The Hindu Business Line : Selan Exploration gains on investors interest

According to market sources, the pumped up accumulation this week is due to its oil reserves in three onshore blocks in Gujarat as also possibility of substantial increase in production and acquisition of another block from ONGC shortly.

Proven Reserves

In an e-mailed response to Business Line query, Mr Gunjan Jain, Company Secretary of Selan, said that currently the company was operating 14 wells in three blocks — Bakrol, Indrora and Lohar — all with proven oil and gas reserves. “We expect a sales/volume growth of 30 to 40 per cent in 2007-08 over the previous fiscal.”

According to him, Ognaj — another block for which exploration permission has been pending — may shortly be handed over by ONGC.

Permission

Under the existing arrangements, lease rights for the oil-bearing block area is to be granted by the Government of Gujarat after obtaining prior clearance from the Union Ministry of Petroleum and Natural Gas.

Once the Gujarat Government allows the right, ONGC can issue permission for exploration, according to the management of the company.

The total reserve, at a conservative industry estimate (considering $70 a barrel), is worth Rs 13,500 crore. According to an oil analyst with an institutional brokerage, normally, minor onshore blocks such as the ones operated by Selan can have an operation span varying between 20 and 25 years.

Regarding recovery of cost petroleum, Mr Jain said that the arbitration proceeding on the contentious issues have started. “The hearings for the Arbitral Tribunal have commenced and we expect that a decision will be available in a couple of years.”

Pending resolution

The company had paid an ad hoc amount of Rs 1.6 crore to Government of India towards its purported claim for profit petroleum for the financial year 2006-07. Pending resolution of the related issues, no provision is being made for the payment now.

“The final decision, whether any payment for profit petroleum will be made, shall be determined by the order of the Arbitral Tribunal,” the company secretary said.

As per the terms of the Production Sharing Contract with the GoI, cost and profit petroleum and assured offtake are parts of the complete arrangement, which kicks off after operation begins.

The stock today closed at Rs 164.5 with a gain of 9.6 per cent and 4.34-lakh shares changed hands on the BSE and the NSE.

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