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ONGC plans to increase acquisition programme
Having a reserve of $5 billion cash and a debt-free balance sheet, ONGC is planning to step up its acquisition initiative to take full advantage of the global liquidity crisis, the reduction in valuation of oil equity due to fall in crude prices, and heavy asset redemption by funds.
Having a reserve of $5 billion cash and a debt-free balance sheet, ONGC is planning to step up its acquisition initiative to take full advantage of the global liquidity crisis, the reduction in valuation of oil equity due to fall in crude prices, and heavy asset redemption by funds.
"We see this as an opportunity to increase our acquisition programme," Director (Finance), Mr D.K. Saraf, told Business Line. ONGC is currently pursing a £1.4 billion bid to acquire Imperial Energy, a UK-based company having substantial oil equity in Russia's Siberia region.
"We are a virtually debt-free company with $5 billion cash reserve and there is a cash accrual even at the prevailing crude price. As a serious player in the business we will therefore make maximum use of the emerging opportunity," he added.
ONGC's views were echoed by Mr Harishanker Subramaniam, Executive Director & Head (Infrastructure & Government) of KPMG: "The global liquidity crisis would dampen the sentiments in various sectors in the short term. However, the fundamentals for the oil and gas sector remain strong. Despite the recent reduction in oil price that was mainly in response to a perceived slowdown in some of the large consuming nations, the level of prevailing price continues to be attractive enough for a growing and sustainable E&P business."
According to him, while a few fly-by-night operators may disappear during the turmoil, serious E&P players would continue with the investment plans.
