After Debt Resolution, Essar Oil Lines Up Rs 1,200-crore Capex

After implementing the debt resolution plan, Essar Oil and Gas Exploration and Production (EOGEPL) has lined up a capital expenditure (capex) of Rs 1,200 crore till FY27.

The capex by the company focuses on unconventional hydrocarbons (UHC). It involves drilling of 210 new wells and refraction of existing 348 wells in Raniganj block during the FY23-FY27 period.

Post implementation of its resolution plan in December 2022, the company has been making debt repayments for the last two quarters ended March 2023.

In addition, it had around Rs 123 crore of cash and liquid investments as on March 31, 2023. This includes one quarter’s repayment obligation kept in Debt Service Reserve Account (DSRA).

CARE has assigned “BBB+” rating to the long-term bank facilities of the company.

The establishment of a pipeline to evacuate gas got delayed due to various reasons.

As there were no alternative infrastructure facilities available to transport gas, EOGEPL had to significantly cut production from its existing wells.

This adversely impacted revenues and resulted in default in debt servicing by the company with its lenders, CARE said in a rating commentary.