Oil India to add five more rigs to kitty

As part of its expansion in exploration, development, production and transportation of crude oil, Oil India Limited (OIL) is planning to add five more rigs to its kitty.

The state-run explorer, which will hit the capital market with its initial public offering (IPO) on September 7, 2009, currently owns around 13 rigs, apart from five rented ones.

"The addition of rigs is part of our expansion in exploration. Some of our rigs are old and, therefore, we plan to add some new ones soon," said Narendra Bhalla, executive director (corporate affairs), Oil India Limited. The company expects to come out with an IPO worth Rs 2,800 crore which will be used for "pure exploration purpose including siesmic data acquisition and integration".

OIL will offer around 26.4 million equity shares through the IPO, at a price-band fixed between Rs 950 and Rs 1,050 per equity share.

While the government would divest 10 per cent of its stake at the IPO price, around 11 per cent fresh equity will be sold through the issue.

Currently, the government holds around 98.13 per cent stake which would be diluted to 78.5 per cent after the issue.

Currently, OIL produces around 3.57 million tonnes of crude and 2.27 billion cubic metres of gas per annum.

According to Bhalla, the company will be utilising the issues proceeds to fund capex of Rs 2,300 crore for exploration for the financial year 2009-10.

However, Bhalla refused to divulge details of the company's plans to bid for the eighth round of auction under NELP.