Quipo Oil & Gas to acquire 8 rigs for $140 million

Quipo Oil & Gas is in the process of acquiring eight on-land rigs, for which it will spend about $140 million. Quipo Oil and Gas is a subsidiary of infrastructure equipment rental company Quipo Infrastructure Equipment, promoted by SREI Infrastructure Finance.

Quipo Oil & Gas owns one rig. It had drilled 11 wells at Cairn India's oilfield in Rajasthan's Barmer district in 2005. The company is also deploying five onshore rigs through Russian-Indian Drilling Oil Company, a 50:50 joint venture with Russia's Oil Technologies Overseas.

An on-land rig typically costs about $17-18 million (about Rs 70 crore).

"Of the eight new rigs, three will be acquired by Quipo, while our Russian joint venture will acquire five. Of the three rigs we will get directly, one will come in September and the other two will arrive by January," said Quipo Oil & Gas Managing Director S K Mehta.

The joint venture company, which will provide drilling services in Russia and India, will get its five rigs by December-January.

There is a shortage of rigs across the world and its impact is being felt in India as well. Reliance Industries' and ONGC's drilling commitments in offshore areas have been delayed due to this shortage.

The waiting period for offshore rigs is almost five years and that for onshore rigs a lot lesser at about 8 months.

Quipo has undertaken on-land drilling with the one rig it has. "Considering that there is so much activity in offshore basins, and if the opportunity arises, we will definitely acquire offshore rigs as well," Mehta said. The rig, named Quipo1, recently completed drilling at ONGC's coal bed methane block in Gujarat, and is headed for Australia on a drilling job at a block owned by Oilex.

Quipo has targeted an increase in revenue from the current Rs 10 crore to about Rs 70 crore, mainly by increasing operations through integrated drilling services. Integrated drilling services include rig facilities as well as engineering and manpower support for operation of the rigs.

Quipo also plans to go public soon. "We would definitely like to go public at some point of time. We will wait for the right time to do that," Mehta said.