Credit Suisse maintains 'neutral' rating on ONGC
Credit Suisse maintains ‘neutral’ rating on Oil and Natural Gas Corporation.
By ET Bureau |
ONGC
RESEARCH: CREDIT SUISSE
RATING: NEUTRAL
CMP: RS 1,072
Credit Suisse maintains ���neutral��� rating on Oil and Natural Gas Corporation. ONGC Videsh (OVL) has recently displayed a propensity to bid and acquire near discovered reserves after a year of adding to an exploratory portfolio.
It has bid for Imperial Energy and is reported to be interested in stakes in Tanganyika Oil and Block 32 in Angola. Imperial Energy has reserves in Russia, but little production.
Tanganyika has heavy oil reserves in Syria that need to be developed. Block 32 in deep-water Angola is yet to begin project development.
Buying multibillion-dollar assets through competitive bids is unlikely to leave much value on the table now, while OVL will run capital expenditure (capex) and project-completion risks.
Upside at such acquisitions can be generated by project execution ��� getting production volume to more than current estimates ; and/or via a sustained high-oil-price environment.
ONGC���s strategy of bidding for such assets implies that it is banking on its execution ability, which is a good sign.
RESEARCH: CREDIT SUISSE
RATING: NEUTRAL
CMP: RS 1,072
Credit Suisse maintains ���neutral��� rating on Oil and Natural Gas Corporation. ONGC Videsh (OVL) has recently displayed a propensity to bid and acquire near discovered reserves after a year of adding to an exploratory portfolio.
It has bid for Imperial Energy and is reported to be interested in stakes in Tanganyika Oil and Block 32 in Angola. Imperial Energy has reserves in Russia, but little production.
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Tanganyika has heavy oil reserves in Syria that need to be developed. Block 32 in deep-water Angola is yet to begin project development.
Buying multibillion-dollar assets through competitive bids is unlikely to leave much value on the table now, while OVL will run capital expenditure (capex) and project-completion risks.
Upside at such acquisitions can be generated by project execution ��� getting production volume to more than current estimates ; and/or via a sustained high-oil-price environment.
ONGC���s strategy of bidding for such assets implies that it is banking on its execution ability, which is a good sign.
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