Selan Exploration has target of Rs 445: Chugh

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Selan Exploration Technology has target of Rs 445, says Ashish Chugh , Investment Analyst & Author of Hidden Gems.

Chugh told CNBC-TV18, "Selan Exploration Technology currently produces about 2,75,000 barrels of oil every year. Now management is currently undertaking contour mapping of the Bakrol field where they say that they are trying to find sweet spots, which when drilled can have the potential to give 10 times more oil than what the current well is producing. So this means that the production has been more or less stagnant for the past one year but you may have one-two quarters where you may see the production going up significantly, you may see it doubling from the current levels in maybe two quarters because their current well gives about 10,000-15,000 barrels and 10 times of that would be about 1,00,000 to 1,50,000 barrels per well."

He further added, "Now the reserves of the Bakrol field is about 75 million barrels, which translated into Rs 25,000 crore as against this the market cap of the company is just about Rs 650 crore. They have ownership of five fields, they are all proven fields. The company currently is not even exploiting 5% of the reserves of Bakrol oil field and the other four fields are still virgin."

"Indrora is another field where management believes that the potential could be very good. So I think given all these things, the stock has got a long way going forward and it may ideally not be a trader's stock. I think people will make more money just buying and forgetting about this stock for a couple of years. Even though the stock has moved up significantly in the past few years but even from these levels this company has got a very good potential going forward. Buy with target of Rs 445."