ONGC Plans to Complete Imperial Purchase on Schedule

By Kartik Goyal

Dec. 10 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest exploration company, plans to complete on schedule the buyout of the U.K.’s Imperial Energy Plc, its largest overseas purchase so far, Chairman R.S. Sharma said.

“We have posted the offer document yesterday. That milestone is over,” Sharma told reporters in New Delhi today. “I am confident that we will get better returns on our investment.”

ONGC ended uncertainty about renegotiating the 1.4 billion pounds ($2.1 billion) deal when it yesterday submitted the formal offer of 1,250 pence a share to buy Imperial Energy. Sharma has justified the proposed deal, saying oil will rebound to $100 a barrel, more than twice the current price. Crude traded at $43.49 in the after-hours trading in New York today, compared with $116.27 on Aug. 26, when ONGC agreed to buy Imperial Energy.

The decision to buy Imperial Energy was taken “very cautiously,” Sharma said. Short-term market fluctuations shouldn’t impact business decisions, he said.

Imperial Energy, which operates in Siberia, “strongly” recommended acceptance in a letter to shareholders yesterday, saying ONGC won’t have to extend the offer beyond Dec. 30. Acceptances have already been received from company directors and investors representing about 15 percent of shares.

$1 Billion Loan

Sharma said there was no change in the Indian state-run explorer’s plans to raise a bridge loan of $1 billion to fund the purchase.

ONGC shares gained 26.3 rupees, or 4 percent to 687 rupees at 1:43 p.m. in Mumbai today, after earlier rising as much as 5.6 percent. ONGC, the producer of almost 25 percent of the crude used by Asia’s third-largest energy consumer, plans to obtain the equivalent of 60 million metric tons of oil, or 1 1/2 times India’s output, from overseas by 2025.

Imperial Energy had proven reserves of 174.6 million barrels of oil equivalent at the end of 2007, the company said on its Web site, citing an independent audit to Society of Petroleum Engineers standards.

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net.