Aban Offshore is expected to deploy the last three of its fleet of 20 rigs by November, improving substantially the company's cash flows and ability to service mountainous debt. The rigs, Aban VII, Deep Driller 1 and Deep Driller 6, were part of seven that were lying idle in the past few months.
Over the last six months crude prices have doubled from $40 per barrel to nearly $80, making it lucrative for oil exploration companies to rent rigs. Four months back, when the seven rigs were lying idle, Aban's interest expenditure as a percentage of operating profit stood around 50%.
For Aban, the debt to equity ratio was not a problem a year back as the day rates (for hiring rigs) were high and the fleet was fully contracted. Problems started when the rigs went idle and the company was not able to generate enough cash flow hampering its ability to service debt. When 4 rigs were contracted three months back, it provided some cushion to cash flows and debt servicing improved.
Aban's consolidated debt stood at $3.4 billion for the current fiscal. The company has completed most of its debt re-scheduling and hence there will be an increase in interest expense. Aban is also expected to make a qualified institutional placement of shares at around Rs 1,620 per share.crackcrack
| Company Name | CMP |
|---|---|
| ONGC | 255.65 |
| Oil India | 452.15 |
| Jindal Drilling&Inds | 713.25 |
| Hind Oil Exploration | 181.00 |
| Deep Industries | 545.45 |
| View more.. | |
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