Detailed Narrative
Northeastern Region Operations & Expansion
The Kharsang block saw significant activity, with 4 development wells drilled, 3 of which are now hooked up and contributing an additional 350 barrels of oil per day. This increased Kharsang's total production to 450 bpd in Q1 FY26, a 28.2% QoQ growth. The company aims to complete 9 wells by December 2025, expecting to add 1,000 bpd. For the Dirok field, a well in North Dirok and 3 more development wells are planned to augment capacity. The total capital outlay for the Northeastern region is INR 250 crores over the next two financial years, with drilling expected to be completed within this period.
Dirok Field Performance & Gas Grid Connectivity
Dirok field's gas sales for Q1 FY26 increased to 20 million standard cubic feet per day (0.41 Bcf), up 10.8% QoQ from 15 MMSCFD (0.37 Bcf). Condensate production also saw a substantial 34.7% QoQ increase to 8,893 barrels. However, the realized gas price declined by 10.9% QoQ to US$ 7.54 per MMBtu. Production remains constrained by limited demand, but the company anticipates increased offtake starting in Q3 FY26, with the Northeast Gas Grid expected to be operational within FY26, connecting Dirok to the National Gas Grid.
Cambay & Offshore Blocks Updates
In the Cambay blocks, environmental clearance has been received for drilling 2 wells each in North Balol and Asjol. Workover operations on NB-1 in North Balol are complete, and the first development well has been drilled. For offshore assets, the Revenue Sharing Contract for Block B-15 was signed in April 2025. PetroVietnam's review of PY-1 (formerly PY-3) suggests a 4-well plan (2 in-fill, 1 appraisal, 1 exploration) with an estimated capex of up to USD 50 million, with drilling expected to commence in the last quarter of FY26.
B-80 Production & Monsoon Impact
Production from Block B-80 saw a decline in Q1 FY26, with oil production at 48,406 barrels (down 19.3% QoQ) and gas at 0.37 Bcf (down 7.5% QoQ). The realized gas price also fell by 5.7% QoQ to US$ 11.4 per MMBtu. Production was disrupted in mid-June 2025 due to monsoon conditions, leading to the de-mooring of the FSO for safety. The FSO was re-moored in August 2025, and a workover for D1 and D2 wells is planned post-monsoon. A new well is planned for B-80, estimated to cost USD 10 million, with a target production of 5,000 bpd.
Financial Performance Overview
Standalone revenue for Q1 FY26 was INR 83.48 crores, a marginal increase from INR 83.37 crores in the previous quarter. Consolidated revenue from operations was INR 85.5 crores. Standalone EBITDA grew 11.7% QoQ to INR 27.24 crores, while consolidated EBITDA (excluding adjustments) declined 9.6% QoQ to INR 35.02 crores. Consolidated PAT (including year-end adjustments) stood at INR 43.87 crores, a 14.2% QoQ decrease from INR 51.16 crores.
Capital Expenditure & Funding Strategy
The company has revised its overall capital expenditure target to INR 1,250 crores over the next two years, up from a previous estimate of INR 1,000 crores. This capex is aimed at unlocking value from both onshore and offshore assets, including drilling in Kharsang, Dirok, Cambay blocks, and PY-1. To support this, the company raised INR 250 crores in debt capital. Management expressed confidence in achieving a debt-free status within two years, leveraging increased production from new wells.
Oil Inventory Liquidation
Hindustan Oil Exploration currently holds 410,000 barrels of oil in stock from its B-80 block. To liquidate this inventory transparently, an auction process has been initiated with M-Junction. The company expects to complete the sale within 1 to 1.5 months, specifically before August 31st, 2025. This liquidation is projected to generate over USD 25-26 million, equivalent to more than INR 220 crores, providing significant revenue.