India’s state-owned exploration company Oil and Natural Gas Corp will by early 2019 quadruple the output from an offshore gas block in the Bay of Bengal that it spent a billion dollars on last year. Output from the Deendayal natural gas block off India’s east coast will reach as high as a million standard cubic metres per day by January 2019 as per Company officials.
Why is this important
ONGC had been saddled with ageing fields and dropping production for almost a decade. ONGC registered a marginal jump in production in fiscal 2016/17, and then production increased by another 6 percent last year in the year through March 2018. the increase in output from the Deendayal field will help ONGC in clocking an increased overall output in the current fiscal year as well.
How the stock will be impacted?
The stock will be impacted positively as the investments made in the gas field which were, earlier, under questions due to delays and cost overruns in developing the field shall, now, start generating revenues.
ONGC (CMP – Rs. 175.35, M Cap – Rs. 2,25,030, PE 7.7x FY20E)