The Hindu Business Line : Drilling stocks new finds on Dalal Street

THE drilling/exploration support service stocks are new finds on the Dalal Street. As the activity in the domestic exploration and drilling in on-shore and off-shore for gas/oil is poised to take off to greater heights in the coming years, a handful of listed companies present in the support service businesses are being re-rated.

The stocks, such as Aban Loyd Chiles, Shiv Vani Oil & Industries, Alpha Geo, Selan Exploration, Jindal Drilling and Dolphin Offshore, have posted varying degrees of gains with increase in traded quantity on the bourses on the prospect of higher growth and better margins.

According to an ONGC official, the demand for rigs and exploratory contracts is expected to go up in the coming years. ONGC, which is the biggest player in the exploration and drilling field, expects a quantum jump in activity after 20 new blocks would be put on offer in NELP V. "Work in the NELP IV blocks has reached a feverish pace and demand for rigs increasing with private sector players stepping up their activity," he observed.

According industry analysts, the prospect of increase in profitability and turnover in the support service field is commensurate with class of rigs and availability. "In short, as demand determines the price, special premium is usual in this business if the expertise and equipment match the specific need within a given timeframe," the analyst added.

While Aban Loyd, reportedly the biggest among the offshore rigs suppliers, appear to be better poised to take advantage of the demand surge, Shiv Vani, on the other hand, has the largest fleet of onshore rigs in the country.

According to Mr Rajesh Agarwal of CD Equisearch, apart from ONGC, the suppliers have an expanding list of clients such as Cairn Energy, Reliance, OIL and Essar.

Mr Devarsh Vakil of Anagram Stockbroking said with the demand and profit increase granted, the local players' positions would largely depend on their flexibility to increase capacity through overseas arrangements. Today, Aban Loyd closed with a gain of 2.74 per cent, while Alpha Geo and Shiv Vani finished up 5 per cent each. Dolphin, on news of fresh orders, gained by 10 per cent. Jindal Drilling and Selan Exploration moved up 2.30 and 3.20 per cent, respectively.

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