Being a smaller peer to industry biggies such as ONGC, state-run Oil India is hardly spoken about when there is any discussion on India’s petroleum exploration and production sector. However, it is doing well in certain key areas, which can help the company emerge as a better value creator for investors.
Oil India is using its capital more efficiently, argues Barclays in a recent report. According to the report, Oil India’s ‘finding and development (F&D) costs — costs incurred when acquiring, exploring and developing properties to establish hydrocarbon reserves — is just 55% of ONGC’s. This has helped Oil India maintain its return on capital employed, or RoCE, consistently higher than ONGC’s over the last decade.
When it comes to production growth, Oil India does a better job. Its output grew at a cumulative annualised growth rate, or CAGR, of 3% over the last decade, while ONGC’s annual growth dropped at an average of 0.4%.
Oil India’s out-performance will continue even in future, according to Barclays, as it spends $2.4 billion to achieve 4.2% annualised growth in production over the next four years. ONGC is expected to spend $24.2 billion to achieve a 2% annualised growth in production in the next four years.
Oil India is using its capital more efficiently, argues Barclays in a recent report. According to the report, Oil India’s ‘finding and development (F&D) costs — costs incurred when acquiring, exploring and developing properties to establish hydrocarbon reserves — is just 55% of ONGC’s. This has helped Oil India maintain its return on capital employed, or RoCE, consistently higher than ONGC’s over the last decade.
When it comes to production growth, Oil India does a better job. Its output grew at a cumulative annualised growth rate, or CAGR, of 3% over the last decade, while ONGC’s annual growth dropped at an average of 0.4%.
Oil India’s out-performance will continue even in future, according to Barclays, as it spends $2.4 billion to achieve 4.2% annualised growth in production over the next four years. ONGC is expected to spend $24.2 billion to achieve a 2% annualised growth in production in the next four years.
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