Promoters of Asian Oilfields seek exit

Manchanda family could exit after Q2 results

MUMBAI: The promoters of Asian Oilfields Services Ltd are seeking to exit the business, according to a person familiar with the development.

The Manchanda family led by chairman Krishna Kant hold about 10.2% stake in the company.

Financial institutions, corporate bodies and other strategic investors, which together hold 43.9% stake in the company, may also sell out if the valuation is right. “The potential buyer could cobble up a majority stake,” said the source.

Based on Monday’s closing share price of Rs 127, a 51% stake would cost the buyer Rs 69 crore.

An Asian Oilfields official denied the development.

“We were seeking buyers some six to eight months ago, but we are not holding any talks at present,” Gaurav Sud, vice president (corporate strategy) of the company, told DNA Money.

Sud said the focus now is on completing commitments in India and also considering  acquisitions overseas.

The Vadodara-based company, which was founded in 1992, is into shot-hole drilling and  seismic data services in both the onshore and offshore categories. It is also looking at diversifying into E&P activity through New Exploration Licensing Policy (Nelp) VII round with an unlisted oil company with which it has an informal arrangement

The source said the promoters of the firm are waiting for July-September quarter to end. “They expect a robust performance in the quarter which could get them better valuations,” he said.

Asian Oilfields called off sale plans twice earlier because of valuations. “The first party was ready for a complete buyout but later wanted a swap deal. The second party offered too less,” he said.

Asian Oilfields, which has an equity base of 104.6 lakh shares, was seeking Rs 200 per share. “But the party was offering it Rs 150 per share only,” he said.

Sub-contractor problems in the last quarter led to a decay in the company’s financials in the first quarter of the current fiscal.

“The company was expecting to post a topline of Rs 55 crore and bottomline of Rs 10 crore by March 2008. But because of the problems, Asian Oilfields may achieve the target only in the June quarter,” he said.

Analysts say the company’s growth strategy and strong orderbook are seductive.
Shyam Kabra and Ashish Goenka from broking house Nirmal Bang Research said in a recent report that Asian Oilfields’ orderbook position of Rs 138 crore will be executed over two years. “Of this, Rs 133 crore orders will be executed directly, while the remaining will be sub-contracted,” they said.

Kabra and Goenka said the company was confident of winning orders worth Rs 50-100 crore in the coming 6-9 months.

Going forward, the company plans to bid for geo-chemical surveys and drilling contracts.

Asian Oilfields is also looking to expand into areas such as coal bed methane drilling, offshore seismic, data processing as well as bidding for marginal fields.

The E&P support services sector is expected to grow at a clip of 20% till 2012.
Asian Oilfields has two competitors in India —- Shiv Vani Oil and Gas Exploration Services Ltd  and Alphageo India Ltd, both of which are listed entities.