ONGC group, India's top oil & gas exploration firm, may have set off on a new oil chase. And this time the target seems to be Imperial Energy Corporation, a $20-million British company with oil-producing assets in the Tomsk region of western Siberia of Russia and north-central Kazakhstan.
The LSE-listed oil and gas exploration and production company currently produces 10,000 barrels per day of oil.
A source said ONGC is in talks with Imperial Energy to form an “alliance”, which could include the former buying an equity interest in the latter. A board member of ONGC Videsh, ONGC's foreign investment arm, said the company doesn't comment on market speculation.
John Hamilton, Imperial Energy finance director, did not respond to emails and phone calls from TOI. Imperial Energy's stock on Friday closed at £ 772 on LSE. With skyrocketing global crude prices, oil companies' valuations have touched new highs and acquisition battles have got tougher. From $101 a barrel on April 1, oil prices crossed the $147-a-barrel mark on July 11. Imperial Energy has a market capitalization of £789.31 million.
Analysts tracking Imperial say the company is a potential takeover target, with substantial holdings in control of equity funds. Imperial executive chairman Peter Levine founded the company in 2004 and is its largest non-institutional shareholder, with a little over 6%. Other institutional investors include Schroder (10%), Deutsche Bank (over 5%), Baille Gifford, Fidelity, Blackrock, S R Global Fund and J P Morgan Chase.
If ONGC manages to strike a deal with Imperial Energy, it will strengthen the Indian explorer's overseas presence. From a single overseas property in 2000-2001, OVL is currently present in 38 oil and gas projects in 18 countries.
In 2007-08, its crude oil production touched 6.811 million tonnes – its highest from overseas assets. Currently, the firm has oil & gas production from six projects spread in Sudan, Russia, Vietnam, Syria and Colombia.
ONGC chairman and managing director and OVL chairman R S Sharma recently said that the parent has surplus liquid funds to fund its growth and expansion. He said OVL is a zero debt company and can leverage its net worth to raise funds. Sharma's comment was in response to queries whether the group plans to list its highly successful overseas subsidiary.
Source: Times of India