RIL up on govt to move court to allow third-party gas sales

Reliance Industries rose 1.22% to Rs 1322 at 11:40 IST on BSE on reports the government will shortly move the Bombay High Court to allow Reliance Industries third-partly gas sales from the Krishna-Godavari basin.
Meanwhile, the BSE Sensex was up 229.15 points, or 2.36%, to 9919.22.
On BSE, 10.63 lakh shares were traded in the counter. The scrip had an average daily volume of 23.82 lakh shares in the past one quarter.
The stock hit a high of Rs 1338 and a low of Rs 1310.10 so far during the day. The stock had a 52-week high of Rs 3252.10 on 15 January 2008 and a 52-week low of Rs 930 on 27 October 2008.
India's largest private sector company by market capitalisation and oil refiner has an equity capital of Rs 1573.79 crore. Face value per share is Rs 10.
The current price of Rs 1322 discounts its Q2 September 2008 annualised EPS of Rs 113.40, by a PE multiple of 11.65.
As per reports, the government will shortly move to the Bombay High Court requesting it to vacate an interim stay order that restrained Reliance Industries (RIL) from selling gas from the Krishna-Godavari (K-G) basin to companies other than Reliance Natural Resources (RNRL) and state-owned NTPC, customers that had signed contracts for the fuel.
Reports added that the government will file an application in the Bombay High Court by the end of December 2008 or early January 2009. The reason why the government will apply the court for allowing gas sales to third parties is that the government is a major stakeholder under the production-sharing contract with Reliance Industries (RIL). The government gets a share of revenue and profit called profit petroleum under production sharing contracts which it enters into with oil and gas producers.
The Bombay High Court's interim order in May 2007 had directed RIL not to create third party interest for the disputed volume of 40 million standard cubic metres per day (mscmd) of gas from the K-G basin.
RIL and RNRL had agreed on a price of $2.34 per million British thermal units (mBtu) in July 2006, but RIL wanted to charge more after gas prices rose and costs climbed. The government in September 2007 set the price of gas from the K-G field for potential buyers at $4.2 per million mBtu. The price was linked to crude oil equal to or more than $60 a barrel.
The move to get the interim order vacated comes just a day after the government withdrew its affidavit that had made it a party to the case being fought by the Ambani brothers in the Bombay High Court, saying it would expedite the two-year old case.
The affidavit, which the government submitted to the court on 14 November 2008, explained why the government wanted consumers to pay RIL $4.2 per unit of gas from the K-G basin. It added that the government had the right to reject the RIL-RNRL contract and that the higher gas price was binding.
Reliance Industries' net profit rose 7.4% to Rs 4122 crore on 39.8% growth in net sales to Rs 44787 crore in Q2 September 2008 over Q2 September 2007.
On 3 October 2008, RIL said it had allotted 12 crore equity shares of face value Rs 10 each to various promoter group firms upon exercise of rights attached to warrants held by them. These equity shares would be subject to a lock-in for a period of three years from the date of allotment of the warrants. The conversion price for the warrants is Rs 1,402 per share.
RIL manufactures petrochemicals, synthetic fibers, fiber intermediates, textiles, blended yarn and polyester staple fiber. The company also owns a petroleum refinery cum petrochemicals complex in Jamnagar, Gujarat that produces a wide range of products such as gasoline, superior kerosene oil and liquified petroleum gas.