Oil India Ltd, with crude oil reserves of 575mn bbls (2P) and natural gas reserves of 63.4bcm (2P) is India’s second largest national oil and gas company. Oil India currently produces about 68,511bbls of oil per day and about 6.6mmscmd of gas. Of the country’s total leased production area, the company operates in about 13.5% area, while it has a 3.5% share in the total exploration leased area. Entire production of Oil India is from onshore blocks leading to significantly lower costs in relation to other major operators such as ONGC. Over the next five years, the company aims to double its gas production and increase crude oil production from new and existing fields. We believe that the issue is attractively valued even at the upper end of the price range and hence recommend a Subscribe rating to the IPO.

Portfolio of 16 producing assets
Oil India currently produces about 68,511bbls of oil per day and about 6.6mmscmd of gas from its 16 producing assets, majority of which lie in the states of Assam and Arunachal Pradesh. Although most of these assets are witnessing natural decline, Oil India has made efforts to arrest the decline through implementation of IOR/EOR techniques.

Exposure to 26 exploratory assets
Oil India has exposure to 26 exploratory assets in India, of which it is the operator in 12 blocks. These blocks spread over more than 110,000 sq kms. A majority of these assets lie in prospective areas of KG Basin, Krishna Cauvery Basin and Rajasthan basin. Furthermore, Oil India has exposure to 8 overseas fields, of which it is the operator in three blocks.

Lower costs and strong execution track record
Over the last three years Oil India has drilled 29 exploratory wells and made discoveries in 22 wells, a success ratio of 75.9%. Furthermore, the finding cost is at US$1.1/bbl vis-à-vis US$2.6/bbl for ONGC, while lifting cost is at US$6.8/bbl against US$6.9/bbl for ONGC. Lower costs have been on account of the fact that majority of the production and exploration has been in the onland regions. Additionally, the company has in-house facilities for drilling, seismic surveys, work-over activities, etc.

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