ONGC strikes gas in Mahanadi deepwater well: 6 stocks likely to benefit from exploration push

ONGC is likely to be in focus on Tuesday, September 22, after the state-run explorer announced a gas discovery in a deepwater well off India’s eastern coast. Its proximity to Odisha could aid faster development, subject to further appraisal and confirmation of commercial viability.

Appraisal here means further drilling and testing to determine whether the gas discovery is large enough and technically/economically viable to develop commercially.

ONGC discovered gas on September 18 at the MN-DW18-1-H-D well in the Mahanadi Offshore Basin, about 43 km off Konark, as part of its Samudra Manthan deepwater exploration campaign, the company said in a statement.

The well, the first drilled by ONGC in the Mahanadi Basin under the campaign, encountered gas at a depth of 1,441-1,452 metres after being drilled to a target depth of 1,623 metres.

The well has been flowing gas for the past three days, with "encouraging flow and reservoir pressure," ONGC said.

Its relatively short distance from the Odisha coast could support early monetisation if the discovery proves commercially viable, while the find and other discoveries in the area could potentially be developed using shared facilities, ONGC said.

Other stocks in focus

Apart from ONGC, there are some stocks that are expected to be in the spotlight following the gas discovery. Here is the list.

The company has several rigs deployed with ONGC and recently secured a three-year contract for its Jindal Pioneer rig at an effective day rate of ₹45.8 lakh.

ONGC has also floated a tender for deepwater drilling rigs under the Samudra Manthan mission, which could open up further opportunities for drilling contractors.

The company is also expanding its offshore services business through subsidiary Dolphin Offshore and has said it is evaluating upcoming offshore tenders.

Its management has identified Samudra Manthan as an opportunity to deploy its offshore support capabilities in Indian waters.

The company has capabilities across offshore support, subsea and related services, which could see higher demand as exploration projects move towards drilling, development and production. Its parent, Deep Industries, is also pursuing a contract-backed expansion of the offshore fleet.

The company provides diving support, inspection, maintenance and other offshore services, which could benefit as discoveries move from exploration to development.

The impact, however, is likely to play out over the longer term as deepwater projects typically have a lengthy development cycle.

The block has six gas discoveries and is currently at the development stage.

The latest ONGC discovery could therefore bring greater investor attention to the company's existing Mahanadi assets and their development potential.

The company recently secured a new contract area in the Mumbai Offshore Basin under the Discovered Small Field programme.

While the ONGC discovery does not have a direct impact on HOEC's assets, the broader push to accelerate offshore exploration could create opportunities for domestic E&P companies.

What market participants need to know

The ONGC gas discovery does not automatically mean these ancillary companies will receive contracts. Instead, it could draw greater attention to the broader offshore exploration and oilfield-services sector.

The discovery highlights the potential of deepwater exploration in the Mahanadi basin, while the government’s ₹84,084 crore Samudra Manthan scheme aims to accelerate offshore exploration, drilling and development.

As exploration activity increases, demand could rise for drilling rigs, offshore vessels, subsea services, engineering and other oilfield services, creating potential opportunities for companies operating across these segments.