Essar Oil seemed all pumped up in morning trades on Monday as the company announced that it was selling its drilling business to the Abu Dhabi-based Bin Jabr group

The news sent the scrip spiraling by 9.28% to Rs 5.30 on BSE by 10:38 IST. It had reached even higher at Rs 5.70 earlier on. Volumes exceeded those normally traded on the counter at 49,749 shares. Essar Oil has now surged a solid 20.45% from Rs 4.40 on 12 February 2003.

The move to sell the rigs business to the Bin Jabr Group, an oil and gas service provider based in Abu Dhabi, is part of the company's restructuring initiative. The company said it was taking all necessary action to conclude the deal by the end of February 2003. KPMG Corporate Finance is acting as the advisor to the company. As per reports, the company will garner around Rs 300 crore from the sale.

The sale proceeds will be used for Essar's refinery project. The company had recently announced that it had restarted work on the Rs 8,000-crore (Rs 80 billion) Gujarat refinery project.

The Ruias-controlled Essar group company has announced that it has restarted a 12-million tonne mega refinery project in Gujarat, stalled since 1999, after tying up with financial institutions.

Essar Oil has already invested Rs 6,300 crore (Rs 63 billion) in the project, including cash infusion in a terminal, which provides natural deep draft suitable for berthing very large crude carriers and is close to the source of crude supply.

Equipment worth $200 million is ready for shipment and major plant and machinery valued at $430 million are already at the site. The project is likely to be completed by the end of 2004.

The Essar Group is aiming to become an integrated private sector petroleum player having interests in exploration, production and marketing. It had obtained a retailing licence from the Centre in 2002. Essar Group will thus emerge as the second private corporate after Reliance Industries to become an integrated petroleum company.

In the first quarter ended 31 December 2002, Essar Oil registered a 54.2% fall in net profit to Rs 3.52 crore on a 3.23% drop in net sales to Rs 47.39 crore.

As on 31 December 2003, the promoters held 61.56% stake in Essar Oil, while the public, institutions and foreign bodies held 24.7%, 6.36% and 1.16%, respectively.