Ahead of a follow-on issue next year, government-owned Oil and Natural Gas Corporation (ONGC) has appointed two international auditors to certify its oil and gas reserves.
D&M (DeGolyer and MacNaughton) and Gaffney, Cline and Associates would serve as reserve auditors to evaluate reserves, Chairman and Managing Director R S Sharma told reporters at the Economic Editors Conference here.
The government plans to sell five per cent of its shares in the company in March 2011. “We are ready for the follow-on public (FPO) offer but not before the first quarter of the 2011 calendar year,” he said.
The company may ask the two reserve auditors to certify reserves in 15 key oil and gas fields out of about 150 discoveries it had made in the country. “Certifying reserves for all the 150 fields will take six to eight months and we do not have that kind of time,” Sharma said.
ONGC usually gets its reserves audited every five years but this time it is getting a certification in the third year because of the planned FPO.
The proposed 5 per cent divestment may fetch the government about Rs 10,257 crore (at today’s closing share price of Rs 1,301.40). After the offer, the government shareholding in ONGC will come down to 69.14 per cent from the current 74.14 per cent. “The Ministry of Petroleum and Natural Gas has accorded an in-principle approval (to the share sale) and the Department of Disinvestment has circulated a note for inter-ministerial consultations,” Petroleum Secretary S Sundareshan said.
Prior to the ONGC offer, Indian Oil Corporation, the country’s biggest oil marketing company, will come out with an FPO, in January. “It is proposed that IOC will issue fresh equity capital of up to 10 per cent of its paid up capital along with a simultaneous disinvestment of 10 per cent of the government shareholding in the company,” Sundareshan said.
The government is likely to realise about Rs 7,990 crore while IOC will fetch about Rs 10,125 crore to meet its capital expenditure requirement. Government holding after fresh issue and disinvestment will come down to 62.65 per cent from the current 78.92 per cent. When asked about the timing of the issue, Sundareshan said the Department of Disinvestment will assign appropriate slots for various issues, keeping in mind issues like overcrowding the market.