International BusinessOIL to float Rs 2,500-cr IPO in Sept
Oil India, the nation’s second biggest state-run explorer, is planning to invest around Rs 2,335 crore during the fiscal. Of this, the company will invest around Rs 1,430 crore in exploration and production and Rs 495 crore towards revamping its ageing fields.
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The company is planning to float an initial public offering (IPO) this September to raise around Rs 2,500 crore to fund its various exploration and production activities. It will offer 26.4 million equity shares to the public in the IPO, while the government will simultaneously sell 10 per cent of its stake in the company to other state refiners.
OIL was to launch its IPO last November, but the stock market conditions made it defer the plan.
The company, however, would not be using the funds raised via IPO for investment in blocks in Iran and Sudan. “Foreign bankers advising the company have asked it not to invest the IPO money in these countries. However, the company might invest from its cash reserves, which at present is 6,000 crore,” said a source.
Oil India holds 10 per cent interest in a pipeline in Sudan and 20 per cent in the offshore Farsi exploration block in Iran. The company also holds interests in around 17 overseas blocks in countries including Libya, Nigeria and Yemen.
The company is also looking at diversifying into city gas distribution and would be bidding for the next round that will shortly come up. It has already tied up with Bharat Petroleum Corporation (BPCL) for this.
“Our core competence lies in the pipeline business. We own and operate a 1,157 km cross-country crude oil pipeline, as well as a product pipeline of 660 km. Diversifying into city gas is another area we are looking at,” said an official from Oil India.
During 2008-09, the company produced around 3.48 million tonnnes per annum of crude oil and 6.8 million standard cubic meters of gas per day from its fields. The company has seen an annual growth of 12 per cent and 8 per cent in crude oil and gas production, respectively.
The company is likely to file a draft red herring prospectus next week.