India’s Essar Oil says it is in ‘advanced talks’ with Russian energy major OAO Rosneft to sell 49% stake, to but the deal is likely to take more time.
Essar Group, which owns Essar Oil, declined to comment of media reports of a likely stake sale to Saudi Aramco. (Read: http://www.arabianoilandgas.com/article-15221-saudi-aramco-may-buy-india…)
Billionaire brothers Shashi and Ravi Ruia have agreed to sell a 49% stake in Essar Oil to Rosneft, according to The Economic Times, providing the Indian company an assured supply of crude while its Russian counterpart obtains a foothold in Asia’s third largest economy.
While the two companies have not yet disclose the deal amount, it is expected to value Essar Oil at $7-$8bn.
Essar Oil has completed the share buy back from its shareholders for its much delayed de-listing, making way for its planned stake sale to the Russian energy major.
But India’s stock markets, particularly the Bombay Stock Exchange (BSE), has been abuzz with media reports stating the Ruia brothers have also had preliminary talks with Aramco for a potential stake sale.
“We have stated that we have signed a non-binding term sheet for exclusive negotiations to sell 49 per cent stake in the company to Rosneft. We are at an advanced stage of talks but will take more time to sign the actual deal,” Lalit Gupta, managing director and chief executive officer, Essar Oil, told reporters in a conference call after announcing results on Tuesday.
Gupta declined to comment on the reports of talks with Aramco.
When asked if the company would be open to divesting more than the 51% that it plans to as of now, Gupta said, “Only the promoters an comment on that.”
Essar Oil’s net profit soared to $53.58mn in Q3 FY 2015-16 (India’s fiscal year begins from April) from $7.65mn compared to the same period a year ago, despite a decline in revenue, driven by robust margins.
The company’s gross revenue declined to $2.052bnin Q3 FY 2015-16 from $3.23bn a year ago, primarily due to the decline in crude oil prices and lower output ,as shutdown in one of its units continued for 15 days in the quarter.
The company reported its highest ever current price Gross Refining Margin (GRM) in the quarter at $13.25 a barrel as against $7.00 a barrel in the same quarter last year.
