D9 block gas discovery lifts Reliance Ind

After being buffeted by negative news for several trading sessions, the stock of Reliance Industries (RIL) staged a comeback in Thursday's trade.

The announcement by the company's partner Hardy Oil and Gas about a gas discovery on the D9 block in the Krishna Godavari basin helped the RIL stock gain 2.9 per cent.

The Sensex, in comparison, rose around 1 per cent. The 12.5 per cent gain registered by the Hardy Oil stock on the London Stock Exchange after the announcement appears to have spurred the interest of bargain hunters in the Indian markets in the RIL stock.

The D9 block, in which Reliance Industries has 90 per cent stake, is adjacent to the company's already-producing D6 block.

Though Hardy Oil did not disclose the reserves the discovery may hold, the D9 block is estimated to be of high potential. However, the long-gestation period involved in exploration and production activities mean that it may be quite some time before possible monetisation of the reserves.

That said, the markets seem to be clutching on to any positive tiding emanating about the company, especially given the spate of recent discouraging news flow that has taken a toll on the stock. Decline in gas production in the D6 block from around 60 mmscmd last calendar to less than 50 mmscmd now has been a major drag.

The stock has significantly underperformed over the past year (down around 17 per cent compared with an almost flat Sensex).

Reliance Industries hopes that its recent tie-up with global exploration major BP should help it stem the production decline and increase output.

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