Asian Oilfields, which is one of the listed seismic data acquisition companies in India, recently announced a preferential allotment of 40.5 lakh equity shares to Samara Capital, which can raise around Rs 25 crore. Samara Capital is already the single largest shareholder in the company with over 13.3% stake and this preferential allotment will take its stake above 36.2%, triggering an open offer according to SEBI norms.
Asian Oilfields, which has emerged debtfree, is raising these funds to finance its growth opportunities. Firstly, it is planning to diversify into mineral exploration through core mining drilling. It has already obtained contracts worth nearly Rs 5 crore and an investment of Rs 15 crore is envisaged in buying two drilling rigs. This will also enable the company to utilise its assets during the monsoon season when seismic data acquisition is not possible.
At the same time, it is also moving up the value chain in petroleum exploration by undertaking a 3D data acquisition contract for the first time. The company may have to invest up to Rs 20 crore in equipment and infrastructure if it gets the contract.
At the moment, the company is executing a 2D data acquisition contract in Mizoram with the unexecuted portion worth of Rs 15 crore. There are several contracts in the pipeline, where the results will be known in the coming weeks.Other things remaining equal, if we consider the equity dilution from the proposed preferential allotment, the P/E ratio would rise to 23.3, which is on a higher side. Although the company appears to be on a growth path and the E&P industry continues to grow domestically, the company does not have a steady growth record. Only a strong order flow in the near future could justify such high valuations for the company.
Asian Oilfields, which has emerged debtfree, is raising these funds to finance its growth opportunities. Firstly, it is planning to diversify into mineral exploration through core mining drilling. It has already obtained contracts worth nearly Rs 5 crore and an investment of Rs 15 crore is envisaged in buying two drilling rigs. This will also enable the company to utilise its assets during the monsoon season when seismic data acquisition is not possible.
At the same time, it is also moving up the value chain in petroleum exploration by undertaking a 3D data acquisition contract for the first time. The company may have to invest up to Rs 20 crore in equipment and infrastructure if it gets the contract.
At the moment, the company is executing a 2D data acquisition contract in Mizoram with the unexecuted portion worth of Rs 15 crore. There are several contracts in the pipeline, where the results will be known in the coming weeks.Other things remaining equal, if we consider the equity dilution from the proposed preferential allotment, the P/E ratio would rise to 23.3, which is on a higher side. Although the company appears to be on a growth path and the E&P industry continues to grow domestically, the company does not have a steady growth record. Only a strong order flow in the near future could justify such high valuations for the company.
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