 12) People & Policy
     

Brisbane-headquartered Mitchell Group wants to sell its Indian subsidiary Mitchell Drilling India, according to industry sources.

Over the past decade Mitchell has made a name for itself in the CBM drilling business in India but a source believes the $60m asking price is unrealistic. “Nobody will pay that much,” he says.

“Mitchell’s assets aren’t worth more than $10m.” Perhaps, he suggests, Mitchell believes it can get an additional $50m for the brand value of its business.

Gurgaon-based driller South West Pinnacle and Asansol-based Mining Associates are both interested in acquiring Mitchell and began carrying out an independent ‘due’ diligence of its assets last month (May). Teams from both companies visited Mitchell’s head office in the Delhi suburb of Gurgaon and its site offices at Asansol and Durgapur in West Bengal.

Mitchell has two CBM production rigs, an Atlas Copco RD-20 and a Soilmec G55. Both rigs are contracted to Essar at its 500-sq km RG (E)-CBM-2001/1 block or Raniganj East in West Bengal.

“A new RD-20 rig costs only $2m,” we hear. “A Soilmec rig costs $3m at most.

” Mitchell also has six well logging and perforation units. Of these two were bought in 2006.

Four were bought in 2011 from Scintrex for Rs2.5cr ($500,000) in total. Add a well testing unit and several desorption test canisters to the logging units and together these still won’t cost over $2m.

Calls to group principal and CEO Nathan Mitchell went unanswered. A senior Mitchell India source denied knowledge of its plans to sell.

“I’ve heard nothing,” he said. “I can’t say anything.