Aban offshore Limited

Aban offshore Limited, incorporated in 1986, is an Indo-US joint venture that is in the business of providing and operating ships, vessels, rigs, structures, equipment and personnel required for on-shore and off-shore drilling and oil field services. It is India's largest offshore drilling entity in the private sector. India offshore Inc. its American partner provide both technical know-how and equity participation. It owns offshore oil rigs and also operates ONGC's rigs on a contract basis and provide drilling services. Aban Offshore also owns the only FPSO in the country. Six facilities are located on Mumbai High, while there is one each on the Persian Gulf and Indian east coast.

Key Risk :

The major risk for Aban Offshore at the moment is that its have debt of around Rs.16,000 crore and some portion of debt due to mature this year and the next. In 2006 when crude oil price starting to move up and outlook of commodity sector looking very bright, Aban acquired Norwegian drilling company Sinvest-ASA at an enterprise valuation of $ 2.2 billion, largely with debt.

Financials :

Aban Offshore net profit jumped four-fold to Rs 256 crore in Dec 2008 qtr. but failed to prevent its market capitalisation plunge 57.2% since the start of 2009 to Rs 1194 cr.The reason for the particularly poor performances on bourses is the negative perception in the market about the outlook for this sector with crude oil price falling.

Conclusion :

It is already discount all the negative perception in the market about its future outlook and now it is risk free investment for medium to long term investor. Last few days if market rumored to believe then some insider are buying at lower level and anytime its blast 20-30 percent from current level.