Visit http://indiaer.blogspot.com/ for complete details Essar Oil: F2Q11 Analysis; Takeaways from Refinery Visit
F2Q11 broadly in line: Essar Oil reported EBITDA of
Rs6.1bn for F2Q11, up 53% QoQ and 74% YoY, and
25% ahead of our expectation. However, adjusting for a
forex gain of Rs1.15bn, adjusted EBITDA of Rs4.97bn is
broadly in line with our expectation.
Strong refining margins: F2Q11 GRMs were
US$6.49/bbl (including sales tax benefit), up 129% QoQ,
marginally ahead of our expectation of US$6.3/bbl.
Adjusting for sales tax advantage of US$1.84/bbl, pure
GRM stands at US$4.65/bbl, implying a positive spread
of US$0.41/bbl over Singapore GRMs. Essar Oil
processed 30kb/d of Mangala Crude, adding another
US$0.50/bbl to GRMs
Following are the key takeaways from Essar Oil’s
Analyst meeting, held at the refinery site at Vadinar.
Phase I expansion – completion in 2QCY11: The
refinery expansion project is broadly on track to be
mechanically completed by March 2011. However, the
coker and the VGO unit of the Phase I expansion are
lagging behind schedule by a quarter. Essar Oil is
looking to complete the upgrading and expansion
around 2Q CY11. It will take 30-35 days of full shutdown
for integration of refinery units.
Mangala Crude processing ramped up: Essar Oil
processed 30 kb/d of Mangala crude during the quarter,
which helped to improve GRMs by US$0.50/bbl.
KG D6 Gas supply agreement yet to be signed:
Reliance is yet to sign the agreement for supply of gas to
Essar Oil; however, it estimates that the use of 0.6
mmscmd of KG gas at the refinery will add about
US$0.30/bbl to GRMs.
Raniganj CBM Development on track: The block is
currently producing 18,000 scm and management
expects Raniganj commercial sales to begin by
December 2010.
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