India's BPCL Reports 10% Drop in Q4 Profit

India’s leading state owned energy firm BPCL reported a 10.65 percent decline in net profit for the quarter ended March 2016.

During the quarter, BPCL's net sales were down 14 percent on year. These figures were better than what many analysts were expecting. For the full year ended March 2016, BPCL's net profit was up 46.17 percent.

Analysts says company’s performance may improve further, driven by improvement in margin recovery, potential reversal of inventory loss and volume growth at Kochi refinery.

Exxon-Eni Mozambique deal booster

BPCL’s Mozambique gas asset may get a valuation boost if ExxonMobil acquires 25 percent stake in the Area 4 from Eni, according to ET Intelligence Group.  

Recent media reports have suggested that ExxonMobil is looking to buy the 25 percent state in Area 4 from Eni for an estimated value of $3 billion. The Italia firm has 50 percent operating stake in the asset. “If this deal goes through, it will set a new valuation benchmark for the Mozambique assets in a low energy price environment,” ET Intelligence Group said.

BPCL has a 10 percent stake in Area 1, which is adjacent to Area 4. 

Mozambique offshore gas discovery in Rovuma basin is divided in two parts: Area 1 and Area 4. Anadarko is the operator of Area 1.

BPCL 10 percent stake in Area 1 is being valued in the range of $5-11 billion. “But based on ExxonMobil's offer for a 25 percent stake in Area 4, the implied value (of Areas 1 & 4) is estimated at $24 billion. This leaves enough room for an upward revision of the stock for the value of BPCL's gas assets,” ET Intelligence Group stated.  

Many analysts believe that if Exxon buys up to 25 percent stake in Eni, it will try to find a way to buy into the field in which BPCL holds a stake.