I agree. I think Antelopus Selan is a good portfolio hedge in case there is severe supply distortion in the oil market.
Personally, what I think makes Selan a bit unique compared to the other oil exploration companies is the fact that they are in the process of volume ramp-up (since they are at a small base).
| Time |
Production (In boepd) |
Comments |
| Q1FY26 |
1,063 |
|
| Q2FY26 |
1,107 |
|
| Q3FY26 |
1,498 |
|
| Q4FY26 |
~1800 |
Estimated Exit run rate as per management |
The management has guided an exit boepd of 1800 to 2200 for the coming financial year.
Scenario 1: If Oil price reverts to pre-war and stabilises at USD 70 per barrel
| Key |
Amount |
Comments |
| BOEPD |
1800 |
Assuming the lower end of the mgmnt estimate |
| Oil Price |
70 |
USD / barrel |
| INR / USD |
93 |
|
|
|
|
| Annual Revenue |
428 |
Rev = Boepd * no. of days * oil price* INR/USD |
| EBITDA % |
50% |
EBTIDA for last 2 years is b/w 53%-55% |
| EBITDA |
214 |
INR Cr |
The current EV/EBITDA is 14x. But let’s assume that in the next 1 year, it reduces by 30% to 10x (Note: the 5 year average EVEBITDA is 14x, but let’s be conservative)
This would mean an EV of INR ~2000 Cr (no-loss or no gain to today’s EV of ~1990 Cr)
Scenario 1: If war worsens and Oil price increases to USD 100 per barrel (Note: Brent price is USD 110 today, being conservative here)
| Key |
Amount |
Comments |
| BOEPD |
1800 |
Assuming the lower end of the mgmnt estimate |
| Oil Price (USD / barrel) |
100 |
|
| INR / USD |
93 |
|
|
|
|
| Annual Revenue |
611.0 |
INR Cr |
| EBITDA % |
50% |
Ideally, the margin would be much higher. No extra cost to extract oil. The cost to extract oil for the company is USD 35 per barrel (as per management) |
| EBITDA |
306 |
INR Cr |
Again, assuming a 10x EVEBITDA ratio, the estimated EV of the company is INR 3000 Cr. This is an upside of atleast 50% in case things go really bad in the oil markets.
The above are my assumptions. The future is uncertain. Nobody knows where oil prices will be in the coming year (it can be 50 or even 150), or what valuation multiple markets will give oil companies.
The high growth in boepd volumes can offset the risk in lower oil price or valuation multiple.
Then there is also the risk of a windfall tax (which the government could apply, and they have already done it for refiners). Although just last year, the govt passed a bill that makes it difficult for them to apply it oil producers.
I am looking at this purely from a short-term portfolio hedging point of view (What if oil markets go up and equity markets go down?). I have other investments at play in case equity markets go up.
Look forward to other fellow investors views
Disclaimer: Invested at lower levels & biased.
