Selan Exploration Technology Ltd: CMP – Rs.59.75,BSE Code –530075 Selan Exploration was incorporated in 1985 is involved in Onshore drilling for exploration of oil and gas. The Company started as a consulting firm and was doing seismic data acquisition work for ONGC. It was later awarded BAKROL, INDRORA and LOHAR oilfields in Gujarat for development in the year 1993. In the year 1997, the Company received Letters of Intent for two additional fields in onshore Gujarat viz KARJISAN, a gas field and OGNAJ, an oil field, from the Ministry of Petroleum and Natural Gas (MoPNG). The company has been producing crude from its oilfields in BAKROL, INDRORA and LOHAR. The company had been buying back its shares through open market purchase from the year 2002 till the year 2004, as a result of which the Equity Capital got reduced from Rs.17.51 crores to Rs.14.0 crores. This indicates the confidence of the promoters in running the business and this is showing up from the continuous good financials the company is posting during the last few quarters. FINANCIALS: The company has been delivering excellent number for quite sometime as mentioned earlier. For the last quarter, Q4 FY-2005-06, the results were brilliant. The Profit after Tax (PAT) surged ahead to Rs.3.3 Cr as compared to a net loss of Rs.4 lakh in the same period previous year. This translates into a rise of 8, 450 %, over the corresponding period previous year. The net profit margin was a whooping 76.08% as compared to (-) 1.16 in the same period previous year. For the FY--05--06, the net profit jumped to Rs.8.73 Cr as compared to Rs.87 lakhs in the same quarter previous year. This is a ten fold increase of profit. The EPS of the the FY-05-06 is a whooping Rs.6 as compared to Re.0.64 in the same period previous year. The promoters hold 38.64 % while FIIs and Punjab National Bank hold 0.08 % and 1.80 % respectively. Private corporate bodies and Shri Parasram Holding Pvt. Ltd also hold 6.50 % and 1.31 % respectively. It is a totally debt free company. The company currently derives bulk of its revenues from BAKROL Oilfield. The company has aggressive plans to increase Oil production from the BAKROL Oil field by drilling new wells and according to any analyst tracking the counter its production is expected to double in FY 06---07. The company is also trying to increase the production from the INDRORA Oilfield by working over the wells where there has been a drop in production. The company had also signed up the Production Sharing Agreement with the Ministry of Petroleum and Natural Gas in February 2004 for the OGNAJ Oilfield and KARJISAN Gas Field. The Ministry has granted Mining Lease to the company for KARJISAN Gas Field in November 2005 and is expected to grant Mining Lease for OGNAJ Oilfield soon[ MoPNG vide their letter dated November 09, 2005, has approved the Grant of Petroleum License (PEL) to the Company for the Karjisan gas field]. Any good news in these fields would lead to higher profits for the company. With Crude hovering above $70 per barrel, the Drilling and Exploration companies will get the maximum benefits. Yesterday, ONGC came out with excellent set of numbers. Their earnings multiplied due to higher realization and better margins. This is expected to remain as long as the buoyancy in the crude front exists. Other players in the same field are also expected to come out with good results due to high price of crude in the international market.Thus Oil exploration companies will command high valuations in the Indian Bourses as long as the oil market is buoyant. Even though this stock is trading quite a good multiple to its book value, I feel that the scrip has huge potential go further from these levels. If more institutional players and FIIs start looking at this scrip then it could shoot to above Rs.150 in no time. One should remember that this is a high risk and high gain stock. Investors who have penchant for risk should enter the counter at this price. [With inputs from various sources] Best Wishes, Suman Mukherjee India. http://finance.groups.yahoo.com/group/SumanSpeaks