Selan Exploration Technology Limited - 155.00 Rs
Incorporated in 1985, Selan Exploration Technology Limited (SETL) is one of the very few private sector listed companies, engaged in oil exploration and production. Infact it was amongst the first private sector companies to have obtained rights to develop oilfields way back in 1992 when government of India opened up the oil sector for private initiative in exploration and production of hydrocarbons. Earlier it use to undertake seismic data acquisition work for ONGC. Hence, the promoters/management have extensive experience and domain knowledge in the field of petroleum exploration, development and production as well as in the field of geophysical data acquisition, processing and Interpretation. So based on their expertise, company entered into the business of developing proven oil fields and was awarded three oil fields in 1993. Subsequently in 1997, SETL received Letters of Intent for two additional fields out of which one was gas field. Since then company is basically involved in onshore drilling for exploration of oil and gas.
Presently, SETL boasts of owning four oil fields Bakrol, Indrora, Lohar, Ognaj and one gas field Karjisan; all in and around Ahmedabad, Gujarat. Incidentally, all the blocks have a well laid out infrastructure with easy accessibility and are in close proximity to the Government's crude gathering station as well as are in close proximity to a large industrial town. However, company has been producing crude from three oilfields only as the mining lease for Ognaj oilfield is still awaited from the government of Gujarat. But its Bakrol field alone is stated to have oil/gas reserves of around 45 million barrel which is huge by any standard. Against this, due to limitiation of funds and conservative management SETL produced only 100,000 barrels of crude in FY07 and is expected to do 140,000 in current fiscal which may move up to 2,00,000 barrels in FY09. With assured offtake of the entire oil and gas production from these blocks by the government, as per the terms of the production sharing contract there is zero marketing risk for the company. To take the advantage of high crude prices, SETL has been aggressively drilling new wells and is busy analyzing the well logging data to further identify prospective drilling locations which would be taken up for drilling in foreseeable future. Fortunately, these new wells are yielding good production levels.
With international crude oil prices hovering around 100$ per barrel and expected to remain high, the future earning of the company looks very encouraging. Secondly, company is constantly following up with government of Gujarat for mining lease of Ognaj Oilfield. And once the lease is obtained, company will initiate the development activities in the block. Meanwhile this debt free company is expected to clock a turnover of Rs 35 cr and Net profit of Rs 15 cr for FY08. This leads to an EPS of more than Rs 10 on equity of 14.40 cr. However for FY09 it is estimated to post an EPS of Rs 15. To conclude, considering company’s proven huge oil reserve and encouraging future prospects, scrip is trading fairly cheap at a current market cap of merely Rs 225 cr. Investors are advised to accumulate at declines as scrip can appreciate 50% in 15 months.
Presently, SETL boasts of owning four oil fields Bakrol, Indrora, Lohar, Ognaj and one gas field Karjisan; all in and around Ahmedabad, Gujarat. Incidentally, all the blocks have a well laid out infrastructure with easy accessibility and are in close proximity to the Government's crude gathering station as well as are in close proximity to a large industrial town. However, company has been producing crude from three oilfields only as the mining lease for Ognaj oilfield is still awaited from the government of Gujarat. But its Bakrol field alone is stated to have oil/gas reserves of around 45 million barrel which is huge by any standard. Against this, due to limitiation of funds and conservative management SETL produced only 100,000 barrels of crude in FY07 and is expected to do 140,000 in current fiscal which may move up to 2,00,000 barrels in FY09. With assured offtake of the entire oil and gas production from these blocks by the government, as per the terms of the production sharing contract there is zero marketing risk for the company. To take the advantage of high crude prices, SETL has been aggressively drilling new wells and is busy analyzing the well logging data to further identify prospective drilling locations which would be taken up for drilling in foreseeable future. Fortunately, these new wells are yielding good production levels.
With international crude oil prices hovering around 100$ per barrel and expected to remain high, the future earning of the company looks very encouraging. Secondly, company is constantly following up with government of Gujarat for mining lease of Ognaj Oilfield. And once the lease is obtained, company will initiate the development activities in the block. Meanwhile this debt free company is expected to clock a turnover of Rs 35 cr and Net profit of Rs 15 cr for FY08. This leads to an EPS of more than Rs 10 on equity of 14.40 cr. However for FY09 it is estimated to post an EPS of Rs 15. To conclude, considering company’s proven huge oil reserve and encouraging future prospects, scrip is trading fairly cheap at a current market cap of merely Rs 225 cr. Investors are advised to accumulate at declines as scrip can appreciate 50% in 15 months.
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