Company name- Shiv Vani Oil and Gas exploration Services Ltd
BSE code - 522175
NSE Code - SHIV-VANI
Shiv Vani Oil and Gas exploration Services Ltd (Shiv-Vani) is an exploration, production and allied services provider, which has been serving Oil and Gas Industry for over two decades. It provides complete suite of services related to onshore and offshore operations along with natural gas production and allied services. It is one of the largest onshore service providers in India. An Integrated service provider has had a track record of robust growth in the past and with excellent order book position and capacity expansions is all set to continue its growth spree.
Business-
Shiv-Vani offers wide range of services related to Oil and natural gas exploration and production. Services starting right from shot hole drilling and seismic surveying through to directional drilling, well development, down hole operations to natural gas compression and allied services. Major activities thereby can be classified into-
Core Services –
Seismic Data acquisition, Processing and Interpretation services are a major expertise. Seismic recording systems conduct high quality 2D and 3D surveys for discovery and development of hydrocarbon deposits and determining oil and Gas contents in old-field. 4D seismic helps understanding nature of reservoirs without any actual drilling.
It also provides full spectrum of drilling activities including shot hole drilling, well drilling and workover services. Operating around 32 onshore rigs, it has capability of drilling up to 6000 meters through hard rock and boulder beds with drilling capacity of up to 2000HP.Workover activities are carried out for cleaning repairing and maintaining wells for enhanced production.
Another key component of its core services Reservoir Data acquisition plays an important role for ascertaining the E&P feasibility of a project.
Pipelines are safest cost-effective and convenient mode for transportation of Oil and Gas. Entire consultation, procurement, engineering, and installation services are provided by Shiv-Vani.
Specialized services-
Cementing, which is crucial for holding well casings in place is a specialized service. Well stimulation is other specialized work for enhancing oil/gas production while Logging involves geophysical survey for identifying and quantifying well performance. Well Testing helps viability assessment, field development and reservoir management. Directional drilling develops non-vertical wells and Mud Engineering helps smooth well operations and production enhancement.
Integrated Services-
It provides full range of integrated E&P services to Indian and overseas players. It provides services to oil majors in Middle East, Europe, USA and CIS countries. These include seismic services, drilling & workover services, maintenance services, Oil & Gas field and CBM services.
Coal Bed Methane (CBM)-
Shiv-Vani provides all services from reservoir analysis, drilling, testing, fracture treatment designing and reservoir simulation to production forecast, optimization and economic evaluation of Gas trapped under Coal seams. This greenhouse gas finds extensive use in gas–fired electric generation as well as other Industrial domestic and commercial use. CBM is procured from Coal deposits.
Gas Compression and allied services-
Natural gas production involves number of activities from processing, compression, and transportation to secure storage. ShivVani provides Gas compressor services at various collecting stations for ensuring smooth transportation of natural gas. Compressor capacities ranges from 20,000 to 1 Lakh standard cubic meters per day. It also has large fleet of compressors for wet lease. Its operations extend to Syria, Iraq, Iran, Qatar, Indonesia and USA.
Besides it also installs gas gathering lines and systems for accumulating and transporting of raw natural gas.
It also installs booster compressors for distribution of CNG that help maintain high-pressure for fast filling operations.
Offshore services
Shiv-Vani provides offshore logistics crucial for achieving optimum performance in the depths of seas and difficult environments. Shiv-Vani operates fleet of offshore vehicles such as MV Satyam, MV Sundram, MV Shivam and MV Sachinam to name a few.
It also has an offshore platform fabrication yard at Vizag capable of manufacturing two standard platforms every year. It also provides off shore drilling services.
Investment rationale-
In the arena of high demand and high crude prices exploration and production (E&P) gathered great momentum. Players in this space with the likes of Shiv-Vani utilized the opportunities and benefited from the same. Revenues more than doubled during period Jan07-march08 i.e. from Rs 276.8 crores in CY06 to Rs 574.55 crores in FY08.High day rates led net profits almost triple during the same period.
However the scenario has changed ever since. Recession in the world economies has slowed down the demand and crude prices have cooled down. Out look for companies in E&P space have dampened. Day rates have taken a beating outlook for rigs have become weak. In this environment Shiv-Vani still outperforms many peers. Its integrated business model gives it advantage. Offshore activities are expected to feel more heat as compared to onshore activities. Onshore rates had not rallied as offshore rates and in times of recession will thereby not decline substantially. Shiv-Vani enjoys being largest onshore service provider in India.
It has a handsome order book position of Rs 4700 crores that consolidates its growth prospects. It is further likely to expand and Shiv-Vani enjoys 60 percent success in contracts it bids for. Bulk of company's order book is dominated by Indian public sector undertakings ONGC and Oil India Ltd (OIL), which provides advantage and also gives cushion.
Shiv-Vani has strong Capital expenditure plans. Fleet size of rigs has already improved from 29 rigs to present 32 rigs. Another four rigs are expected to be added soon and fleet size is expected to touch 40 by end of the year. Funds for expansions have already been sourced.
In terms of rig rates that are likely to reduce, Number of rigs being newly commissioned by Shiv-Vani provides it a boost. New rigs have much higher capacity and contribution from these will take care of any falling revenues. Depreciation of Rupee also works in favour.
E&P activities are capital-intensive. Shiv-Vani has debt of Rs 1100 crores on its books. With interest rates coming down, no major increment on interest cost front is visible. Majority of FCCB's issued have been converted and small portion redeemed, thus no outstanding remains.
Concerns-
Majority of order book comprises of orders from ONGC and OIL and renegotiations on contracts by them cannot be ruled out in the backdrop of changing economics for oil majors and crude prices remaining same.
Valuation-
Shiv-Vani's topline at Rs 187.25 crores in Q2FY09 marked a robust growth of 92.35 percent y-o-y. Net profits at Rs 47.58 crores grew impressive 140.54 percent. Both operating and profit margins grew handsome 171 bps and 509 bps respectively. Going forward taking economic slowdown into consideration and changing economies of oil majors impact on E&P activities is being. Previously estimated growth by analysts for Shiv-Vani may be reduced. Nevertheless its Integrated services, strength in onshore activities, capacity expansions and handsome order book will help it outperform many peers. Shiv-Vani is a good addition to portfolio for Investors with long-term investment horizon.
Q2 | Annual | Annual E | |
FY09 | FY08 | FY09 | |
Net sales | 187.25 | 574.55 | 718.19 |
OP | 73.65 | 221.10 | 272.91 |
PAT | 47.58 | 92.26 | 129.27 |
Capital | 43.91 | 43.91 | 43.91 |
EPS | 10.89 | 25.17 | 29.44 |
Margin | |||
OP | 39.33 | 38.48 | 38 |
PAT | 25.41 | 16.06 | 18 |
Price | 130.1 | Date | 5/12/2008 |
PE | 5.11 | P/BV | 0.93 |
Book Value | 140.14 | EV | 1242.26 |
EV/EBIDTA | 5.62 | Mcap | 571.24 |
(rs.crore) |
Shareholding | 30-Sep-08 |
Promoter | 53.97 |
FII | 5.17 |
Public | 4.31 |
Others | 36.55 |
Total | 100 |
No comments:
Post a Comment