Gujarat State Petroleum Corp. Ltd (GSPC) has resumed the process of selling its hydrocarbon blocks to pare debt, said two people, seeking anonymity. GSPC is the flagship company of the group which is involved in exploration and production (E&P) of oil and gas. The state government owns 87% in GSPC.
The company is in the process of seeking bids for its interests in five E&P fields.
“As a part of strategy review, GSPC had evaluated its exploration and production business portfolio and performance. Based on the review, certain E&P assets were identified which were not aligned with the overall strategic objectives of the company and, thus, were shortlisted for divestment or farm-out to align the business verticals of GSPC,” a GSPC spokesperson said in an emailed response.
GSPC has successfully divested seven E&P fields in the previous financial year, he added.
“The previous round had experienced good interest from industry counterparts as the fields had potential. GSPC has raised $6.1 million through this round of divestment,” he said.
The shortlisted sites are small-to-medium scale fields.
The five blocks include CB- ONN-2004-1 in Karannagar, where GSPC holds a 40% stake and state-run Oil and Natural Gas Corp. Ltd (ONGC) holds the remaining 60%.
In CB-ONN-2004-2, Vadatal, GSPC holds 45%, while ONGC has a 55% share.
At CB-ONN-2004-3 in Uber, GSPC holds 35% and ONGC 65%.
In MB-OSN-2005-1 (Mumbai Offshore), GSPC has a 20% stake and ONGC 80%.
ONGC has a 40% stake in GK-OSN-2009-1 (Kutch Offshore), GSPC, Adani Energy and Indian Oil Corp. Ltd have 20% stake each.
The sale process will complete in two months and GSPC may take another 6-8 months to operationalizing the stake sale, the company said.
GSPC’s profit after tax (PAT) rose by 102% in FY21 to ₹739 crore, compared twith ₹366 crore in the previous year.
Profitability improved on the back of incremental gas marketing volumes, which rose to almost 19 million metric standard cu. m per day in FY21.
The company has clocked a compounded annual growth rate (CAGR) of 17% in gas marketing volumes since FY19, it added.
GSPC’s consolidated profit after tax has increased by 60% to ₹3,733 crore. The net worth of the group increased to ₹2,105 crore in FY21, compared with a negative net worth of ₹25 crore in FY20, it said.
“Since the bidding exercise is going on, the estimate of funds to be raised through this process cannot be disclosed. The funds raised through this divestment shall be deployed for further reduction of debt,” the company added.
GSPC’s long term debt is approximately at ₹4,700 crore as on date
GSPC’s tryst with upstream investments went sideways when it piled up a debt of ₹27,700 crore in FY17. It hired consulting firm EY in 2016 to prepare a report on the proposed stake sale in 21 hydrocarbon blocks to reduce debt.
In 2016, the company sold its 80% stake in Deen Dayal block in the Krishna Godavari Basin for ₹7,738 crore to ONGC. GSPC had invested $3.5 billion (approximately ₹20,000 crore) in the block.
The proceeds of the sale of the Deen Dayal block were used to pare debt. In March 2018, GSPC sold a 28.4% stake in Gujarat Gas Ltd, its city gas distribution business, to its subsidiary Gujarat State Petronet Ltd (GSPL) to pare debt further. Both Gujarat Gas and GSPL are subsidiaries of GSPC.
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