Indian Stock Market News and Analysis

Selan Oil Exploration With crude oil price a trifle over $ 77 per barrel and small cap Selan Oil= confirming a crude oil reserve of 45 mn barrels in Bakrol (just one of the = four oil fields) owned and operated by Selan Oil, effectively worth close to= $ 3.5 bn should this company continue to carry a market cap of a mere Rs 16= 6 crore. =20 After all the corporate produced 1 lakh barrels of crude in FY07, expects = to do 140,000 barrels in FY08 and 2,00,000 barrels in FY09 and has a oil pro= duction cost of roughly $ 10 per barrel, leaving clean profits of approximat= ely $ 67 per barrel of oil pulled out and sold. =20 Just maybe this corporate may be worth a take-over by a strong E&P player = like Reliance or Ongc. =20 =20 Dear Mini:
Please find below a seriatim reply to your queries :
1. I want to understand the company’s business better and therefore request= you to kindly send me any writeup(though I’ve read your Annual reports for = last 2-3 years & website), which explains company’s business elaborately. An= y presentation made to the investor=20 community or during a conference would be appreciated.
Selan: The Company has entered into a contract (Production Sharing Contract)= with the Government of India for 5 oil/gas fields in and around Ahmedabad, = Gujarat. These fields were initially operated by ONGC and later awarded to = SELAN under Pre - NELP bids. Mining Lease for 4 of these blocks has been gra= nted to the Company.=20 =20 The Company has 100% ownership of these blocks. The quantity of crude prod= uced from these oilfields is sold to IOC and the payment is made to the Comp= any as per the prevailing international crude oil prices (+2%).
2. I’m interested in gauging the business potential of the company.Therefor= e purposefully interested in knowing the business processes, areas of activi= ty, where all the company operates, assets owned in the form of gas wells/ba= sins, licenses won .
Selan: Refer Q1.
3. What are the future plans of the company- timeline for the oil/gas explo= ration in the next two years.
Selan: The Company plans to drill approximately 8-10 wells in each of the ne= xt 2 - 3 years to scale up its production significantly.
4. Background of the promoters, foreign partners.=20
Selan: Please read Corporate Governance section of the Annual Report for det= ails on promoters. We have no Foreign / Indian Partners.
5. Possible growth rates and margins– if declared by company.=20
Selan: 30 - 40% increase in sales / production in each of the next 2 - 3 yea= rs.
6. There was a newsitem in the Hindu that the industry sources put oil/gas = reserves for Selan at 45 mn barrel. Comments pls.=20
Selan : Theses figures relate to our Bakrol field and are certified by an in= dependent agency.
Regards.
Gunjan Jain
Company Secretary Selan Oil Exploration

Safe Harbor Statement: =20 Some forward looking statements on projections, estimates, expectations & ou= tlook are included to enable a better comprehension of the Company prospects= . Actual results may, however, differ materially from those stated on accoun= t of factors such as changes in government regulations, tax regimes, economi= c developments within India and the countries within which the Company condu= cts its business, exchange rate and interest rate movements, impact of compe= ting products and their pricing, product demand and supply constraints. =20 Nothing in this article is, or should be construed as, investment advice.= =20 =20 =20 =20 =20
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