No IPO till market conditions improve, says Oil India

Vol 12, PW 19 (26 Feb 09) People & Policy

Oil India is holding back on plans to sell shares through an Initial Public Offering (IPO) because of downbeat market conditions and the global credit crisis.

“The market climate is not at all favourable,â€‌ TK Ananth Kumar, Oil India director finance tells PETROWATCH, in a wide-ranging interview last week. But Kumar stresses that if local bourses bounce back over the coming months, a narrow window is still open to reconsider a share sale.

“We have the government’s permission to launch an IPO until September,â€‌ he says. Still, Kumar stresses that there is enough work for Oil India in the coming months, as it steps up its drive to acquire overseas assets.

Money, even in these tight times, he says, is not a problem. “We have Rs7000cr ($1.5bn) in the bank,â€‌ he adds.

“There are many lenders that will give us more if the need arises. We are looking at many potential companies who are offering stakes in producing or discovered properties.

â€‌ How will Oil India spend this cash Kumar says the number one priority is to buy proven assets. “We will look only at producing or discovered properties so we can get an immediate return on the investment.

â€‌ Oil India already has 14 overseas assets spread across Nigeria, Gabon, Libya, Iran, Egypt and Yemen. Kumar says it is now looking further afield in north and west Africa, Russia, the CIS countries, Syria and Australia.

Most of Oil India’s domestic pre-NELP acreage is in Assam, where it has registered a sharp production hike. “We have broken the jinx of being a 3m t/y company,â€‌ says Kumar.

“Today we are producing 3.5m t/y, most of it from ageing fields.â€‌ Kumar says this is down to efficient reservoir management, aggressive exploration, and a growing E&P budget.

By March, Kumar says Oil India will have spent Rs1700cr ($400m) but plans to increase this by 35% to Rs2300cr ($540m) in the next financial year beginning April 1.