Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Electrosteel Castings enters into a JV with Dart Energy
Electrosteel Castings (ECL) has entered into a joint venture (JV) with Dart Energy (Dart) for
the production and sale of coal bed methane (CBM) from its coal mine in Parbatpur,
Jharkhand. The JV will have exclusive rights to produce CBM from the Parbatpur coal mine
license area, which is currently owned and operated by ECL. Dart will be holding 30%
equity in the JV and act as the operator, while ECL will be holding the balance 70%. The
cost of gas extraction will be funded by both the parties and profit will be shared in
proportion to their respective holdings.
As per Netherland, Sewell and Associates Inc., gross gas resource at the coal mine is
estimated to be approximately 168bcf. The coal mine has high gas content, which requires
extraction of the CBM ahead of mining activity for regulatory and mine safety purposes.
Given the high gas content and coal thicknesses, a vertical well completion technology is
intended. The initial programme will include two core holes and six pilot wells in 2011,
followed by a well development programme of over 30 wells in the following years. Dart
will be contributing around US $2mn in 2011 and US $10mn for development expenditure
going ahead. On completion of all wells, the annual production is expected to be 3bcf.
As per the release, production and sale of gas is expected towards the end of
2011/January 2012. Both the companies are already in advanced discussions with
domestic natural gas players for potential gas offtake contracts. The JV agreement also
gives the option to ECL to acquire produced gas for its steel plant.
We have not factored the earnings accruing from the sale of gas in our estimates, as we
await further clarity. We continue to maintain our Buy recommendation on ECL with a
target price of `43.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Electrosteel Castings enters into a JV with Dart Energy
Electrosteel Castings (ECL) has entered into a joint venture (JV) with Dart Energy (Dart) for
the production and sale of coal bed methane (CBM) from its coal mine in Parbatpur,
Jharkhand. The JV will have exclusive rights to produce CBM from the Parbatpur coal mine
license area, which is currently owned and operated by ECL. Dart will be holding 30%
equity in the JV and act as the operator, while ECL will be holding the balance 70%. The
cost of gas extraction will be funded by both the parties and profit will be shared in
proportion to their respective holdings.
As per Netherland, Sewell and Associates Inc., gross gas resource at the coal mine is
estimated to be approximately 168bcf. The coal mine has high gas content, which requires
extraction of the CBM ahead of mining activity for regulatory and mine safety purposes.
Given the high gas content and coal thicknesses, a vertical well completion technology is
intended. The initial programme will include two core holes and six pilot wells in 2011,
followed by a well development programme of over 30 wells in the following years. Dart
will be contributing around US $2mn in 2011 and US $10mn for development expenditure
going ahead. On completion of all wells, the annual production is expected to be 3bcf.
As per the release, production and sale of gas is expected towards the end of
2011/January 2012. Both the companies are already in advanced discussions with
domestic natural gas players for potential gas offtake contracts. The JV agreement also
gives the option to ECL to acquire produced gas for its steel plant.
We have not factored the earnings accruing from the sale of gas in our estimates, as we
await further clarity. We continue to maintain our Buy recommendation on ECL with a
target price of `43.
No comments:
Post a Comment