Stock review:-Selan Explorations Technology Ltd

Scripscan:Selan Explorations Technology Ltd
CMP:240
Traded in:Nse-bse
My view:The "Show Stealer"


[Selan Explorations Technology news,views and analysis/Oil exploration company/turning it on/upcoming results/great future prospects/going to do wonders/target price/Hidden gem/Great bet to own]


Industry Structure and Developments:The Government has awarded and signed a number of Production Sharing Contracts with Private Sector Oil Companies for Exploration Blocks under New Exploration Licensing Policy (NELP) and Coal Bed Methane (CBM) Projects.Private Companies and Joint Ventures have contributed significantly in exploitation of existing oil reserves in the country with the striking of huge reserves of oil and gas within the Country. As a result, the domestic crude oil production is continuously improving with significant contributions of crude production from private operators,thus reducing foreign exchange outflow on crude imports.Oil sector today is one of the most prospective sectors where newer growth avenues for business and employment are opening up. India currently produces about 32.19 million tonnes of crude oil annually as against the requirement of 130.11 million tonnes.The balance is imported, making crude oil India's single largest item of import.All these factors make "Selan Exploration" a scrip to be a part of very investors core portfolio.

Why i like it:Selan exploration is set to produce around 130,000 bareels of crude oil from the onshore operating fields of Bakrol,Indrora and Lohar in the current fiscal compared to around 100,000 barrels produced in entire FY07.Further in FY09,Selan is expected to produce over 150,000 barrels of crude oil.Now things entirely changes for the company starting fiscal 09,As against an average price realisation of $ 71 per barrel in FY08, the realisations in FY09 would exceed $ 110-112 per barrel putting FY09 Revenues of Rs 68-70 crores with profits expected to exceed Rs 25crores.

Conclusion:The company recently signed agreements with Indian Oil Corporation to uplift the existing and additional production at the international rates for Crude Oil. The IOC and the State of Gujarat have also agreed to refund the levies on account of Sales Tax and surcharge on Sales Tax.The promoters are raising 30crs alloting themselves 18 lakh shares of Rs 165 each.Promoters in the past have hiked their stake in the company a number of times.Everytimes they does so the company performs bigtime.Selan is expected to clock an EPS of rs 15 in 09.At present prices the valuations looks quite attractive considering the prospects of the oil exploration industry.Seeing the trend of crude ,selan may just avail an increase in per barrel realisations.In case that happens expect the company to post better profits thereby giving more chances of higher capital appreciation.Watch out for the company folks may just become the "Show Stealer".