Deep plans 230 coreholes at seven CBM blocks

Vol 13, PW 10 (22 Oct 09) Exploration & Production

Ahmedabad-based Deep Industries is planning an ambitious drilling programme of 230 coreholes across the seven CBM blocks it won in the just-concluded licensing round.

One way of funding this aggressive exploration campaign is through a listing on the Alternative Investment Market (AIM) in the UK. “Listing on AIM is one of several options we’re considering,â€‌ confirms Paras Savla, Deep’s chairman.

Savla and Deep’s managing director Rupesh Savla (his cousin) hold a 53% stake in this fledgling Rs150cr ($31m) listed company, which provides gas and air compression services, owns a fleet of workover rigs and has emerged as India’s biggest CBM player with nine CBM blocks, if you include two from an earlier round. Deep is also exploring how to raise money from private equity to fund its exploration programme.

But these plans will only firm up after the PSCs are signed. Savla tells us Deep is impatient to begin work immediately after signing the PSCs.

“But getting a PEL,â€‌ he adds, “and getting the necessary environmental clearance can take up to a year.â€‌ Deep will need to buy air drilling CBM rigs to complete its Minimum Work Programme for Phase I (which could be between 18 and 24 months) as conventional rigs take time to drill core holes.

“We are thinking of buying five to six (air drilling) rigs,â€‌ says Savla. Deep also won two NELP-VIII onshore oil exploration blocks with Ahmedabad-based KGN Industries: VN-ONN-2009/1 and VN-ONN-2009/2.

“It was our strategy that helped us win so many blocks,â€‌ says managing director Rupesh Savla. Savla credits the company’s aggressive work programme and high PLP (Production Linked Payment) as critical in it emerging best bidder for seven of the 10 CBM blocks on offer.

“If you average the PLP we offered across the seven blocks,â€‌ adds Savla, “it comes close to 23%.â€‌ Deep won three of the CBM blocks on its own, two with Gurgaon-based Lanco Infratech and two with KGN.