OVL to go ahead with the acquisition Imperial Energy

The union cabinet has accorded its approval to ONGC Videsh Ltd, the overseas investment arm of ONGC, India's largest oil explorer, to go ahead with the acquisition of UK-listed Imperial Energy.

The cabinet committee on economic affirs met Tuesday morning to approve the deal. There is no official word on the government's decision as yet. People who are in the know of the deal said that the cabinet clearance was taken so that OVL could meet the Tuesday midnight deadline set by UK authorities.

This would pave the way for OVL to make the open offer to the UK listed shareholders. The $2.1 billion deal will be one of the bigger deals by ONGC in recent times Imperial Energy has oilfields in Russia. OVL had sought to delay making the open offer but the request was rejected by the Takeover panel on Monday.

Analysts say the deal works out to around $2 to $2.5 a barrel for OVL given Imperial's declared reserves of 900 million barrels and will help improve India's energy security. India meets almost 70% of its oil demand through imports.ONGC is being advised by Deutsche Bank. Merrill Lynch is advising Imperial.

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OVL may make ‘firm’ offer to Imperial soon
Imperial Energy has choosen OVL over Sinopec

OVL may make ‘firm’ offer to Imperial soon

ONGC Videsh (OVL) — the foreign arm of government-owned Oil & Natural Gas Corporation (ONGC) — is set to make a ‘firm’ offer to shareholders of the UK-based Imperial Energy within 28 days.On Monday, the Russian Federal Anti-Monopoly Service (FAS) gave OVL a clean chit on anti-monopoly regulations, the other mandatory pre-condition for making a formal offer paving way for the $2.5 bn acquisition.

Imperial, incorporated in 2004, has oil and gas assets principally in the Tomsk region of western Siberia and the Kostanai region in north central Kazakhstan.It has about 920 mn barrels of oil equivalent (boe) independently estimated proven and probable hydrocarbon reserves (2P) and around 3.4 bn boe of independently estimated proven plus probable plus possible hydrocarbon reserves (3P). The company plans to produce 25,000 barrels of oil per day (bopd) by December this year and 35,000 bopd by the end of 2009.

Read more in The Economic Times article.

ONGC Videsh in talks to buy Canadian oil co

ONGC Videsh (OVL) — the foreign investment arm of ONGC — is in talks to take over a mid-sized listed Canadian oil company having hydrocarbon blocks including oil sand assets. OVL is negotiating to pick up 100% equity stake in the firm for an undisclosed sum.

The acquisition would put OVL in a strategic position in the North American energy space. Code-named as “Project Crystal”, the target company is listed in TSX Venture Exchange in Canada and Stockholm Stock Exchange, Sweden. OVL, which is yet to begin due diligence, is tight-lipped about the company or the valuation.

The acquisition, if it goes through, will give OVL a foothold in oil sands, which gained currency following the spike in global oil prices. Canada is known to have high deposits of oil sands which are now being explored as a viable source of hydrocarbons. With oil prices ruling at over $125 a barrel, several non-conventional hydrocarbon sources like gas hydrates in India are being researched.

Read more in The Economic Times article.

RIL, Essar Oil eye ONGC`s `unviable` Kakinada refinery

After the UK-based Hinduja group, Oil and Natural Gas Corporation's (ONGC) proposed Rs 26,500-crore refinery at Kakinada, Andhra Pradesh, has found new suitors in Reliance Industries (RIL) and Essar Oil.This is despite ONGC maintaining its stand that the refinery is not financially feasible unless the Andhra Pradesh government gives it more incentives.

The 15-million-tonne-per-annum refinery will be implemented by Kakinada Refinery and Petrochemicals (KRPL). While ONGC's subsidiary Mangalore Refinery and Petrochemicals (MRPL) holds 26 per cent stake in KRPL, IL&FS holds 51 per cent and the remaining stake is held by the Andhra Pradesh government.

Read more in The Business Standard article.

DLF shares rise 11%; 8th most valued firm

Shares of DLF Ltd jumped 10.85 per cent in the real estate major's second coming to the capital market, making it the eighth most valued firm on the bourses in terms of market capitalisation.

The scrip listed at Rs 582 on the Bombay Stock Exchange against the issue price of Rs 525 and soared to a high of Rs 714.25, briefly propelling the market value to over Rs 100,000 crore.

Billionaire KP Singh-promoted DLF, which had delisted from Bombay Stock Exchange in 1982, was ahead of ICICI Bank and State Bank of India in terms of market cap. Only Reliance Industries, ONGC, Bharti Airtel, NTPC, Infosys, TCS and Reliance Communications had higher market value on BSE.

In the first 15 minutes of trade, the scrip reported turnover of around Rs 330 crore as around 60 lakh shares changed hands on the BSE.The company had offered 17.5 crore equity shares through 100 per cent book-building process. The proceeds of the issue, which got oversubscribed 3.5 times, would be deployed to meet costs of construction, land acquisition and repayment of debt.

Read more in The DNA Money article.

Sensex hits all-time high at 14,727

Equities opened the week higher, with the Sensex making an all-time high of 14727. Capital goods, metal and banking stocks led the rally. Mid-cap and small-cap stocks also were firm. Autos and FMCG shares, however, were weak.

At 10:15 am, Bombay Stock Exchange’s Sensex was at 14,717, up 67 points or 0.46% from Friday’s close. National Stock Exchange’s Nifty was up 9 points or 0.2% at 4327.

Top Sensex gainers were Cipla, BHEL, Tata Steel, Larsen and Toubro and ONGC.

Hero Honda, ACC, HDFC Bank, HDFC and Wipro were the laggards in the 30-share Sensex.

Market breadth was strong as 1105 shares advanced while 342 declined on the BSE. On the NSE, 648 shares advanced and 269 declined.

NTPC to foray into wind power

After ONGC, HPCL and Tata Power, the country's biggest electricity generator NTPC Ltd now plans to foray into wind power with an investment of more than Rs 1,200 crore as it seeks to diversify into renewable energy.

The navratna PSU, which has an installed capacity of more than 26,000 MW entirely on coal or gas, has been looking to diversify into other energy sources and is already working on hydroelectric projects, besides a few small biomass plants.

NTPC's proposed venture comes at a time when a number of energy companies in India and abroad have already forayed into renewables, particularly wind and solar. India is the world's fourth largest wind energy producer with an installed capacity of more than 7,000 MW, only behind Germany, Spain and the US.

Read more in The Economic Times article.

PSUs likely to invest in MFs

The Cabinet Committee on Economic Affairs (CCEA) will discuss the proposal to lift the ban on state-owned companies from investing in mutual funds in its weekly meeting tomorrow.

This opens significant opportunities for cash-rich public sector units (PSUs) to earn higher returns and provide a fillip to the stock-markets. Mutual funds account for less than 1 per cent of total stock market investment.

According to data compiled by the Business Standard Research Bureau, the 78 listed public sector units had reserves worth Rs 3,04,292 crore at the end of March, 2006. Oil and Natural Gas Corporation (ONGC) with reserves of Rs 52,534 crore topped the list.

This is the second recent move by the government to strengthen PSUs. A month ago, it allowed the chairmen of such companies a role in the appointment of independent directors, also allowing them greater flexibility to make investment and operational decisions.

Read more in The Business Standard article.

Fenosa eyes 10% Petronet stake

Spanish power group Union Fenosa may pick up 10% equity in Petronet LNG Ltd (PLL). The deal may come through the foreign currency convertible bond (FCCB) route. PLL was planning to float a $100-million FCCB issue.

Petronet sources said a Union Fenosa team visited its Dahej LNG import terminal in Gujarat a few months back. The team may come for due diligence again, they added.However, with regard to FCCB route, PLL may have to take a fresh government approval for the issue since the previous approval has expired.

Union Fenosa is present in 12 countries with significant interests in the gas business.

PLL is a joint venture company promoted by Bharat Petroleum Corporation, GAIL India, Indian Oil Corporation and Oil & Natural Gas Corporation. These firms hold 50% in the venture (12.5% each), floated to build and operate the country’s first LNG terminal at Dahej.

With an authorised equity of Rs 1,200 crore, the company’s other shareholders include Gaz de France (10%) and Asian Development Bank (5.2%). The remaining 34.8% equity is held by the public.

Read more in The DNA Money article.

Gail to raise Rs 15,000 cr from overseas

GAIL (India), the country’s largest transporter and marketer of natural gas, plans to raise over Rs 15,000 crore through overseas borrowings over the next five years. This is part of the Rs 25,000 crore the company plans to spend in the 11th Five Year Plan ending 2012.

The company is also likely to sell part of its stake in Oil and Natural Gas Corporation (ONGC) to fund its projects, which include addition of almost 5,000 km of pipelines over the next five years.GAIL holds 2.4 per cent stake in ONGC, which at today’s share price of Rs 909 is worth Rs 4,672 crore.

The Company's debt to equity ratio is 0.12:1 which gives them the freedom to raise more debt. Moreover the company is close to being rated by Moody's, which will make it easier for them to raise money overseas.

The company has also lined up expenditure of Rs 2,744 crore during the current financial year. Of this, Rs 1,761 crore will be spent on laying new gas pipelines, Rs 500 crore on oil and gas exploration, Rs 146 crore on petrochemicals, and Rs 268 crore on new projects. GAIL currently generates around Rs 2,000 crore every year through its pipeline business.

Read more in The Business Standard article.