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Rig sale to fetch Essar Rs 300 cr

Mumbai, Feb. 14: Essar Oil Ltd has finalised an agreement for the sale of its drilling business that includes 11 rigs ó four deep sea drilling rigs and seven mobile drilling-cum-workover rigs ó to the Bin Jabr Group of Abu Dhabi for an estimated value of over Rs 300 crore.

Company officials, who did not wish to comment on the value of the transaction, pointed out that the sale of the drilling division is consequent to Essarís decision to become an integrated oil and gas company with strategic focus on three areas ó exploration and production of oil and gas, crude oil refining and bulk and retail marketing of petroleum products.

As part of this strategy, the company has earlier exited from offshore drilling business, he added.

It is understood that the sale proceeds will be utilised for Essarís 12 million-tonne refinery project at Vadinar that involves an investment of Rs 6,300 crore.

The company has said that 64 per cent of the overall work has been completed. ABB Lummus Crest of Holland is the project management consultant contractor with single point responsibility to complete the project.

The drilling business of Essar Oil has an annual turnover of about Rs 150 crore with a profit margin of around 25 per cent, officials said. They added, this division currently has contracts worth $ 80 million and contributed to about 25 per cent of the rigs business in Oman.

Essar Oil has informed the stock exchanges regarding the deal. KPMG Corporate Finance was adviser to the sale.

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