OVL and Oil India to acquire 10% stake in Mozambique gas block - Angel Broking

ONGC's fully owned subsidiary ONGC Videsh (OVL) and Oil India will acquire 10.0% stake in a Mozambique gas block (Rovuma Area 1 offshore block) from Videocon for US$2.5bn. The block has over 50TCF of gas reserves. Videocon had acquired 10% stake in the block during 2008 for US$100mn. The acquisition is expected to be implemented via a newly incorporated special purpose vehicle, in which OVL and Oil India are expected to hold 60% and 40% stake, respectively. The acquisition is subject to the approvals of the governments of Mozambique and India, relevant regulatory authorities and other approvals. We await further clarity on timelines of production and other operational details.

Until then, we maintain our Buy view on ONGC with a target price of Rs. 372

Source : Equity Bulls

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