Friday, March 4, 2011

ACIL: Interview.

Assam Company has bought a 70% interest in an oil block in Colombia for an undisclosed amount. The company is expected to start drilling operations by July. It also expects to produce 4,000-6,000 barrels per day of oil over the next two years.

Q: Can you tell us about this acquisition in Colombia and what is the exploration schedule and by when do you expect to begin commercial production?



A: We did an acquisition in Colombia where we own 70% interest in a block called El Triunfo and we got a farming interest from a company called Sismopetrol and R3, they were the original owners of the block, and now they own 30% and this is in a basin called the Lianos basin. We expect to start drilling by July this year and we expect that over the next two years we should get nearer to 4,000-6,000 barrels a day.

Q: How much did you pay for it?

A: At this moment, I am not supposed to disclose that but the first drilling of the well will cost us nearly between USD 12 million and USD 15 million.

Q: Any early estimates of the resource potential in the block?

A: Yes, they have done some 2D and 3D seismic and in resource, we think recoverable resource is between 20 and 30 million barrels.

Q: Can you tell us what this will do to the Assam Company’s balance sheet, you said that 6,000-8,000 barrels a day will be probably drawn by FY12?

A: I think it would be by late FY12 or early FY13 depending on how because the basin is exactly the same as what we are doing in Assam- Arakan basin. There is no difference. So it depends on the weather and how we go about it.

Q: When does it become EBITDA positive as a project?

A: It becomes EBITDA positive by Q1 of January by between January and March this quarter.

Q: Of this quarter but you said that the oil will be drawn only by end FY12?

A: No, coming to that barrel what I am talking about 6,000-8,000, we would start because there would be the first well, which we will drill, we roughly expect to fetch about 2-2,500 barrel - between 1,800 to 2-2,500 barrel - which we will start drilling by this July-August.

Q: Perhaps an update on the tea business also, how is that fairing and how is the season progressed so far?

A: The season is looking good, as speaking to different members of other teams also, we expect buoyancy in the market for the next few years and there is about Rs 8-12 up over last year and the weather also is good for us. So we expect the production to also go by about 8-10% this year and we expect about Rs 15 increase over the last year.

Q: What is the relative share of revenues coming from the tea and the oil business?

A: Our balance sheet starts from January this year. The oil business, which is one of our partners in a block called Amguri, there has been a small problem with government and our partner. We hope that it gets sorted out. If that happens, there would be a different potential as we are looking at in the oil.

At this moment in tea, we are looking at nearer to about Rs 30-40 crore because it is just beginning of the season over the time as things progress, we would be able to talk more about it. We also have two other block under acquisitions, which is under consideration at this moment which we cannot disclose. One of the blocks is a producing block.

Q: Can you enlighten us a little more about this Canoro Resources which partners you at Amguri and what exactly is the problem?

A: It is a matter in the court so it is subjudice, apparently the interest of our partner called Canoro was cancelled by the government of India for certain noncompliance and that has been put into the court. Now once decision comes through the government has to then take it forward accordingly how will it go about. So at this moment, I am not competent to comment on it.

Q: Can you update us on the power business in Gujarat?

A: Yes, as you know power needs necessary certain clearances, we have got the land, we have also got recently the water connections, we have an approval on vibrant Gujarat by the state government, we have got the state government stamp on it that they would also give us the necessary permission, we have in principle some gas help from the state of Gujarat, we are following up the environment clearance and the final gas permission from the central government. As that is done, we will cut the ribbon.
 
Courtesy: http://www.moneycontrol.com/news/business/assam-company-buys-70colombian-oil-block_527622.html

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