The Hindu Business Line : John Energy places orders for 4 more rigs

Ahmedabad, April 16 With its business booming in India and abroad, and customers like Reliance Industries Ltd (RIL) and Gujarat State Petroleum Corporation Ltd (GSPC) hiring its rigs for the next three years, John Energy Ltd is acquiring four more rigs this year to meet the increasing demand in the exploration and prospecting (E&P) sector.

The company invested Rs 180 crore in 2006-07 and Rs 160 crore in 2007-08 for acquiring rigs, imported from the US. It plans to invest nearly Rs 400 crore in 2008-09 to acquire more rigs and has recently placed orders with a US-based company to acquire four new ones of 2,000 MW each, which would be deployed overseas, mainly in Kazakhstan, Turkmenistan, Egypt and Libya.

Each of these rigs would cost $20 million. Signing of long-term contracts with these countries is in progress. In view of its overseas business, the company has set up offices at Dubai and Aktau (Kazakhstan). Orders for buying the rigs were placed after the company received drilling orders from the E&P sector, a senior official of the Ahmedabad-based company, engaged in drilling contract business, told Business Line here.

With the new rigs, John Energy will have 20 rigs deployed across India and four overseas, coming next only to ONGC, which has some 140 rigs in the drilling business. Last year, RIL and GSPC had placed their orders with John Energy for hiring rigs for their Gujarat and Cambay Basin oilfields respectively. It recently deployed a 1,500 Horse Power (HP) rig for GSPC in Gujarat.

All the rigs owned by John Energy are fully booked for drilling for the next two to three years. Even ONGC has placed an order with John Energy seeking a 1,000-HP rig in January 2008, the official added.

The company posted a turnover of Rs 48 crore, which is projected to go up to Rs 200 crore this fiscal due to heavy booking. It is also contemplating an initial public offer late this year to raise funds for future expansion. Mumbai’s stock market investor Mr Rakesh Jhunjhunwala had picked up a 30 per cent stake in John Energy Ltd last year.

Apart from going public to fund its expansion plans in the next couple of years, John Energy plans to disinvest further. Besides, it has tied up with the State Bank of India for a Rs 115-crore debt to kick-start an aggressive business strategy overseas.

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