Vedanta gains after winning ten exploration blocks

Vedanta was up 0.84% to Rs 174.10 at 09:32 IST on the BSE after the company announced that it was awarded ten exploration blocks in India at a total bid cost of $245 million.

The announcement was made after market hours yesterday, 3 July 2019.

Meanwhile, the S&P BSE Sensex was up by 69.32 points, or 0.17% to 39,908.57.

On the BSE, 35,000 shares were traded in the counter so far compared with average daily volumes of 4.50 lakh shares in the past two weeks. The stock had hit a high of Rs 174.10 and a low of Rs 172.20 so far during the day. It hit a 52-week high of Rs 246.90 on 3 October 2018 and a 52-week low of Rs 145.90 on 15 February 2019.

Vedanta announced that it was awarded ten exploration blocks in sedimentary basins throughout India (Blocks) pursuant to the Indian Open Acreage Licensing Policy (OALP) at a total bid cost of US$245 million. The OALP is a government-led initiative organised by the Directorate General of Hydrocarbons of the Government of India (GoI).

The 10 blocks awarded to the company comprise 7 onshore blocks and 3 offshore blocks. The company will enter into 10 revenue sharing contracts (RSCs) with the Government of India to effect the transaction, Vedanta said.

Following the signing of the RSCs, a license permitting exploration, development and production operations of all types of hydrocarbons will be granted pursuant to the terms of the relevant RSC in relation to each block.

In total, the exploration period will have duration of six years for all Blocks, subject to any extension granted. The development and production period of each contract will be a maximum of 20 years from the date of grant of the petroleum mining lease following discovery of previously unknown deposits of hydrocarbons and approval of the relevant field development plan, subject to any extension granted.

The bid cost of US$245 million represents the company's total committed capital expenditure on the Blocks during the exploration phase and will be met by using the group's existing cash resources. It is expected that this capital expenditure will occur over a period of approximately three to four years, Vedanta said.

On a consolidated basis, Vedanta's net profit fell 16.5% to Rs 2615 crore on a 16.4% fall in the net sales to Rs 23092 crore in Q4 March 2019 over Q4 March 2018.

Vedanta, a subsidiary of Vedanta Resources, is one of the world's leading diversified natural resource companies with business operations in India, South Africa, Namibia and Australia. Vedanta is a leading producer of oil & gas, zinc, lead, silver, copper, iron ore, aluminum, steel and commercial power.

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