Hindustan Oil Exploration Company Ltd
NSE:HINDOILEXP
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Hindustan Oil Exploration Company Ltd
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Good morning, ladies and gentlemen. Good day and welcome to the Q1 FY '23 Earnings Conference Call of Hindustan Oil Exploration Company Limited. [Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.
Thank you. Good morning, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of HOEC Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the first quarter of financial year 2023.
Before we begin, let me mention a short cautionary statement as always. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.
Now let me now introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We firstly have with us Mr. P. Elango, Managing Director; and Mr. R. Jeevanandam, Executive Director and Chief Financial Officer.
Without any further delay, I request Mr. Elango to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good morning everyone. Glad to connect with you all in this Q1 earnings call for FY '23. Jeeva, our CFO and Whole-Time Director is with me. Valorem Advisors, our Investor Relations advisers are also on the call. I hope everyone has received our updated earnings presentation. We've also uploaded it on our website for your reference.
Q1 FY '23 marks an important milestone in the development of our discovered small fee, DSF Block BAT in Western offshore. We achieved first gas and first oil production in June after all the installed facilities were integrated and commissioned. After executing the agreement with ONGC and meeting the required specifications, the commercial gas sales commenced to GSTC on 4th of June. Initially, the D2 gas well was flown at a lower rate to stabilize the operational parameters. Post stabilization, the flow rate was increased to meet the committed sales volume of 10 million standard cubic meters per day.
During June, the average gas sales rate achieved is about 7 million standard cubic feet per day. D2 gas well successfully demonstrated its ability to deliver production of over 12 million standard cubic feet per day. However, we could not achieve the same success in D-1 oil wells. We thought we had addressed the technical issue in D-1 actuated line. However, the problem recurred after a few days of production, therefore, we have to keep the well shut-in condition.
It appears that a permanent solution can be found only post-monsoon after a comprehensive underwater survey. Intensification of monsoon and the resultant rough weather is leading to challenging marine system performance, causing disruption to offshore production operations. Our integrated marine system is witnessing the first monsoon post commissioning. Severe weather conditions caused snapping of the hose that connects CALM Buoy to FSO. Consequently, production from D2 gas well had to be shut down on 14th July under the initial attempt made to reconnect was not successful. We plan to rectify and reconnect the host in the first available weather window and resume the production from the gas wells as soon as possible.
Post-commissioning operational [ jack ] issues are being handled on a day-to-day basis, targeting stable and sustained Production operations. Overcoming the operational challenges and bringing the production operation of BAT into a stable mode remains our top priority. Considering that the wells have performed to our expectations, we believe that we will be able to overcome the remaining challenges post monsoon.
At our Northeast onshore block Dirok, we had to limit production due to an unplanned shutdown of BCPL plant during April and May 2022. This has reduced our average production in Q1 to about 25 million standard cubic feet per day. However, share of premium sales is being maintained at a healthy 40%. Subsequent to BCPL coming online, we are witnessing improved uptake.
Dirok reservoir performance continues to be good. Productivity of these 3 new wells drilled in the last drilling campaign remains very healthy. We are confident to meet the current peak market demand with existing 6 wells. To meet the long-term gas demand, particularly as the Northeast gas grid gets implemented in phases, connecting multiple demand centers, we are continuing with the preparatory work on the Dirok Phase II development. We have secured the environmental clearance. Recently, we achieved the working -- we received the working permission to lay the 18-inch pipeline in the Forest segment.
In PY-1 Eastern offshore field, where our participating interest is 100% and in-house designed low-cost gas dehydration unit was commissioned. We achieved the DuPont specifications of GAIL and gas sales recommenced during May. Internal geological studies have been completed to plan the next drilling campaign in this unique fractured basement reservoir. Although the current output from PY-1 is quite low, we are optimistic that the drilling program will return the field to its full potential. The final investment decision will be made following an independent technical review and risk mitigation.
In Kharsang, normal production operations are continuing. PSC extension is still pending. There are difference between the contractor and the government as to the amount eligible for cost recovery. Discussions are still ongoing between the government and the operator. The cost recovery eligibility issue will now be referred to Dispute Resolution Committee. In our Cambay assets under approved field development plan, we will be drilling 2 development wells at Asjol and North Balol each. At Palej, ring-fenced PSC has been signed by the JV parties for R2 area and has been submitted to Ministry of Petroleum and Natural Gas. Final execution by government is still awaited.
The mandatory public hearing was completed as part of the environmental clearance process. Further development drilling will be undertaken after the execution of the ring-fenced PSC for Palej. In other northeastern blocks, Kherem and Umatara, there has been further progress in the regulatory process for forest and environmental clearances. In greater Dirok block, the potential drilling locations are identified. The land acquisition and preliminary EAA studies will be initiated in the near future.
Coming back to BAT, frankly, we have not anticipated the start-up challenges that we are facing in BAT, especially after the onset of monsoon. We do not have adequate resources and appropriate in-house marine expertise. Mobilizing marine assets and resources also takes a lot of cost and time. Fortunately, there are no performance issues related to reservoir and both the wells are capable of delivering the expected volumes.
I now invite Jeeva to share the financials.
Thanks, Elango. We report that the company made a revenue of INR [ 65.66 ] crores in the current quarter against INR 38.84 crores in the previous quarter. In the consol accounts, it is INR 93.42 crores against INR 44.42 crores in the previous quarter. Increase in revenue is mainly from BAT gas sales from 4th June, 2022, for INR 13.45 crores, an increase in sale of gas in Assam about INR 12 crores, mainly on account for higher realization for condensate and gas due to high prices. The profit on stand-alone is INR 34.21 crores against INR 23.47 crores in the previous quarter, excluding exceptional in the previous quarters. In the consol accounts, the profit after tax is INR 32.7 crores against INR 7.6 crores in the previous quarter.
The total expenses of stand-alone including DDA is INR 35.99 crores comparing INR 20.85 crores in the previous quarter. Statutory levies, royalty and cess are [indiscernible] which has increased from INR 6.59 crores to INR 9.74 crores as BAT being operational from 4th June, 2022, operating costs of BAT along with other blocks has increased the cost from INR 5.46 crores to INR 22 crores. In the consolidated accounts, it is INR 59.08 crores comparing INR 36.34 crores in the previous quarter, including the stock adjustment.
The EBITDA in the consol accounts for this quarter is INR 52.23 crores comparing INR 22.3 crores in the previous quarter. Consequent to the commencement of production from BAT field, the capital work in progress of INR 517 crores moved to -- INR 514 crores moved to oil and gas assets in the current quarter. Similarly, the offshore installation of subsidiary used in BAT, that is MOPU moved to operating assets from capital work in progress. With the commencement of BAT field offshore installations that is MOPU, FSO and the SBM owned by the wholly-owned subsidiary are in revenue mode effective for 4th June, 2022. On production from BAT with the support of ongoing high prices of oil and gas, the company can meet its obligations. Ensuring the continuous production from BAT, we will embark on the development of dormant assets in Western region and PY-1 with appropriate capital infusion. Thanks, Elango.
Thank you, Jeeva. We can open the forum for questions now.
[Operator Instructions] The first question is from the line of Akshay Satija from Alpha Invesco.
Congratulations on BAT. Sir, in the presentation, you mentioned that we have some topside issues. Are these issues regarding to the production separator as such?
[Operator Instructions]
Yes. So in your presentation, you have mentioned that we have some topside issues. So if you could mention throw some light on it, is it regarding the production separator or?
Yes. We have 5 separator systems in the plan. With one system, we will be able to essentially produce from both the wells. We have a problem in one of the separator system delivered by Expro, and we are now looking at ways of rectification or replacement of the system. But currently, that is not really a constraint to bring the wells on production.
Just a follow-up on the earlier question. So what would be the capacity of our MOPU, including the production separator and test separator, respectively? So can we run both production and separator in parallel? And what would be the combined capacity of the MOPU with these?
So we would -- so far, we have put the D2 gas well on a continuous production mode. And D2, at its peak was able to deliver about 13.5 million cubic feet of gas per day with the existing system. The oil wells, as you know, we have some technical issues to be addressed, nothing related to the well per se, but the actuator line, which is required to be on a pressurized condition to keep the well on open condition. So that well has not -- we were not able to flow continuously for a longer period, which is something we will be able to do post monsoon. And we do expect with both the wells we've not really tested them to their full capacity, but we should be able to deliver the targeted volume of roughly about 4,500 barrels of oil and the committed volume of 10 million cubic feet of gas per day after internal consumption.
So we are comfortable that these two wells can deliver the volume that we have indicated. And topside facilities with the existing system can handle that, but the additional separator system would also need to be rectified and we refurbished.
[Operator Instructions] The next question is from the line of Akshay Ajmera from Nirzar Securities.
Sir, my question is regarding your earlier opening comments on the MOPU revenue. So as we understand that from 14th July, the field remains shut-in. So could you please clarify if the MOPU revenue are still on and the stand-alone entity is paying to the MOPU and we are getting MOPU revenues as such.
Okay. Thanks for the question. The fundamental fact is this is a separate contract with the BAT field with our subsidiary company. So normally, any facilities of this nature on contract will have certain allowed downtime thereon. If there is a downtime exceeds that limit, then we have to charge there. But in this case, there is no problem because of the MOPU that only the separator issue and the small, small issues are coming, there should be a reduction in the revenue thereon. And similarly, with our other facilities of FSO thereon, wherever there is no operation thereon, we have to take a cut in our operating costs to standby rates.
So if you can just clarify once again because it was very difficult to compare. So basically, my question is, there was a communication earlier that $90,000 will be the revenue per day. So how much it would be from 14th July onwards, since we are -- since both the wells are shut-in? That is the understanding that...
Yes, the 14th of July onwards because MOPU, the revenue would be as it is and FSO revenue, which is on account of the parting of the hose and other things would be reduced to zero. That would be around $48,000.
$48,000. So roughly $50,000 will be the revenue that is envisioned?
Yes, that's right.
The next question is from the line of Varatharajan Sivasankaran from Antique Limited.
So on this windfall tax, how are we impacted, any clarification on that?
There is no impact on us due to the windfall tax, zero impact.
I mean, is there any limit in case we push the production up or do we come under the [indiscernible]?
I think Jeeva will explain in detail.
The windfall tax has come out with the 2 factors and firstly to the volume of production, the volume of production on the previous year is less than $2 million, there is no tax in the current year. So we will not be able to reach the 2 million barrel oil production thereon. So effectively, there will be no windfall tax on this.
Any guidance you can give on the cost we are paying to ONGC in terms of processing as well as transporting our gas?
Transporting gas through ONGC line, then the...
Yes, tariff charges would be there, tariff charges would be a part of operating cost thereon.
And the processing also we are paying some charges, is it?
Pardon?
Any processing charge we are paying?
Yes. Transportation and processing is clubbed together under one agreement with ONGC and we pay that.
So it's a process to gas, but however, it is getting governmental with the ONGC protection, we have to pay for the tariff charges as agreed with them.
The next question is from the line of Manan Patel from Airavat Capital.
Sir, so first of all, I wanted to thank you for making such an effort despite such difficulties in BAT. So thank you for that. And thank you for being transparent. Sir, my question is that we have committed a volume of 10 million cubic feet to GSPC. So will there be any penalties if we are not able to deliver it for, let's say, whatever time it takes to bring that back online?
Yes. There is -- in the gas sales agreement that we have executed with GSPC, we have made the first year free of any take-or-pay or supplier pay obligations. Just to ensure that both their side and we side have time to stabilize the operation. So therefore, there is no penalty for non-supply. However, we give a forecast to them about every fortnight related to what would be the estimated production. If during that fortnight they would book the capacity for transporting the gas in the GAIL system. Whatever actual costs they incurred based on our forecast, which is given on fortnightly basis, if you are not able to deliver that volume, we will compensate them for that whatever cost that they have paid to GAIL. So that's a very small amount. But there's no energy for non-supply.
Okay. Got it. That is very helpful. And sir, second question is regarding, you mentioned that we don't have adequate marine resources, and it takes time and cost to make it working again to the entire system. So how much cost do you estimate? And if you have any -- like once the monsoon weather window is available, how much time can it take to bring back the production time and cost? And because the Expro is also involved and other vendors might be involved, do we have -- do we charge the cost that we incur to these vendors?
I'll ask Jeeva to give an overall estimate of what it would cost to rectify the total system. But in terms of -- so far, there are two things. Whenever there is any operational issue in the offshore system, first thing is we needed to mobilize a suitable vessel. Typically, a vessel mobilization involved where you find what type of vessel is required to fix the particular issue. And then you need to go through a regulatory process of getting Ministry of Defense and naval clearance for the vessel to go to our location.
And then typically, there are 2 types of divers, depending on the nature of the problem. There is up to certain upper deck, [ SAT ] divers are deployed. They are access -- available within the western offshore system, we mobilize the SAT divers, they go and fix the issue along with the tools and practice that are required. That's one level.
If these problem that requires addressing at a deeper water level beyond what SAT divers can access, then that requires a saturation diving system with saturation divers. So far, we have used for underwater inspection of that nature, ONGC vessel and ONGC has been very, very helpful in diverting their vessel to support us. But there are certain tasks, which is not to be performed during monsoon for safety reasons.
So one of the things that we are very keen is to ensure that whatever we do, we do it in -- within the acceptable safety norms. So we've been very careful on that. So in other words, whatever troubleshooting they are doing is kind of temporary fixes. For a permanent fix of the total system, please remember 2 things. One, both the wells are absolutely have no problem. The wells themselves have delivered to our expectations, although we are yet to put the oil wells on a longer duration. At MOPU, the mobile offshore process system is concerned, it's structurally very stable. It had some minor issues related to Expro supply the equipment, which Expro needs to replace under the contract -- repair or replace under the contract that we don't have to incur any expenditure.
So the MOPU system itself does not require any major changes. The wells are behaving fine and the flexible pipeline flow lines that are connecting is also in good shape, where we have had problems with hoses that are connecting FSO to CALM Buoy as well as certain part of the change and stuff, which due to the weather condition is either [ sags ] or we had problems on those lines. So finally, our plan is to really engage repeated offshore construction contractor to go and do a comprehensive survey of the overall systems, connecting systems in below the water and where -- which can be repaired, will be repaired and what need to be replaced that can -- will be replaced. But a clear system will emerge after a comprehensive survey, but Jeeva can indicate if possible that up.
The issue of D-1 well, we have to fix the hydraulic leak, which should cost around some $350,000. That's a level as such because including the sealant companies and then the vessel required put together would be in the maximum order of about $350,000. And the other one, the FSO is functioning properly. There is no issue on it, but the disconnection of the hose and rechanging the hose and all put together maximum about some $150,000 to $200,000. So totally, it should be in the order, INR 4 crores to INR 4.5 crores. But in the worst case, we can see the CapEx exposure that exposure, whether you call it as a CapEx and OpEx, but it should be in the order of say INR 5 crores. That's what we plan it.
That is very helpful and detail. And sir, the last question is on the gas front. So it's expected that September or October, the prices -- the APM prices will pick up again. So do you see any difficulties in the volume offtake from day...
First of all, as far as the BAT is contained, we work on the government notified prices have got no impact on BAT. We have a contract with GSPC that will continue as far as BAT is concerned. In Dirok, what we have so far seen is even at in the current quarter, about 40% of our offtake has been in the premium segment, which means the consumers are paid $1 more than the government notified price of 6.1. Now effective October 1, we need to see how much of the price increase would really impact. We don't see that impacting that much in Northeast. They should be able to absorb but because all consumers -- all major consumers have got only 2 sources of supply, which is both Oil India and us HOEC. And since Oil India will also be selling at the government notified prices, we don't see any major impact due to that, but we'll have to wait and see.
[Operator Instructions] The next question is from the line of Jayesh Gandhi from Harshad Gandhi Securities.
Just a clarification. So the problem which we are facing is in both D1 and D2, right?
The D2 gas well, there is no problem because as you produce the gas well, it also produces along with that some volume of oil that oil cannot be stored in MOPU, it needs to be continuously exported into FSO through the hose connectors, which connects between the SPM, the CALM Buoy to FSO. So essentially, when you produce from the gas well also, you'll be producing some small volume of oil, which needs to be -- continued to be exported into the FSO as we pointed out since there is a problem in that hose connection, so we could not produce the gas well also. Otherwise, there is no problem.
Once as soon as we find a weather window, we will send a team to go and reconnect these hoses and test the system again, then we'll be able to quickly bring the gas production and gas sales into -- resume it very soon. As far as the oil well is concerned, as Jeeva was finding it out, we are looking at multiple options to fix a problem. Most likely, we'll be able to find the solution in post monsoon for that. So our immediate focus is to bring back the gas well into production mode and get some revenue.
Okay. And can you share what the realization on gas that we achieved last whatever days we were working?
So the gas price we are getting is $20 per MMBtu. And I think you have mentioned about in June alone, we've realized about INR 13.45 crores. And the oil in stock is about some INR 6 crores.
Okay. And one last question, sir. Out of that leasing revenue that we get for our equipment, what do you expect you will get it in this quarter, in the current quarter, coming quarter?
Sorry, we didn't get your question. Can you repeat that, please?
So I think equipment leasing, we were expecting somewhere around $95,000 per day. So in this quarter, because D1 and D2 both would not be working, so will we get any revenue from equipment leasing or no revenue from...
I think Jeeva explained that for the MOPU, we will get the revenue of $48,000 per day. For FSO, it will be 0 till the production resumes. And we don't expect the whole quarter to go this way. We are expecting this -- the fixing of the hose reconnection, we expect it to happen during the monsoon itself, during this period itself as long as we get a weather window of 2, 3 days is sufficient to fix this issue and resume the gas production, which we are monitoring the weather forecast and we'll be mobilizing.
The next question is from the line of Dharmendra Vora from Vora Wealth.
Just as a small request, in order of the proprietary and transparency, I think BAT when a probably investor community is looking BAT as a significant event in the operations of the company. So is it -- don't you think is it a material event in case of disruption or resumption of the activities? And it is not proper on our management to keep going to provide timely information to the exchanges or the investor community at large? I know it's very difficult in the normal course of operations to really for this kind of request. But I think that would be a welcome step. There's a lot of anxiety and investors as to wait for an entire quarter for what has happened and what is not. So I would request you to probably share your views on this subject.
We kind of agree, but I just want -- I agree. It would have been good to have shared such information, but please understand our effort, whenever a problem of this nature occurs is to go and rectify the problem. And in this case also, we thought we will be able to fix the issue because this is only -- there's no problem with the well. There's no problem with any of the process system as well as D2 is concerned, things were going pretty well and we have won almost 3 weeks of production. In June, we raised invoices, we realized revenue. And in fact, the first quarter of July as well, things are going very smooth. Suddenly, when the problem occurred, our immediate reaction is to see since -- whether we can go and reconnect it. And our focus was on that, and we genuinely believe this can be done because we just decided we'll reduce the length of the hose and just simply reconnect it. We mobilized the vessel, we mobilized the divers, we went to go fix it. Unfortunately, the weather turned very bad, and we have to take a call for safety reason not to continue with the operation.
Now, so this is a phase, but I take your point that it is -- we look at what are some of the best practices, whether a monthly operational update would be a good idea to give because we really don't want to -- when you're producing from multiple wells, each time there's a problem in a well, we really don't to see it as a major event. But I take your point that BAT has to be looked at differently because it is material in nature.
Yes. I totally agree and probably acknowledge the kind of efforts you would need to put in at that particular point of time. But probably after a couple of days or when you come to realize that it is going to take a significant time on whatever weather window you'll have to wait, I think it's a material event in the light of SEBI's material event disclosure. So probably, I would request you to just go through that and probably take some or probably consideration on this and come out with disclosures on this in future.
Thank you.
The next question is from the line of Rohith Potti from Marshmallow Capital.
I just have a couple of questions. The first question is any range of time lines that can be provided to resolve the D1 issue? So will it be -- I mean an upward limit of 5 months, 6 months or anything like that, is it possible to share?
So this D1 oil well is concerned, what we are looking at is post monsoon. Typically, post-monsoon you are looking at October, November period for that. As far as D2 gas well is concerned, within the monsoon period, we are looking at 2, 3 days of weather window to go and fix the problem.
Perfect. So I understood the D2 well has a very short cycle, probably less than a week. So you mentioned there are 2 probable kind of problems that could be there. So if it is the severe problem, which requires a deep sea diving mechanism, what is the time line that would be -- the outer limit of the time line there? Would it be 3, 4, 5 months?
I'm sure by end of this calendar year, we should be back on stream with both the wells.
Okay. So that was very helpful, sir. And my second question is with regards to -- with regards to opening comments of Jeeva, sir. So I think in the end, he said that we are going to focus on the Cambay asset and the PY-1, the drilling campaign in both these regions. And he mentioned something on capital infusion. Could you expand on that, please?
Yes. This company is -- right now, we have borrowed about some INR 300 crores plus. So we have to look at some strategic way of infusing additional capital into the company, which we'll be discussing appropriately with the capital requirements and reevaluation of the reserves and what our geologists are coming out with the numbers, then you have to look at the capital plan thereon. Depending on the capital plan and depending on our cash flow situation thereon to it, we have to make a call on it, either the infusion of the debt or equity, subject to the Board approval. So we'll be presenting something to the Board. And if the Board approves, we'll embark on the development.
And this will be post BAT commencement? Or is it irrespective of that?
Rohith, we wanted to put it in such a manner that 1 job at a time. Now unless I have a revenue stream which comes and meet my all obligations in time that I cannot embark on another one. So we will be doing everything only after BAT stabilization. Once a BAT is fully on a -- without any hassle-free mode of operations, then we will embark on that.
Perfect. So this was very helpful. And, I mean, congratulations on beginning BAT, it was a long project, and it's nice to know that it's begun and there are few teething issues, which hopefully will be resolved by the end of the calendar year.
The next question is from the line of Vikesh Parikh from Absolute Advisors.
Just wanted to understand with regard to D2 well since the problems pertaining to MOPU move, so can it be done during this current monsoon time and how soon it can be come on stream?
One is D2 gas well can be fixed during the monsoon period only, but we are looking for a right weather window during the monsoon itself for a right weather window. It's difficult to give the time frame, but it is not a long-term issue. So we are hoping just looking at the forecast and looking at that, yes.
So it will be like a 1 week kind of a thing or something like that, right?
The work itself is 2, 3 days' work, but hopefully, by -- maybe by end of this month or early next month, we should get the window. But things start getting better from September onwards. But we are not looking at monsoon to end, but during the season itself for the right weather window.
And with respect to D1, what will be the time period required to -- for completion, estimated?
So I think, as I said in response to a previous question, by end of this calendar year, we expect both the wells to be fully on stream.
Okay. And last question on PY-1. Sir, your presentation mentioned that you have started production from March or April or May. So what is the quantum of gas you started from PY-1 and the sale price is just $3.67 or it is changed with the...
The sales price, as far as PY-1 is concerned is, as per the contract, which is $3.68. The volume that we are producing is roughly about 1 million cubic feet per day.
Okay. So it's very small. Is there any [indiscernible]?
Any increase in PY-1 production can -- is possible only after drilling of new wells which, as we said, we've done the technical studies. So we will -- after BAT comes on full stream, then we would look at an independent review of those technical work as well as certain this mitigation work before we embark on the drilling campaign in PY-1.
Sir. And then last question, what is the level of debt at the end of 30th June?
What is level of debt?
Yes. We have INR 313 crores.
I guess I'll tell you the break up, we have -- INR 313 crores, I think. Actually, INR 313 crores out of -- primarily, we have -- we are growing about INR 119 crores or something to -- HDFC Bank, INR 120 crores is HDFC Bank, and Axis Bank is about INR 125 crores. Total put together all INR 278 crores and Hindage, we have borrowed some INR 62 crores. So total put together ours is about INR 330 crores exposure, including some of the short-term borrowings.
The next question is from the line of Tejas Shah from [indiscernible] Securities.
There is no intimation to the stock exchange regarding [indiscernible] tax gain, plus the D1 well was closed much prior, I mean in June itself, it was closed. Still, there was no intimation. This is in continuation with the earlier speakers. So -- and even I had sent mails also rigorously to the new CS, but there was absolutely no communication. If you can throw some light on this.
I think to answer the question in respect to the previous speaker, and you've noted your suggestions and comments. We'll also look at the requirements. Our CRT has been our focus, and will -- as been to address the operational issues as such. And we've been -- we thought it is appropriate to -- we do open communication once in quarter to everyone together. We will look at other ways of ensuring that there's a common communication and update happens. But right now...
The only reason why I'm pushing so much is that people or investors are losing faith in terms of the communication if something goes wrong. The information is not privy to all the investors. The information is only private, maybe there some people if it is there. If it gets leaked up from an employee, not in the Director level. So it's a problem. So I request no need to justify or explain but it's a request, either you notify or else complete it out.
Going to the next question, sir, our revenue is only right now from the Dirok even after increase in the dollar pricing from INR 73 or INR 74 to INR 79, our revenue has not gone up to the level that the prices have gone up.
As told by Elango, there is a reduction in the uptake. In the last quarter, the gas was 0.76 billion cubic feet of gas in Assam that has reduced to 0.65 billion in the quarter, first quarter of this year. So effectively, there is a reduction in the sales. The reduction in the sales is compensated by increase in price. And similarly, the condensate of Assam is 15,932 barrels that has been reduced to 12,900 barrels. So this reduction in product -- I mean, offtake. Basically, there's nothing to do with the well performance and availability to deliver the gas. There is a poor uptick, and that has reduced the sale gas. But however, the increase in the price is compensated, that's why we have got an additional revenue of additional INR 12 crores.
Similarly, we have got INR 13 crore new revenue comes from the BAT block, but INR 1 crore has come out from the PY-1. That is the state of affairs at the moment as -- yes, I think any increase -- significant increase in oil and gas companies have to pay. Only you have to able to sell the oil and gas and produce and able to sell it and get a right price. Out of that, today, we are getting the right price, but our uptake is less. Our production is less than BAT. These are the reasons for that.
The next question is from the line of Yogesh Patil from Centrum Broking.
So my question related to upcoming gas price hike in October 2022. So APM gas price formula mostly to -- from various global gas prices, which are at a record high level. So do you think the government tweak the formula. And lastly, do you see any probability that the government can introduce CAP or [indiscernible] to the APM gas price going forward?
Yes. I think if I rephrase the question you're asking about whether there is a possibility that government can tweak the gas pricing formula and introduce any other new restrictions on that. The honest answer is, we really don't know. The good thing is that we hope, if you look at the gas revenue going forward for the company is predominantly some [indiscernible] and PY-1, both are governed under different price regimes. Dirok is, of course, very important asset and any change by the government would have an impact there. What the government will do is really difficult to predict.
Okay. And sir, lastly, could you please share what is your average cost of gas production at EBITDA level in dollar per MMBtu, that would be helpful.
See our Assam same gas production, mainly the gas field in Assam, it is about less than $1 per MMBtu. But the taxes like royalty and [indiscernible]. So whatever the price we get paid and we have to pay 10% as a royalty towards it. But for that, our cost of production is less than $1 for that. But in BAT, we are just breakeven with the gas sales, but we have to put the oil well on production to make some meaningful profit there on to it. Otherwise, it will be the way which is the operating cost.
The next question is from the line of Vaibhav Badjatya from HNI.
So on this pricing freedom on oil sales that has been notified by the government, how do you see that because it can work against as well given that oil companies can probably make Russian crude as benchmark rather than Brent, which was earlier for the marginal supply. So how do you see that -- can it impact our realization in BAT whenever it comes on a stream?
See, what we have planned was to follow the auction model that we followed for discovering the gas price essentially...
My question was around oil only, not gas. Gas is pretty much clear. But on the oil is what my question.
I was saying that for us, our plan is to replicate the same model for oil also, which essentially today, the policy is that you cannot export the oil out of the country, but you're free to sell it to any of the domestic refineries. So we have a group of public sector refineries as well as private sector refineries. So what we are thinking is to share the part of the settled crude sample with the refineries and conduct an e-auction, which is the very most transparent way of discovering the prices. And obviously, to avoid any Russian-related impact because you are not forcing anyone to buy the crude. You're only selling them that this is the best -- you will know -- you will benchmark the crude based on its quality preferably related to Brent and people will be free to quote a premium or a discount to that. So we expect to get a fair and reasonable price and discover it through a transparent mechanism.
Got it. Understood. And so not for FY '23, but for FY '24, assuming all things are -- all the oil wells are completely on stream, what would be the approximate -- I know exact numbers are difficult, but what would be the approximate cash generation that will be there assuming oil and gas prices stay where they are currently?
I don't want to have a revenue projection there on to it unless the field is coming to the revenue mode with the sustainable and comfortable mode. That would be something which is incorrect on my part to project something.
Right. I actually had this question because there was earlier a question on the capital raise as well. So I mean, if both the wells are -- in BAT are, I think we will generate substantial cash. So just wondering what would be the need for further capital raise.
See the capital is required for -- in oil and gas fields, 2 way of looking at defer the monetization or early monetization. And looking into the current market, every company would like an early monetization. So the CapEx required is for early monetization that is what we are looking at.
The next question is from the line of Yash Mandawewala from Mandawewala Family Office.
Jeeva, sir, can you just elaborate on the cash flow position as of 30th June? So what is the amount of liabilities that are going to come due in this financial year? And against that, what is the current cash balance?
I said my working capital issue, I cannot say no to that, but these working capital issues are not very difficult to manage. The moment, I've got some revenue from BAT and with the good gas price, I'm getting it from the Dirok, I'll be able to manage all my obligations. But I have some teething trouble with couple of months and which I will be able to manage with my existing contractors.
In case we are not able to get BAT on stream in the next 5 or 6 months, will the cash flows from the rest of the field Dirok even at the higher prices, will those be enough to meet the liability?
Absolutely, it could be able to meet with the liabilities because my liabilities are not insurmountable, it is a very small subset. When you look at an oil and gas companies and the operating uses, it's about INR 30 crores, 40 crores, it's not a big deal. So we'll be able to manage it, and we are not finding it very difficult to do that.
Okay. So just for reference, including the debt that we may have to repay this year and any sort of capital?
We have lined up the funds for it. Debt repayments are not an issue at all because it is only a quarterly repayment for the Axis Bank and monthly repayment for the HDFC bank. So debt repayment obligations nowhere is getting affected by any means whatsoever.
And are there any capital liabilities so for equipment or anything, anything of that sort that we need to pay...
There is nothing called as capital liabilities at all. We are now having only an ongoing working capital liabilities, working capital issues, which we'll be able to -- which we'll be able to come out quickly.
[Operator Instructions] The next question is from the line of Akshay Ajmera from Nirzar Securities.
So just I wanted to understand from you, sir, as you have mentioned that there is no penalty in case of non-supply of gas to GSPC, whatever we have committed. So when is this period going to expire, as you have mentioned that for the first year, there is no penalty and what could be the penalty going forward? That is my first question.
So the first year is -- we started the supply in June. So till June '23, there is no penalty for supply -- there's no supply or pay or take-or-pay process. After that, we agree for 75% take-or-pay, they are not able to take the gas, they will pay. And if you are not able to supply there are mechanisms that we can top up the supplies during the period that year. At the end of the year, there will be a reconciliation whether on days and we were ready to deliver whether they have taken the gas or when they were ready to take the gas, we were able to supply or not. So that's how we have structured the -- we've given a 1 year of obligation [indiscernible]. And we've also kept the volume at 10 million cubic feet, though we are -- we would be in a position to deliver about 12 million cubic feet. Purposefully, we kept the contract volume at...
Understood, sir. Understood. And sir, just a quick one on the MOPU side also. In worst-case scenario, do we need to retrofit the rig and the MOPU, do you see any possibility of that kind because of the issues and damages to the structure specifically?
No, there is no damage to the structure of MOPU. So MOPU does not require any retrofitting other than on the top side, a few equipment need to be replaced by the Expro who is the contractor who has the -- as you know, we are operating on -- the MOPU as such is owned by the subsidiary company of HOEC. And the topside facilities are supplied and operated maintained by the Expro.
Okay. Okay. So is there any need in your understanding to strengthen the legs of the rig that we have deployed over there?
No, there's no. This is a class structure.
The next question is from the line of Vikesh Parikh from Absolute Advisors.
Sir, just wanted to understand what is the quantum of crude we have accumulated till now?
About 15,000 barrels.
The next slide comes from the line of Ritesh Doshi, an individual investor.
My basic question is that what is the capacity of the test separator and production separator? And in the -- I mean -- can it happen that our both wells start operating and we don't have the proper separator capacity or something like that?
No, we have not so far put both the wells simultaneously on production, so far, right? But the separators, both the separators together will be able to operate the volumes with some modification that the Expro will be undertaking. So we do not expect this to become a constraint as soon as the D2 well is ready -- D1 well is ready.
And there are no further questions from the participants. I now hand the conference over to Mr. Elango for closing comments.
Thank you for all your understanding and all the questions. At the macro level, prices of both oil and gas are strong, and they expected to remain so. We will remain focused on bringing BAT to a stable operational moat. Our plan is to engage internationally reputed consultants and contractors post monsoon to find permanent solution. This may involve repairing and where required, replacing the connecting system and few topside facilities to bring both the wells of BAT on sustained production mode.
When both the wells are brought on full production mode, the revenue generated will be adequate to address all our short-term challenges. Post that, we will be able to invest and unlock the potential in our existing portfolio to continue to drive the production growth. We have sincerely hoped that we would be in that position by now. But it looks like we will have to wait for the monsoon to end to reach that position. Thank you for your continuing support, especially during this challenging period. Thank you.
Thank you. On behalf of Hindustan Oil Exploration Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.