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Hari Bhartia puts his 10% stake in KG-OSN-2001/3 on sale-I: Return on investment will be a long time into the future
Jul 24: Hari Bhartia's Jubilant Offshore Drilling Private Ltd has formally put its 10% stake in the Block KG-OSN-2001/3 on the block.
8The company has gone broke, and is now undergoing what is called an Corporate Insolvency Resolution Process under the new Bankruptcy Code.
8It is pertinent to note that ONGC has taken over 80% of the block from GSPC, at a cost of $ 995 million.
8Attempts were made privately earlier to sell off this stake but there were not takers.
8It remains a moot point whether buyers will indeed be found for this stake.
8There is no doubt that ONGC will invest in the block's Deendayal field and integrate it with its other KG Basin offshore developments. Anyone who buys the 10% stake will have to end up investing more money, besides taking all the debt incurred by Jubilant.
8Given the high cost of additional exploration and production from this high pressure high temperature block, with unstable geology, over and above the sunk cost, the breakeven gas price is likely to be significantly higher than the actual price of gas that the Deendayal field is likely to elicit for a long time to come.
8ONGC is not going to be an easy partner to deal with, particularly when the E&P major is in the driver's seat.
8Cash calls for further work will be heavy and a return on investment, if at all, will be a long time into the future. Click on Report for more.


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