Buoyed By High Crude Prices

With crude prices remaining firm, Maharashtra Seamless’s prospects have turned buoyant. High crude prices lead to fresh investments into exploration and production (E&P) activities the world over — a trend that has started to manifest itself. The company is positioning itself to take advantage of the opportunities ahead. Its plant in Romania is expected to come online this year and will lead to higher volumes. Meanwhile, a strong order book and huge cash reserves provide comfort to a potential investor in the company. Valuations too are reasonable currently. Strengths and opportunities Favourable international environment: High crude price is good news for pipe manufacturers like Maharashtra Seamless. With prices remaining firm at $100 per barrel levels, investments in the E&P sector are expected to start kicking in. Higher E&P activities directly improve the demand for seamless pipes and tubes. The number of rigs in operation has already reached levels seen prior to the 2008 global recession. (Rigs are big clients for pipe companies like Maharashtra Seamless.) The key markets that are witnessing robust demand include Latin America and the Middle East. In the LatAm market, Brazil, Argentina and Columbia are at the forefront of increased E&P activities. Drilling is on the rise in Brazil and Columbia, while in Argentina, the “Gas Plus” programme (that lifted gas price restrictions on fields lying idle since 2004) has boosted E&P activities. Buoyant domestic envi

This article was originally published on June 23, 2011.