Alphageo - Creating Seismic Waves


(Raj) #41

Little dated but info on acquisition of new equipment:

http://www.worldoil.com/news/2016/12/14/cggsercel-sells-four-508xt-acquisition-systems-to-indian-seismic-companies


(manjushree) #42

They seem to have reduced the holding in the next quarter.


(Sarabjeet Singh) #43

Hi Guys,

Has anyone found some update on how is their execution of ONGC project progressing ?

I tried searching on Google but could not find any info at all.


(Raj) #44

3rd quarter result is on 10th Feb. Management generally issues a press release along with it which contains other details. There is no other window of opportunity to find about the progress in the company.

Alternate option is to call up the management and if they decide to talk to you then you can get some insight. My assumption is that this is a silent period for them and hence they will not speak before the results.


(Suvrat Jain) #45

@raj1968 , Thanks for the detailed updates on Alphageo… Going by the customer feedback, Alphageo is currently operating around 13 crews from Sercel equipment. When it was operating 3 crews in Q4FY16 and Q1FY17 for the ONGC 3D survey, it generated a revenue of around 45 to 50 crores. So with 13 crews it can generate around 180 to 190 crores of revenues. It may be less as most of the crews are starting with the execution of Survey activities at various sites. What are your expectations for this quarter (Q3) as far as revenues are concerned ?


(Raj) #46

@suvratjain When we spoke to the management during AGM, they said that revenue from big ONGC contract will be linear which means they should do something around 150cr+ per quarter(since they have to deliver entire 1500Cr project within 10 quarters and remember Q2 always have very little revenue for them due to monsoon.)
Now I would rather wait for next 10 days to see than hazard a guess of what’s going to come. FY18 should be quite big for them plus I assume they will also start bidding for new projects in FY18.

Regards,
Raj


#47

I came across a report by prospero tree on Alphageo
the link is
http://prosperotree.com/investment-ideas/322-alphageo-mega-execution-of-seismic-survey.html


(Mridul) #48

@nagesh_reddy - A good read. Thanks! Most of the stuff is already known. Though, it’s good to find out the prospects post this big order. Few questions @raj1968 - What’s the difference between 2d and 3d surveys in terms of seismic research? I guess 3D survey is more exhaustive? Is there a possibility of the company getting order for 3D surveys for the fields it has already conducted 2d surveys? What’s the cost difference between the two? Why don’t oil companies order a direct 3D survey (assuming it is more conclusive evidence), but a 2D survey…pricing?


(Raj) #49
  1. For difference between 2D and 3D survey you have details on alphageo site itself. If you need more details, please google it. You will find more links.
    http://www.alphageoindia.com/faq.htm
  2. Order for 3D survey of the fields where 2D survey has been conducted?
    Yes…those who buy the blocks will definitely go for a 3d survey or much narrower 2D survey(in this NSP survey the distance between 2 lines is 40km). But again bidding will be done and winner will carry out the project.
  3. You guessed it right. Pricing differential is quite high. But I don’t have data to tell how much.

Regards,
Raj


(Mridul) #50

From Alphageo website FAQs - indeed 3d surveys are carried out once initial 2d data is available; and the 2d survey findings point towards further exploration in the said block as winning bet for the bidder. Cost is pretty steep with 3d surveys.

The more i am studying this company, the more confident i am getting of this investment. Good thing is its prospects after this huge order. There will be more basins up for grabs for 2d surveys, and at later stages, more 3d survey order might come up depending upon the results of these 2d surveys.


(Mridul) #51

Potential business drivers (From recent company presentation)

Further orders from National Seismic Program (NSP)
• The current requirement of data acquisition under NSP is about 50,000LKM.
• Out of this contracts have been awarded for approx. 42,000 LKM. Against this ALPHAGEO has been
awarded approx. 30,000 LKM.
• Potential tenders from balance work in the North East aprox. 1000 crores

Post NSP Scenario
• All data acquired under NSP will be put in data room for allowing companies to participate in Exploration
Activity under the Open Acreage Licensing Policy (OALP). Participation from global players is expected
• Further orders for 2D seismic surveys with closer grids in the prospective areas by companies taking up
work under OALP. Alphageo is the most likely candidate for data acquisition services in these fields
• The prospective areas could potentially upgrade for 3D seismic survey

Marginal Fields and CBM fields
• The marginal fields which were written off by ONGC , and Oil India due to unviable economics will be reexplored,
opening up possibility of 3D surveys in these areas for Alphageo
• Currently Government has called for bids for 69 fields (due in October 2016) out of a list of potential 200+
fields
• Potential CBM fields also carve out new opportunities

Government thrust to enhance Production – CARPET 3D SURVEYS
• The current Government is actively pursuing the policy of implementing enhanced production by the 2
National Oil Companies.
• ONGC KG Basin has taken up the pilot project of CARPET 3D to better understand basin reservoir
characteristics. This is being executed by ALPHAGEO (RS. 242 Cr order).
• Potential tenders from balance regions Gujarat, Assam, Tripura etc to come up

Prospects overseas and offshore
• Prominent onland seismic service provider in Myanmar. Exploring further in Myanmar as well as other
Asian geographies
• Exploring offshore opportunities through alliances


(rajput.delhi) #52

I little dated but gives an idea of the kind of unknown problems/risks the company could face while executing a size they have had no experience in.

Rgds
RR
Not invested but tracking


(sagararya) #53

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/3C3647E8_7F69_4DE1_A549_D70AB1B72140_143642.pdf

Good results…Has anyone quantified the market here? Dont expect any more bids from NSP…correct me if iam wrong…there are two revenue sources going forward- OALP and revenues from outside India. Is there any way to quantify the size of the opportunity here?


(Kunal Patel) #54

Only problem is Margins…It has come down significantly. Need to check with the management, what could be the sustainable margin going forward?

Discl: Invested from lower levels. No trade in last 30 days


(Raj) #55

@kunal_patel management guided for 25-27% EBIDTA margin during the AGM from new contract.


(Raj) #56

Quite a few people seem to be worried about the future of alphageo post FY19(When their big ONGC work gets over). The company has decided not to bid for any new projects till they stabilize their largest order. The may start bidding for new projects in second half of FY18(my guess from management indication during post AGM discussion). Please have a look at the link below for some of the open tenders.

http://www.petrowatch.com/search-solr.php?sq=seismic&ctype=3&PetroWatchSearch=Search

Petrowatch is a paid site and you will get only limited access as a visitor.

Disc: Invested heavily in alphageo. No trading in last 90 days.


(Tarun) #57

Hi Raj,

I am one of those who are trying to be devils advocate on this script. I am invested and applying contrarion thinking to be able to see worse case scenario.

I have understood that management has cautiously - and so prudently- decided not to go for anything new till this ~40k line kilometres 2d survey gets over.

I also understand from prtronet site, and even otherwise that new opportunities are/may be there once they need one.

Somewhere in this thread itself I estimated an EPS of ~125Rs for full year, for next 2years. Recent q result seems to be in line. On that assumption, forward PE is ~8 - despite market knowing this s great order size - I think players are little cautious, and may be for sound reasons.

All I am saying is, looking at a long term top line/bottom line this companies fortune are tied greatly to government whims/fancies/policy, very very very closely.

Disc: invested
Only caution is policy continuity.


(Tarun) #58

Currently getting settled in a new city (bangaluru) and new job.:smiling_imp: will attach the long term top line/bottom line graph in due course to support what I am trying to convey.


(Raj) #59

Hi @T11,
It always pays to be cautious rather than being too optimistic, so the cautionary note from you is welcome.

Let me clarify the statement below based on my understanding:

I have understood that management has cautiously - and so prudently- decided not to go for anything new till this ~40k line kilometres 2d survey gets over.

The above statement is not correct. The project will be completed only by Sept '19. Management has decided not to bid till this project stabilizes not till the completion of the project. There is a big difference in your statement and management guidance. Management will most likely start bidding towards the second half of FY18(my understanding from interaction with management from AGM last year).

Alphageo is in a business where order book is important. 3 year order visibility is rare for this kind of business. They may not get such large orders within India in future and sales might dip post completion of this order. But such large orders give time to management to think about expanding their offerings. During the AGM they hinted about their foray into shallow water survey. Also with the demonstration of such large execution ability then will be able to bid globally as well.

Due to nature of this business, alphageo will always get a lower discounting compared to compounding stories. However, with full execution there is a strong possibility of large upside from here(although no multibagger opportunity). I will review my position after a year and take a call.

Regards,
Raj
Disc: Invested and fully biased :slight_smile:


(Billu) #60

All I am saying is, looking at a long term top line/bottom line this companies fortune are tied greatly to government whims/fancies/policy, very very very closely.

I thought petroleum mining was tied more to current crude oil prices rather that anybody’s whims. Even if they don’t want to search for oil, $100 barrel forces people to. So shouldn’t we care more about the future price of oil rather than who’s sitting in Dilli?