Future endeavors as outlined by BPCL

Author: Bappaditta Jana

Bharat Petroleum Corp Ltd (BPCL) is eyeing at buying excess stakes in oil and gas assets that have already boosted up investment returns. The state-run refiner had previously focused specifically on exploration assets overseas, where it has invested just over $1.5 billion. But the company now also looks at fields that are already producing. During March, it bought a stake in Russian oilfields that are in production via its upstream subsidiary Bharat Petro Resources Ltd.

D Rajkumar, MD Bharat Petro Resources Ltd said that is the reason they looked at Russia which will ensure them of their balanced portfolio of assets from exploration, development to producing. So with all these, they will soon be in a self-sustaining place. The pressure on oil companies to derive rapid return on their investment has risen owing to lower oil prices which have also hit the industry’s capital spending plans.

As of now BPCL share price is trading above 5%, settled at Rs. 604.45.

Acquisitions

  • Bharat Petroleum was the first Indian state refiner to undertake into the upstream oil business when it acquired minority stakes in Brazilian blocks in the year 2007.
  • During 2008, the company invested in a gas block in Mozambique but the production has now been postponed to 2020-21 after liquefied natural gas (LNG) prices dipped.
  • The purchase of the Russian assets gives Bharat Petroleum a possibility for instantaneous revenues and bridges the gap till 2021-22 when Mozambique gas production commences.
  • S Varadarajan, the chairman of the company, is of the view that it would also continue to eye for exploration opportunities. He further added that there is a strategy to look at various markets and projects which are at different phases (of exploration and production) and that is why they undertook the Russian acquisition.
  • It has planned to take Bina Refinery, its joint venture with Oman Oil Company, public via an initial public offering some time next financial year.
  • Next in line, the company aims to start full operations of its expanded Kochi refinery project in the fourth quarter of the current fiscal year.
  • The outlined expansion at its Kochi refinery will be executed and operational by the March quarter of the present financial year. The company is extending its refining capacity at the Kochi Refinery from the existing 9.5 MMTPA to 15.5 MMTPA for an investment of Rs16,000 crore.
  • BPCL aims to invest Rs 1 trillion as capital expenditure over the coming five years. Of the plan capex, around Rs 55,000 crore will be spent for the expansion of refining capacity and around Rs 20,000 crore in upstream projects, which will include the Mozambique block over the same period.

Stock Fundamentals

  • The 52 week high of BPCL share price is observed at Rs. 617.70 on 8th August ’16 while the 52 week low is seen at Rs. 365.58 on 23rd Feb ’16.
  • The Average Daily Movement of the stock is 14.90 and its average volume for last 20 days is3473735.
  • The market cap of the company amounts to Rs. 86596.57 (Cr) and has a book value of Rs. 211.11.

    For further details on the stock kindly refer to BPCL share price forecast.