Essar's Capex Plans Boosted By Market Tailwinds

摘要

According to a senior offcial at India-focused Essar Energy, the frm intends to increase its crude oil production by proceeding with exploratory drilling of its blocks in India and Vietnam later in 2015. This move is in direct contrast to most other competitors, which have been reining in their capital expenditure (capex) in response to the crash in crude oil prices. Furthermore, the frm plans to ramp up its coal bed methane (CBM) output from 0.5mn cubic metres per day (mcm/d) to 3mcm/d by FY2016/17 (April-March). While we see Essar Energy benefting from oilfeld service cost defation as well as lower interest rate costs from the dollarisation of its debt, the negative net current assets position of the frm's subsidiary Essar Oil, remains a risk to the expansion strategy.