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New Delhi: ICICI Bank and HDFC Bank plan to sell their 50% stake in state-owned Hindustan Petroleum Corporation Ltd's (HPCL) oil exploration firm, Prize Petroleum Co Ltd to a strategic investor, reports PTI quoting a company official.
"An advertisement has been issued seeking offers from potential buyers of the stake," Prize Petroleum managing director M R Pasrija said on the sidelines of the Petrotech-2010 oil and gas conference here.
HPCL holds 50% in Prize Petroleum while ICICI Bank has 35%, ICICI Ventures 10% and HDFC Bank 5%.
"All the three (ICICI Bank, ICICI Ventures and HDFC Bank) are selling their stakes," he said but refused to elaborate.
So far, HPCL and the financial institutions have contributed Rs10 crore as equity each in the company.
Mr Pasrija said offers from potential buyers have been invited by end of this month.
Prize Petroleum operates Cluster-7 marginal fields of Oil and Natural Gas Corporation Ltd Cluster 7 is estimated to hold 180 million barrels recoverable oil reserves. It also has two exploration blocks awarded under the fourth and sixth rounds of auction under New Exploration Licensing Policy.
Sources said HPCL may buyout the financial institutions in the company if it does not get favourable response. HPCL management wants to turn the company into a 100% subsidiary.
HPCL and Prize Petroleum are both in market for exploration assets and may be acting at cross-interest in some areas, they said adding HPCL already has an exploration and production division, which is working parallel with Prize Petroleum, and merging the two can yield better results.
HPCL, in partnership with consortium companies, currently has 19 upstream assets including four blocks in Oman, Australia, and Egypt. It plans to invest around $500 million in the upstream sector by March 2012.
Mr Pasrija said the financial institutions have been looking to exit Prize Petroleum, and have been trying to move out by selling to a strategic investor.
In 2008, Jaiprakash Associates Ltd had entered into an agreement to buy 45% in Prize Petroleum from ICICI Bank and ICICI Ventures, but the cement maker later walked out of the deal.
Prize Petroleum is looking for prospective or producing assets in Russia and other Commonwealth of Independent States such as Kazakhstan.
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