Assam Company plans private equity placement

Assam Company Ltd (ACL), which recently announced a demerger of its oil and gas business, would be raising funds through private placement of its equity.

The company is in talks with merchant bankers for raising debt through external commercial borrowing ahead of the demerger becoming effective.

The company is demerging its tea and oil and natural gas business divisions to have better administrative and financial control.

Chairman K K Jajodia said the demerger would become effective in four to five months.

While ACL would focus on the tea business, biotechnology and herbal plants, the oil and gas outfit would concentrate on exploration, production and development activities. He said the company would also diversify into gas-based power generation.

"We are identifying consultants for drawing a plan for power generation," Jajodia said adding that the generation capacity would be small o begin with and could be wheeled to grid for trading through the Power Trading Corporation.

He said the company was negotiating with Libya and some central Asian countries for foray into oil and gas exploration abroad. The oil and gas company would be based in New Delhi, he added.

ACL holds two exploration blocks in South Jorhat and Amguri in Assam along with Canoro Resources, a Canadian firm. While Canoro is the operator of the blocks with 60 per cent interest in Amguri and 65 per cent interest in AA-ON/7 exploration block in South Jorhat.

The Amguri block has estimated in-place reserve of 58 million barrel and associated free gas reserves in the range of 95 billion cubic feet.

Assam Company also holds service contracts of Oil and Natural Gas Corporation for three marginal fields in Assam. The fields are Laxmijan, Barsilla and Bihubar. Assam Company will extract oil on behalf of ONGC and sell it to ONGC under the contract.