The Hindu Business Line : John Energy investing Rs 400 cr for acquiring rigs

Ahmedabad, Aug. 29 Hydrocarbon sector service provider John Energy Ltd will invest Rs 400 crore for acquiring seven drilling and work-on rigs for deployment in oil and gas fields of Central Asia and North Africa this year.

John Energy will obtain four rigs of 2,000 horse power (HP) and three of 600 HP for deployment in Kazakhstan (Central Asia) and North African countries such as Egypt, Libya, Tunisia, Morocco and Algeria from where demand has come recently, said Mr Mahesh Vyas, Chairman and Managing Director of the Ahmedabad-based company.

Of the seven rigs, four would be drilling rigs and three work-on rigs.

Two more drilling rigs will be deployed in Kazakhstan where John Energy has already deployed one while the remaining two drilling rigs will set sail to North Africa, he told Business Line.

The work-over rigs would be deployed in Egypt and its neighbouring countries.

Mumbai’s stock market investor Mr Rakesh Jhunjhunwala had picked up 10 per cent stake in the company a few months ago.

To fund its plans, John Energy is now diluting its stake by 10 per cent to raise Rs 100 crore, while the balance Rs 300 crore would come from debt. The promoters will dilute seven per cent out of their 70 per cent, while Mr Jhunjhunwala will shed three per cent of his stake, he said.

Earlier, the company had planned to raise around Rs 125 crore from the capital market through an IPO and had also appointed a merchant banker. However, it has now been postponed for a year in view of the market conditions, Mr Vyas said. The company has identified three parties, including two from abroad, for private equity and expects to clinch the deal in the next few weeks.

All the 21 rigs owned by John Energy, with capacities ranging from 140 to 2,000 HP, are fully booked for drilling for the next two to three years. Even ONGC had placed an order with the company for a 1,000-HP rig in January. In August 2007, John Energy’s first 2,000 HP rig, the first of its kind in India, was commissioned in an onshore oil and gas field near Neyveli, Tamil Nadu.

The $22-million drilling rig, which can drill up to a depth of 6,000 metres, was hired by a consortium of Jubilant Oil and Gas Ltd, GSPC and GAIL for a daily tariff of around $35,000. The company’s 2006-07 turnover of Rs 48 crore zoomed to Rs 118 crore in 2007-08 and is projected at Rs 240 crore this fiscal due to heavy booking.

Order book

Soon after receiving a spate of orders last year, John Energy had tied up with the State Bank of India for a Rs 115- crore debt to kick-start an aggressive business strategy overseas, where it is now even eying an acquisition, Mr Vyas said, while refusing to divulge further details at this stage.

The company has a capacity to manufacture smaller rigs but imports the bigger ones. Its clients for drilling and work-over services include Cairn Energy India Pvt Ltd and Essar Oil Ltd, while its clients for gas compression services include ONGC and Gujarat Gas Company Ltd.

Its water-well drilling rigs are being used by Neyveli Lignite Corporation Ltd, a host of other companies, and some 500 contractors across India.

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