ONGC gains 4 percent on winning seven oil, gas blocks

Out of the seven blocks on offer, five are in Madhya Pradesh, and one each in Rajasthan and West Bengal.

The government had launched the Open Acreage Licensing Policy (OALP) Bid Round-IV on August 27, 2019, and the bidding round closed on October 31, 2019.

"In the last two-and-a-half years, the government has successfully bid out nearly 1.4 lakh square kilometres for exploration and production. Seven blocks awarded today under OALP-IV to ONGC have the resource potential of approximately 33 billion barrels of oil and oil equivalent gas," said Dharmendra Pradhan, Minister of Petroleum and Natural Gas & Steel.

The latest licensing round held with revamped terms witnessed only ONGC and Oil India participate in the bidding. ONGC put in bids for all the seven blocks on offer, while OIL put in an offer for one block by the close of bidding.

The four OALP Bid Rounds, conducted till date have been a success, with total of 94 blocks awarded covering an area of 1,36,790 sq km to leading E&P companies. The operators of these blocks have since then initiated petroleum exploration activities or are in final stages of obtaining Petroleum Exploration Licenses (PELs), the Petroleum Ministry said.

Meanwhile, Goldman Sachs upgraded ONGC to ‘Buy’ from ‘Neutral’ and set a Target Price of Rs 175 on the stock.

The global brokerage feels free cash flow generation and dividend yield remain robust for Indian upstream companies.

At 11:43 am, shares of ONGC gained 1.95 percent to Rs 130.50 on the BSE.