Buy ONGC; target of Rs 285: Motilal Oswal

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • New Western Offshore projects: ONGC awarded two offshore development projects, expected to unlock ~22mmtoe of hydrocarbons, with a combined capex of ~INR118b.
  • BP's Technical Service Provider (TSP) role: Extended to the entire Western Offshore, aiming to arrest decline in mature fields and speed up development.
  • Samudra Manthan exploratory scheme: Four wells planned in FY27, with up to 13 in FY28, subject to rig availability, with high expectations from the blocks.
  • KG-DWN-98/2 production: Expected to add ~1.5mmscmd with three gas wells planned for hook-up in 4QFY27.

Thesis Validation Checklist

  • Oil production: Watch for an increase in oil production, particularly from new projects and the impact of BP's TSP role.
  • Gas production: Monitor the addition of new gas wells and their impact on overall production.
  • Realization: Track oil realization and its impact on revenue and profitability.
  • Capex and investments: Keep an eye on the progress of new projects and investments, such as the Western Offshore projects and Samudra Manthan.
  • OPaL performance: Follow the performance of OPaL, including its EBITDA and net loss, as it rebounds from feedstock price increases.