Already a Bloomberg.com user?
Sign in with the same account.
(Updates with closing share price in eighth paragraph.)
July 8 (Bloomberg) -- Reliance Industries Ltd. may lift natural gas output at India’s biggest deposit after two years as it awaits ships that will connect deepwater wells drilled this year to pipelines, a person with knowledge of the matter said.
The ships are booked and may become available for use at the KG-D6 block in 2013, the person said, asking not to be identified because he isn’t allowed to speak to the media. The Mumbai-based explorer plans to drill 11 wells this year to raise output at the KG-D6 block, the person said.
Reliance, India’s biggest company by market value, may win government approval next week to sell stakes in oil and gas blocks to BP Plc and benefit from the London-based company’s technology and expertise in drilling and production in offshore areas. Reliance’s profit grew at the slowest pace in six quarters in the three months ended March 31 after production from KG-D6 declined because of technical difficulties.
“Two years of below-capacity production is a worry,” said Alok Deshpande, a Mumbai-based analyst at Elara Securities Ltd., who has an “accumulate” rating on Reliance. “Exploration and production was the major attraction for investors. That trigger is missing now.”
Manoj Warrier, a spokesman for Reliance, didn’t answer two calls to his mobile phone seeking comment.
Reliance currently produces about 48 million cubic meters of gas a day from the D1, D3 and MA areas of the block, located off India’s east coast, from about 60 million cubic meters a year earlier, the person said.
The company last month submitted a plan to drill three wells in the block and has a commitment to dig eight more in the year ending March 31, the person said.
Reliance declined 1.8 percent to 854.85 rupees at the close of trading in Mumbai. The stock has fallen 19 percent this year compared with an 8.1 percent decrease in the benchmark Sensitive Index.
Morgan Stanley cut the stock to “equal-weight” from “overweight” today and lowered the price target by 20 percent to 956 rupees because of the absence of any positive triggers in the short term, according to its report. The bank cut its KG-D6 output forecast to 47 million cubic meters a day from 50 million.
Reliance sells gas to power plants and fertilizer units at $4.2 per million British thermal units, a price set by the government and scheduled for revision in April 2014.
Drilling rigs used in the Asia-Pacific region fell to 255 on land and sea in May from 268 a year earlier, Baker Hughes Inc., an oilfield services company, said on its website. Rigs in operation climbed to a 26-year high of 286 in January.
--Editors: John Chacko, Indranil Ghosh
To contact the reporter on this story: Rakteem Katakey in New Delhi at firstname.lastname@example.org
To contact the editor responsible for this story: Amit Prakash at email@example.com