Oil exploration firms gain after recent spike in oil prices

Shares of four oil exploration and production companies rose by between 0.28% to 4.22% at 11:40 IST on BSE after crude oil prices surged yesterday, 3 February 2015.

Meanwhile, the BSE Sensex was up 22.41 points, or 0.08%, to 29,022.55.

Among shares of oil exploration and production companies, Cairn India (up 4.22%), ONGC (up 1.88%) and Oil India (up 1.42%), edged higher.

Reliance Industries (RIL) rose 0.28% to Rs 939.25. The stock was volatile. The stock hit high of Rs 942.15 and low of Rs 932.10 so far during the day. RIL announced before market hours that it has priced a Rule 144A/Regulation S offering of $750 million 4.875% Senior Unsecured Notes due 2045. The Notes have been assigned a rating of BBB+ (S&P) and Baa2 (Moody's). The Notes have been priced at 262.5 basis points over the 30-year US Treasury Note, at a price of 98.865 to yield 4.948%. The Notes will be denominated in US dollars, and will bear fixed interest of 4.875% p.a., with interest payable semi-annually in arrears and shall rank pari passu with all other unsecured and unsubordinated obligations of the company. The funds will be utilized for its ongoing capital expenditure.

 

Increase in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Brent crude oil futures edged lower as renewed concerns over global demand and high stock levels halted a rally that pushed up prices by about 19% over the past four sessions. Brent for March settlement was down 3 cents at $57.88 a barrel. The contract had jumped $3.16 a barrel or 5.8% to settle at $57.91 a barrel during the previous trading session.

The recent rebound in oil prices was driven by hopes that prices may have hit a bottom after a seven-month rout slashed oil futures by nearly 60% and prompted major energy firms to cut spending on new production.

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