Hindustan Oil Exploration Company Limited

Hindustan Oil Exploration reported a significant QoQ decline in standalone revenue by 75.96% to Rs. 77.32 crores, primarily due to the absence of a large crude oil sale from B-80 that occurred in the previous quarter. However, consolidated revenue (excluding crude oil sales) showed a robust increase of 25.58% QoQ to Rs. 81.04 crores. Consolidated EBITDA grew by 23.22% QoQ to Rs. 30.99 crores, and consolidated PAT surged by 192.58% QoQ to Rs. 8.28 crores, indicating underlying operational improvements despite standalone volatility.

In the Kharsang block, 8 wells have been drilled, with 5 oil wells and 1 gas well completed, and the ninth well is in progress. Current production is 800 barrels per day, with plans to reach 1,000+ barrels of oil and a minimum of 10 mmscfd of gas. Dirok gas sales for the quarter were 13 mmscfd, down from 14 mmscfd in the previous quarter, with a price realized of $7.32 per mmbtu. The mechanical completion of the DNPL line is achieved, and its connection to the IGGL line is expected by end of March 2026, which is anticipated to significantly increase Dirok's gas offtake to 40-45 mmscfd by Q1 FY27.

B-80 production saw a notable increase to 45,742 barrels of oil and 0.4 bcf of gas in Q3 FY26, up from 31,468 barrels of oil and 0.23 bcf of gas QoQ. However, management noted that B-80 is not performing optimally, and the planned workover for the D1 well is delayed until after the monsoon due to resource constraints. For B-15, the development plan is in progress, with production targeted within 2 years of submission. Drilling for PY-1 is expected to commence by October, with offshore campaigns generally facing delays due to revenue impacts.

The company is embroiled in a dispute with HPCL over alleged crude contamination, resulting in Rs. 259 crores plus interest being blocked. Management asserts that the sale was on an FOB basis, transferring title and risk to HPCL, and they are not responsible for any contamination. This issue is significantly impacting the company's liquidity and is cited as a reason for delays in offshore drilling plans, with the company actively seeking an amicable resolution.

In the Cambay blocks, two wells have been drilled in North Balol, with one flowing oil and the second planned for side-tracking. The company plans to drill two wells in Asjol and expects final clearance for the Ring-Fenced Production Sharing Contract. Overall production from Cambay wells remained stable at 0.32 mmscfd of gas in Q3 FY26, consistent with 0.33 mmscfd in the previous quarter.

Management provided optimistic guidance for future production, expecting Dirok's gas output to triple in FY27 to its full potential of 40-45 mmscfd once grid connectivity is established. Kharsang is targeted to produce 1,000+ barrels of oil and a minimum of 10 mmscfd of gas from new wells and workovers. The company also guided for an EBITDA margin of approximately 60% for FY27-28, reflecting confidence in improved operational efficiency and higher volumes.

The company announced an upcoming leadership change, with the current Managing Director, Mr. R. Jeevanandam, confirming his departure from an executive position. The Nomination and Remuneration Committee (NRC) and the Board are actively seeking a new CEO, with an announcement expected shortly. This transition marks a significant development for the company's future strategic direction.