THE wait for the patient investors in Assam Company is finally over. Oil and gas have finally begun to flow from the company’s oilfield in Assam. This stock has been on the radar screen of investors for a long time due to expected bumper profit from the company’s oilfield. The company’s joint venture partner and operator of the field, Canoro Resources of Canada, on Monday announced the commencement of oil and gas production from two wells — Amguri 10B and Amguri 11. Assam Company holds 40% stake in the Amguri oilfield with the Canadian company holding the operator’s stake of 60%.
Investors greeted the news by bidding up Assam Company’s stock price. The shares were locked in 5% upper circuit on Monday to close at Rs 35.1 on BSE. Currently, the level of production from these two wells is 1,370 barrels of oil equivalent per day (boepd), which is nearly one-third of their full potential of 4,200 boepd. At the present level of production, Assam Company’s share would bring in incremental net profit of Rs 25 crore per annum at current international price of crude oil. The profits will go up as the full production level is achieved. The production from these fields is right now
restricted due to lack of transportation and storage facilities. Canoro is constructing a new 10-inch gas pipeline and plans to raise the capacity of oil transfer by the end of March station 2008 to enable the full level of production.
In October 2007, Canoro Resources had discovered three distinct hydrocarbon deposits in Amguri 11 well with a total potential to produce 3,190 boepd. At present, out of these three payzones discovered, production from only one has started.
Assam Company reported a substantial jump in its net profits for the quarter ended December 2007 to Rs 5.66 crore as compared to just Rs 0.52 crore in December 2006. The company is also in the business of tea plantation, which is a seasonal business. The company is also planning to set up an SEZ in Gujarat along with Gujarat State Petroleum Corporation (GSPC).
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