Cheaper producing properties abroad

Vol 13, PW 1 (18 Jun 09) News in Brief
     

Exploration companies in India looking for overseas assets are finding that producing properties where oil and gas has already been discovered and in some cases is flowing are being offered at huge discounts.

“These days you can find properties at a more reasonable price than before, sometimes between $4 and $6 per barrel of one-P (P1) reserves,â€‌ we hear. “Last year the benchmark was around $15-$16 per barrel of one-P reserves, particularly in sought after areas like the Americas or Kazakhstan.

â€‌ But cheap assets might not translate into a rush of Indian companies making overseas acquisitions. With global credit conditions still tight, financing can be a problem.

“Bank lending is tight,â€‌ adds a source. “All exploration companies are facing this problem, not just ours.

â€‌ Essar, Jubilant, Ensearch and Reliance are among Indian companies that have cut back their overseas acquisition plans, and in some cases are â€کfarming-down’ what they already have.