Skip to content

    Hind.Oil Explor.

    HINDOILEXP
    Oil, Gas & Consumable Fuels·5 Feb 2025
    Management Summary

    Hindustan Oil Exploration Company Limited reported strong financial performance in Q3 FY25, with significant QoQ growth in consolidated revenue, PBT, and EBITDA, driven by increased production from B-80 and improved offtake in Dirok. The company maintains a zero net debt position and is progressing with its capital expenditure plans, including commencing drilling in Kharsang. However, demand constraints continue to limit Dirok's full production potential, and the timeline for critical gas grid infrastructure remains uncertain.

    Highlights

    7

    • Consolidated revenue for Q3 FY25 was ₹156 crores, a 56% increase from ₹100 crores in Q2 FY25.

    • Consolidated Profit Before Tax (PBT) for Q3 FY25 was ₹52.47 crores, a significant 291% increase from ₹13.41 crores in Q2 FY25.

    • Consolidated EBITDA for Q3 FY25 stood at ₹77.69 crores, up 112.9% from ₹36.47 crores in Q2 FY25.

    • The company maintains a net debt of zero and has secured an 'A rating with positive outlook' for a ₹500 crores loan.

    • B-80 oil production increased by 51.8% QoQ to 88,073 barrels, and gas production rose by 65.5% QoQ to 0.6292 bcf.

    • Dirok gas sales increased to 17.64 MMSCFD from 15 MMSCFD QoQ, with company share volume up 18.9% to 0.44 bcf.

    • Kharsang development well drilling is planned to commence before March 31, 2025, with an aim to reach 1000-1200 barrels/day in the next financial year.

    Concerns

    4

    • Dirok gas production is restricted due to lack of demand, preventing the field from reaching its full potential.

    • The timeline for the North-Eastern Gas Grid connectivity, crucial for easing demand constraints, is difficult to predict and not entirely within the company's control.

    • Capital expenditure for the current financial year was 'not up to the mark' due to delays in regulatory and environmental clearances, though these are now in place.

    • Quarterly results exhibit volatility influenced by external factors such as weather, price, and demand.

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated Revenue₹156 Cr+56.0%QoQ
    2. 02Consolidated PBT₹52.47 Cr+2.9%QoQ
    3. 03Consolidated PAT₹43.32 Cr+3.0%QoQ
    4. 04Consolidated EBITDA₹77.69 Cr+112.9%QoQ
    5. 05B-80 Oil Production88,073 barrels+51.8%QoQ

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    ₹300 crores

    entirely through internal accruals without debt

    Debt

    Net ₹0 crores

    M&A

    Block B-15 in Mumbai offshore

    acquisition · pending regulatory

    Liquidity

    Liquidity disclosed

    With the current cash position and continued production, the company expects to meet all its obligations, including the planned capital program for the coming three years.

    Guidance & targets

    11
    CategoryTargetPriority
    Capacity
    North-Eastern Gas Grid Operational
    2025-26
    		Medium
    Capex
    North-East Capital Outlay
    ₹250 crores
    		High
    Capex
    PY-1 First Well Drilling Commencement
    25-26
    		Medium
    Capex
    FY26 CAPEX
    ₹300-350 crores
    		Medium
    Revenue
    FY26 Revenue
    ₹1000 crores
    		Medium
    Profitability
    EBITDA Margin
    50%
    		Medium
    Profitability
    EBITDA Amount
    ₹250 crores
    		Medium
    Production
    Kharsang Production
    1000-1200 barrels/day
    		Medium
    Production
    Dirok Gas Volume
    30-35 MMSCFD
    		Low
    Production
    B-15 Field Production Commencement
    within 24 months
    		High
    Infrastructure
    DNPL Line Connection
    March 31, 2025
    		Medium

    Kharsang Development Well Drilling Commencement

    by March 15, 2025
    CurrentCivil works in progress, rig mobilized
    TargetDrilling commenced

    Why it matters

    Timely commencement of drilling is crucial for achieving the targeted production ramp-up in FY26.

    Our first well will start, we expect it to start by 15th of March, plus minus one week.

    How to verify

    detailed_narrative

    Risks & concerns

    4
    RiskSeverity

    Dirok Gas Demand Constraint

    Dirok field production is restricted due to lack of demand, preventing full potential realization. — Management acknowledged

    medium

    North-Eastern Gas Grid Timeline Uncertainty

    The operational timeline for the gas grid, vital for easing demand constraints, is difficult to predict and not fully within company control. — Management acknowledged

    medium

    Volatility in Quarterly Results

    Quarterly results are subject to external factors like weather, price, and demand, leading to fluctuations. — Management acknowledged

    medium

    CAPEX Delays

    Current year CAPEX was below target due to regulatory and environmental clearance delays, now resolved. — Management acknowledged

    low

    Q&A highlights

    8

    “B-80 our current stock is 3,17,000 barrels and we plan to do the offtake before 31st March of this year. We don't get either the oil price or the exchange rate. So we would be looking for a better price to carry out the offtake before 31st March of this year.”

    Clarified the company's strategy for managing and monetizing its significant B-80 oil inventory, indicating a focus on price realization.

    asked by Riddesh Gandhi

    3 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Financial Performance Overview

    Hindustan Oil Exploration Company Limited reported robust financial results for Q3 FY25. Consolidated revenue increased by 56% quarter-on-quarter to ₹156 crores, up from ₹100 crores in the previous quarter. Profit Before Tax (PBT) saw a substantial rise of 291% QoQ, reaching ₹52.47 crores compared to ₹13.41 crores. Consolidated EBITDA also grew significantly by 112.9% QoQ to ₹77.69 crores, demonstrating improved operational efficiency. The company's net debt remains at zero, reinforcing its strong financial position.

    02

    North-Eastern Region Operations and Outlook

    In the North-Eastern region, Dirok gas sales increased to 17.64 MMSCFD in Q3 FY25, up from 15 MMSCFD in the prior quarter, with the company's share of sales volume reaching 0.44 bcf. However, production remains constrained by demand, preventing the field from reaching its full potential. The company anticipates the North-Eastern Gas Grid to be operational by 2025-26, which is expected to alleviate demand issues. For Kharsang, drilling of the first development well is slated to commence by March 15, 2025, with a target of achieving 1000-1200 barrels/day in the next financial year.

    03

    Offshore Blocks (B-80, PY-1, B-15) Updates

    Offshore, B-80 production saw a significant increase, with oil production rising by 51.8% QoQ to 88,073 barrels and gas production by 65.5% QoQ to 0.6292 bcf. The company holds 317,000 barrels of B-80 oil inventory, planned for offload before March 31, 2025, targeting favorable prices. For PY-1, Petro Vietnam is evaluating the block's potential, with drilling of the first well expected in FY26. HOEC is also awaiting the award of Block B-15 in Mumbai offshore, for which it was the sole bidder, with plans to bring it into production within 24 months of approval.

    04

    Capital Expenditure Plans and Funding

    The company's capital expenditure for the current year was impacted by regulatory delays, but momentum is expected to pick up from FY26. HOEC projects a CAPEX of ₹300-350 crores for FY26. The overall capital outlay for the North-East region for the next two financial years is ₹250 crores. The total ₹1000 crore CAPEX plan is broadly allocated with ₹650 crores for offshore and ₹350 crores for onshore projects, all of which will be funded entirely through internal accruals without incurring new debt.

    05

    Gas Pricing and Market Dynamics

    Gas prices realized varied across blocks; Dirok gas was sold at US $8.25 per mmbtu, while B-80 gas fetched US $10.78 per mmbtu. The company noted that B-80 gas prices in the Western region are moving akin to imported LNG prices, reflecting market demand. In contrast, Dirok's lower price and demand constraints highlight the impact of the price difference between PPAC and nominated blocks, with the full potential of the field dependent on easing demand through improved grid connectivity.

    06

    Cambay Blocks and Future Exploration

    In the Cambay blocks, environmental clearances and Pollution Control Board consent have been secured for North Balol and Asjol. The company has secured a rig for workover of two wells and is ready for drilling two new wells in North Balol, pending JV partner approvals. An exploration well is also being pursued in Kharsang. The company anticipates final clearance for Ring-Fenced PSC and extension of Palaj blocks, which could add substantial value to the Cambay assets.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.