Aban Offshore surges as Iran-US reach agreement on nuclear program

MUMBAI: Shares of Aban Offshore rallied as much as 7.22 per cent in intraday trade on Monday after Iran and global powers reached preliminary agreement on Iran’s nuclear programme.

Other oil sector related companies gained too following the news. Chennai Petroleum rallied as much as 5.59 per cent, while Essar Oil gained as much as 2.86 per cent in intraday trade. MRPL was also up 3.06 per cent in intraday trade.

The Framework measures, if implemented by Iran, would eventually result in the European Union and United States easing sanctions related to its nuclear program.

In an "international joint venture," Iran would cut its nuclear capacity while agreeing to monitoring and modernization of its facilities.

Axis Capital sees nearly 42 per cent upside in Aban Offshore. The brokerage is of the view that if sanctions are lifted off Iran, it will lead to E&P capex in the country.

Iran contributes 35 per cent to total revenues for Aban Offshore. The company currently has 5 rigs deployed in the country. Iran sanctions will aid Aban’s working capital situation, the brokerage said.

Axis Capital has target price of Rs 610 on the stock.

Companies that buy oil directly from Iran also moved higher as concerns of sanctions eased.