Eni desperate to sell its 47.18% stake in HOEC

Vol 17, PW 18 (24 Apr 14) People & Policy

Embattled Italian explorer Eni is again trying to sell its 47.18% stake in Chennai-headquartered Hindustan Oil Exploration Company (HOEC) in what some suspect is a prelude to its exit from India.

Frustrated with slow progress in developing HOEC's assets, Eni India boss Guido Papetti and HOEC managing director Manish Maheshwari, who is moving to Essar, met potential buyers in Chennai, where HOEC has set up a dataroom, earlier this month (April). "Three companies are interested," reports a source.

"Two private equity funds and a large privately held Indian downstream company.” One of the visiting firms spent the whole of Saturday examining the company’s accounts with Maheshwari, we hear.

Eni tried to sell its HOEC stake before, in December 2012 to IndianOil and ONGC. Both declined, saying HOEC was overvalued and holds geologically complex assets, including its flagship PY-1 gasfield.

Anadarko Petroleum was also rumoured to have once shown interest, in 2012. Eni can expect to make a loss on any sale, predicts a source.

When it bought the stake in 2008, it paid Rs144/share ($2.37); HOEC’s share price today hovers around Rs49 ($0.81). HOEC has stakes in 10 oil and gas assets in the Cauvery, Cambay, Assam-Arakan and Rajasthan basins.

Last year it made a Rs595cr ($98m) pre-tax loss after revising down reserves at PY-1, where production was shut down for a total of 135 days.