Hindustan Oil Exploration Company Ltd
NSE:HINDOILEXP
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Hindustan Oil Exploration Company Ltd
Earnings Call Analysis
Summary
Q1-2025
In the latest quarter, Hindustan Oil Exploration Company reported a significant revenue drop to INR 71.79 crores from INR 254 crores in the previous quarter, primarily due to a decrease in gas prices from USD 17.5 per MMBtu to USD 10.34. Revenue from the Dirok field increased slightly to INR 50.58 crores from INR 47.11 crores. Consolidated operating profit before tax fell to INR 48.5 crores from INR 51.07 crores. The company plans a capital program of INR 1,000 crores over the next three years, funded through internal accruals. Additionally, they have approved a debt resolution of up to INR 750 crores.
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Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Conference Call of Hindustan Oil Exploration Company Limited. [Operator Instructions] Please note that this conference is being recorded.
At this time, I would like to hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.
Thank you, and good morning, everybody. A very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Hindustan Oil Exploration Company Limited, HOEC. 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 2025.
Before we begin, let me mention a short cautionary statement. 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.
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. R. Jeevanandam, Managing Director; Mr. N. S. Senthilnathan, Chief Financial Officer; and Mr. Krishnan Raghavan, Chief Technical Officer, E&P.
Without any further delay, I request Mr. Jeevanandam to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good morning. Hope everyone has received the updated earnings presentation. It is on our website for your reference. I have with me Mr. Krishnan Raghavan, Chief Technical Officer; Senthilnathan, CFO; and Daisy, our Company Secretary.
At outset, we would like to highlight some of the events of the Northeastern region. We are pleased to inform you that as informed in the last call, we have tested 2 untested sands in Dirok field, Sand 9 and Sand 10. When tested Sand 9 produced a 6 million standard cubic feet of gas per day at [indiscernible] with some condensate. This sand extends to the whole area and is prominent in all the wells drilled. This will increase the field potential of recoverable reserves, production capacity of the field as well as the field life.
In case of Sand 10, the test is inconclusive, and we are not able to flow the hydrocarbon to surface. However, this gives us a lead for further prospecting in the contract area. During the workover, Dirok-2 well was cleaned up, which marginally increased the production. After carefully going through the exiting well profile, we plan to sidetrack with the whipstock to know the full potential of the block by drilling up to Barail formation.
We would like to take up this drilling after securing necessary clearance and approval of our partners. In Dirok-4 workover is in progress, and we will be testing an untested Sand #23. We will let you know once the results of the testing is completed. Dirok gas sales for the last quarter was 0.55 Bcf, the same level of -- the same level is maintained in the first quarter of '24, '25 for our share.
Condensate is 10,578 barrels compared to 10,917 barrels in the previous quarter. Those still can produce about 50 million standard cubic per day. We have to restrict the production due to lack of demand.
Oil and ONGC are selling the gas at the price applicable for nominated blocks with a ceiling of USD 6.5 per MMBtu, and the Dirok JV is selling the gas at the PPAC price without any discount at about $9.5 per MMBtu. Therefore, the gas on the nominator field is sold first and the balance demand is met by our -- by us at the PPAC price.
We are keenly watching the progress of Northeastern gas grid. Once the concept of common carrier is accepted and the gas grid connectivity is established, situation would get reversed. We believe that once the DNPL line becomes the common carrier, we can expect some increase in volume.
TNGRP is in discussions with various stakeholders in an endeavor to commission the gas grid at the earliest. We believe that once the IGGL lays its own line from Duliajan to Numaligarh for about 180 kilometers, the demand constraint may move to supply constraint. This will ensure that an increased and stabilized uptake from financial year '25-'26 onwards to achieve the production to the full potential of the field.
After the workover success, we plan to drill 2 additional producers, which can help to ramp up the production up to 70 million standard cubic feet per day. In effect, we keep ourselves ready to meet the potential increase in demand. Once the demand constraint is eased out by connecting the Northeastern gas grid to the national gas grid.
GeoEnpro wholly owned subsidiary is operator to Custom Block, and the group has 35% participating interest in the block. Continuous workover is being carried out in the producing wells to maintain the current production. After a careful G&G review, drilling one exploration well to the depth of about 4,000-plus meters would unlock substantial value in the block. We plan to have a discussion with our partners to achieve this at the earliest. Drilling 15 wells to increase the production from upper Girujan will start as soon as we get the environmental clearance.
Revised environmental impact assessment report is submitted. We will try to get the clearance at the earliest to embark on drilling. The tangibles required such as wellhead, X-mas trees and tubulars were already procured and is in stock. We believe substantial of say it is in lower Girujan, Tipam and Barail formation.
This block could unlock value after drilling the proposed exploratory well with the connectivity of the Northeastern gas grid to national grid, monetization of the gas development would be faster with a better price.
AAON HP 2017 and '19 block adjacent to Dirok set to be greater Dirok is analog to Dirok structure. GTO has been approved to drill own exploration well with 7 seismic signatures. Due to heavy rain, drill pad and approach road could not be constructed in time to move the rig for drilling before August 2024. We have made an application for a 2-year RSE extension and once the extension is received from MoPNG, we will drill one exploration well. And on success, we will drill the second well.
In Northeastern region, our capital outlay for the next 2 financial years is about INR 250 crores, which would further be increased if there is sustained demand for gas after the establishment of great connectivity.
Now I'll move to Cambay blocks. In Cambay, we have secured the environmental clearance after 4 years. And once the formal minutes are received, we will start drilling 2 wells each in Asjol and North Balol. The total contract area is about 38 square kilometer with substantial number of wells for evaluation.
Well data are being evaluated and good potential excess in all the 3 books to enhance production. Once the ring-fenced R2PSC is signed, we would -- we could add additional value to the Cambay blocks. Our G&G team has increased the production, though meager this has given greater confidence to unlock value in these blocks. These wells are shallow, and we plan to start drilling at the earlier.
Now I move on to offshore blocks. Though we are proud that we are the only private operator producing from the field, BAT in Mumbai, our every attempt to ensure continuity in production during the monsoon is failed. We are not able to achieve the continuity in production and every attempt has been frustrated due to adverse weather conditions.
We will be back to normal shortly after installing the new hawser to connect the FSO and SBM. Wells and export lines are duly secured to commence the production as soon as the hawser connection is completed.
Production in the current quarter is 67,351 barrels of oil and above, and 0.4 Bcf of gas, while it was 83,290 barrels of oil and 0.42 Bcf of gas in the last quarter. On the e-commerce front of production, we expect consistent performance from the block. We honestly hope that this help us to test the optimum potential of the wells of D1 and D2 and get a sustained flow rate.
During this quarter, the average gas price realized is USD 10.34 per MMBtu compared to USD 17.54 per MMBtu in the previous quarter. Now the gas price in the Western region is moving akin to imported LNG price, which is about $13. In PY-1 offshore field, all facilities are intact, such as platform, pipeline and other infrastructure required for processing and evacuation of gas and condensate.
Our in-house G&G team has evaluated and released 3 drilling locations. We've also carried out a third-party expert review, which is echoing the views of our team. The uncertainty on the gas water contact of north and south of the field indicates high and low volumes, which needs to be reevaluated by one more expert team in London.
We plan for 3 development wells and if everything goes as per plan, drilling of the first well will commence in April to June 2025. We are upgrading our results and increasing the underlying value of the assets. However, our ability to monetize quickly is hampered due to demand constraints in Northeast and issues faced with the facilities in BAT. We are hopeful we will overcome all these with a sustained production.
Capital program of about INR 1,000 crores for the next 3 years would ensure our sustained production with increased reserves and resource base of the company. Our planned capital spend will be met through internal accruals. We have no intention to borrow for our organic growth.
Board has approved an enabling resolution for debt up to INR 750 crores subject to shareholders' approval. This will enable us to scout for new opportunities in oil and gas service -- oil and gas service space with hard assets to widen our scope in the service sector.
Now Senthil, our CFO, will update the financial results. Over to Senthil.
Thanks, Mr. Jeeva. Good morning to all. Stand-alone revenue for this quarter is INR 71.79 crores compared to INR 254 crores in the previous quarter. Sales revenue in the previous quarter includes the sale of crude from BAT field for INR 172.42 crores.
BAT revenue for the current quarter is INR 18 crores for gas sales compared to INR 31.16 crores in the previous quarter. Oil and stock is adjusted in the operating cost. Current quarter revenue reduction in BAT is mainly due to reduction in gas price from USD 17.5 crores per MMBtu to USD 10.34 per MMBtu in the current quarter.
In the case of Dirok, revenue for the current quarter is INR 50.58 crores compared to INR 47.11 crores in the previous quarter. Field operating expenses for this quarter in the stand-alone account is INR 65.81 crores compared to INR 67.93 crores in the previous quarter.
Other costs, including depletion, finance costs and others is INR 13.06 crores for this quarter compared to INR 14.55 crores in the previous quarter. Out of the total operating cost in the current quarter, credit adjustment for oil stock is INR 23.43 crores whereas it was INR 105.56 crores debit in the previous quarter due to oil sales.
Stand-alone EBITDA for the current quarter is INR 20.97 crores compared to INR 29.45 crores in the previous quarter. Profit after tax for the current quarter is INR 11.39 crores compared to INR 19.1 crores in the previous quarter. Major reason for reduction in properties due to reduction in the gas price of BAT field from USD 17.54 per MMBtu to USD 10.34 per MMBtu.
In consolidated accounts, the revenue from operations for this quarter is INR 143.41 crores compared to INR 158.21 crores after adjusting the sales revenue of oil of INR 172.42 crores from BAT block in the previous quarter.
Total expenses in the consolidated accounts for the quarter is INR 98.25 crores compared to INR 241.54 crores in the previous quarter. Main reason for this difference is movement in crude stock in BAT block. In consol accounts, EBITDA for this quarter is INR 72.98 crores compared to INR 77.67 crores in the previous quarter.
Consolidated operating profit before tax is INR 48.5 crores against INR 51.07 crores in the previous quarter. Profit after tax, including exceptional in the previous quarter is INR 70.3 crores and the current quarter is INR 41.83 crores. As on 30 June, 2024, the term loan outstanding is INR 122 crores.
India Ratings has reaffirmed the rating IND A and a revised outlook from stable to positive for INR 500 crores bank loan. With the current cash position and with the continued production, we will meet all our obligations, including the planned capital program for the coming 3 years.
Thanks, and back to Mr. Jeeva.
Thanks, Senthil. Now we can open forum for questions now.
[Operator Instructions] The first question is from the line of Riddhesh Gandhi from Discovery Capital.
Sir, just a few questions. Is there any approximate time line on when we expect Assam to be connected to the national grid. And after it is, how much do we expect to be able to produce compared to how much we are producing right now?
See, I think as per the indication, it should be at least on the third or fourth quarter. We cannot confirm it because it is carried out by the different agencies. And if we get connected, then we will be able to get back at least minimum of 40 million cubic feet of gas that can double it from what we are doing right now.
So roughly the double from where we are right now.
Yes, you're right.
And is there any potential incrementals apply also, which we can actually increase because after connectivity, the national grid demand will be irrelevant because it will be ample, right?
Yes, you are right. And we could go up to 55 with the existing and the workover is also successful. We will be drilling the 2 wells once the connectivity is getting done by the time we should seek approval from the partners and already they have given in the operating committee. So we will go ahead the 2 additional wells.
Got it. Great, sir. Sir, the other question was with regards to the BAT. I just wanted to understand with regards to this hawser, is this -- are there any big time lines when you're expecting the new hawser, and are there any risks associated with the reconnection of the hawser and the restarting of the wells?
Yes. I think, see, we had on spare hawser that also parted. That's becoming a critical issue for us. We have already placed an order. We are expecting the hawser within about maximum 7 to 10 days. Once hawser comes, if the weather is a little conducive, it is about less than a day's operations.
Got it. Sir, and how expensive is the hawser, just to understand?
It's less than INR 60, INR 70 lakhs.
Got it. Understood, sir. Sir, and with regards to, is there any broader sort of guidance you're able to give us in terms of where we expect to be either in terms of barrels of oil equivalent or revenues would be harder because obviously, the oil prices and gas prices move. But any indication for how we expect production to scale over the next few years?
See Riddhesh, fundamental fact is in this business, we're continuously creating the value of the underlying assets. The monetization depends on many important drills, and it is not bad to me to give any guidance, and that will be either way incorrect.
The next question is from the line of Rishabh Daga from Motilal Oswal Financial Services.
This is Abhishek. So just on the borrowing limit increase, if you can clarify around what kind of opportunities are you looking at and can you clarify on what kind of oil service assets are you looking at? Is it billing rates? Or is it something else?
See, actually, there is a wide range of opportunities in the service sector. We have a company, Hindage, which is now capable of operating the FSO and our subsidiary company, Geopetrol, can operate the mobile offshore processing unit. It is always in the back of our mind to -- we have to have -- a company should be a service company for oil and gas sector.
So we are looking at a cost the other services as you rightly said, some rigs or some coil-tubing units or some other services where we can leverage, we would like to embark on it. And for our existing growth capital or our own upstream assets, we don't intend to borrow any money.
Okay. Okay. Fair enough. And just on BAT, for how long has production been shut now?
It's about 10 days now -- 10 to 14 days. I think it's about 14 days, a little more than that.
And maybe another 10 days or so, assuming the weather permits, you will restart.
That's better now. That's what we believe it. So let us see.
Okay. Fair enough. But otherwise, both the wells are fully operational and there is no technical issue with the well of such. It's just weather issue?
We have secured the well through putting some chemicals and diesel inside. So that should flow now.
The next question is from the line of Rakesh Roy from Boring AMC.
Yes. Sir, may I think I missed something, sir. Sir, in B-18 for gas and oil, how much is this for B-18 and Dirok gas and oil and -- Dirok gas?
See that -- the Dirok gas revenue is -- Dirok gas both oil and gas, right? So in that the revenue was about INR 50 crores I think, about quarter 1, you are asking, right?
Yes. Quarter 1.
Quarter 1 is about INR 51 crores -- INR 50.5 crores. And B-80 is about INR 18 crores. As you know that oil is getting held in stock. It will be sold once it reach to a threshold limit.
And gas, sir?
That's -- gas is about INR 18 crores we have sold.
Okay. And oil?
Oil is kept in stock.
Okay. Right, right, right. And sir, how much inventory [indiscernible]?
We have about -- as we speak, it should be around 165,000 barrels.
The next question is from the line of Tejas Shah from Laser Securities.
Sir, looking at all the expansions that we are trying to do, in a year's time, what are we looking at the gas volume and the oil volume? Again, in the last con call you had informed us saying, you're looking to drill 1 or 2 as on B-80, maybe a year later or -- I don't know, next year. But then I think we have -- what do you say, volume cap because we don't want to pay higher royalty, and existing the volume of the oil, I think usage around some 850 barrels.
So normally, earlier we used to do 1,800 to 3,000 barrels also. So can't we do a workover and just increase the volume of oil from the existing oil rather than to go for a new value. And since this is not a 365 days right now proven asset, every rainy season, we face some or the other problem. And also, if you can throw light to whether we can every time maybe just close the 1-month window, which is very rough and restart later on so that we don't face any damages or again place new things, something goes wrong.
Okay, Tejas, thanks the suggestion. But we, as an operator, we would like -- we would do all our best to ensure continuity even in the monsoon. That's our endeavor. Every lesson learned will be try to put into the next monsoon or in the ensuing monsoon.
And now the question goes to about both the wells are capable of producing up to 1,400 barrels and gas about 1,200, we were crafting somewhere around 2,400 to 2,500 barrels of oil equivalent. We will continue with that. And I don't think we plan to have any workover in these wells. And these are the -- we'll drill 3 new wells at the appropriate time, as we plan for it about 2026 and '27 to ramp up the full potential of the block.
Okay. And can you throw some light on the Dirok total gas volumes, which we are looking at?
So Dirok gas volumes as we are -- as I told you, there is an optic constraint. With the constraint, we are able to sell it only about 20 million cubic feet up there. In the gas connectivity is established, we can ramp it up.
How -- I think forest was done, the balance, how much time it's going to take to complete the line from our side?
[indiscernible] is not our line. It is a gas grid I said.
That is okay. We had done a pipeline via forest, correct? And I think so rest connectivity from our side to the hub is pending. How much time...
That is not impacting our uptake. Our uptake is the demand constraint. That will get eased out only the Eastern gas grid connected to the national grid.
We have our connectivity from our plant to the Eastern grid, you're saying, correct?
I said, up to [indiscernible], whatever we laid, it will be connected to the Oil India line. So there should not be any problem to ramp it up to about 40 million, 45 million cubic feet of gas immediately.
The next question is from the line of Kartik Jain from Niveshaay.
So currently, I'm understanding oil and exploration industry. So a couple of questions regarding the industry. Sir, how can we value the gas produced in barrel oil or any other [indiscernible] terms?
Okay. See, oil, you know the price as is. That is -- it depends on the quality of the oil, you get a price and that has been very well documented, you can go through any Internet. That is a brand, it's a benchmark place. And like Bonilla, it is another benchmark price. In case of gas, it goes with reference to the calorific value.
Now previously, what happened, the gas price to the oil was about 1/4, now it has come almost closer to the oil price. So that is the difference. And gas royalty is the only thing, there is no SEZ there. But oil in the [indiscernible] block, there is a SEZ also there. For now the RSE and other things, there is no SEZ, only the royalty is there.
Okay. But currently, [indiscernible] or there is a contact with the government?
See, all this is now being a free float actually. You can sell. There is no domestic -- there is a domestic market obligation. But for that, you can auction it within the country and sell it.
So there is no bidding amount?
Yes, we will be. See, it's up to the company's size and volume permits, they will bid for it and get gas allocation or they can allocate the gas accordingly.
The next question is from the line of Dhwanil Desai from Turtle Capital.
Yes. Sir, my first question is regarding the new contract on the gas that we signed for the BAT. So you indicated that it is 12% of oil pricing. Can you also indicate if there is any ceiling and floor defined and the duration of the contract.
I think the floor, we put it as PPAC price that whatever it comes on it, that should be, to my mind, should not be less than -- that should not be less than, how much it is? What is the floor? So the floor price should not be less than $6.5 and there is no ceiling as such because it is fixed with the 12.1% for one company, another one is 12% or something.
Okay. Another question, sir, on this is generally, my understanding is that the energy equivalent for gas is equal -- is around 16% of oil. So we have kind of signed this contract as a discount to the energy equivalent. So any reason we are signing because generally, Gujarat and around region, the gas consumption is pretty good and demand is generally robust. So any light that you can throw on that?
See, what is happening is gas is a better fuel than oil. It is a clean fuel, but the equivalents are getting reached. The overall gas consumption in this country is much lesser than in the fossil fuel consumption.
On the gas takes up more as a consumption as is, the demand will come. It will be equivalent to the oil price. Now today, it is a little -- it is little discounted to the oil price.
And sir, one, slightly larger question, but this entire idea of entering into the oil services business that we are exploring. But if I look at our next 3-year plan, we have INR 1,000 crore CapEx lined up. We have a lot of potential to scale of BAT. Assam, we have found new reserves, we are also exploring in 2 more blocks of development wells and exploration wells.
So our plate is full. So why would we want to get into a services business, which is currently -- there are many good service providers available. So what's the underlying idea behind spending money and management bandwidth on this?
So it's actually, look at -- when the captive consumption is there, and that sector, it is the growing sector and we can make a difference therein and create a value. So in a sense, we are planning to drill at an arms length price. We have our own program for about, say, 30 wells. Then why not we use our own in-house resources rather than getting outsourced. Always outsource is a concept. And resource at a price -- at a cost.
Now my price is going up. I wanted to mitigate my overall cost. I should have it with me itself, my facilities. So that is a ready concept, we are looking at that as a sector. But we look at our assets and purchase at the price provided we have a committed work program in a manner that we don't -- that it doesn't take our existing bandwidth. Our G&G team is not going to get involved.
Our existing management is not going to get involved in that. We will be getting into a new set of people with the manpower with the proper equipment, we will embark on it at the right time.
As you've rightly said, if there are many good operators, we will use it, and we find any of the shortage of the rigs and other things, we would like to have it from our own source. That's the idea.
The next question is from the line of Mehul from 40 Cents.
Sir, one question regarding the new wells for BAT. What is the time line for the new wells and how many wells are going to be planned?
See, this is about 3 structures there in BAT, which is to be drilled and connected. So we are looking at '26, '27 as per the planning at the moment.
Okay. And what will be the capacity for these well? Or we can't say right now?
So we see normally this business, you know the subsurface, we cannot say unless we prove to the surface. So -- but the capital outlay, I can say, it is about $50 million that we have at current.
Okay. And sir, regarding the ability to sell the gas -- sorry, the ability to sell oil from BAT right now, you mentioned that there is 155,000 barrels of oil. So when are we trying to sell when it reaches a certain threshold?
Yes. See, what is happening is we have to get a tanker from the buyer. So normally, to optimize the cost, the tankers would like to have a load up to 400,000 barrels. So till we reach the 400,000 barrels, we will just store it in the FSO, which is having the capacity of up to 900,000 barrels.
Okay. And right, sir, after this BAT issue is resolved, as in when we are in steady state after the monsoon. And let's say, if there are no other issues, which crop up, then how much time would be tentatively required to reach that 400,000 barrels?
It's about another 200 days, I assume it.
The next question is from the line of Dhruv Rawani from Shreeji Finserv.
Like, BAT started in June until date, what sort of barrels we would have produced?
See, normally, it will be about 1,400 barrels of oil. It varies from 1,300 to 1,400 barrels of oil and about 9 million cubic feet of gas.
The next question is from the line of Rishabh Daga from Motilal Oswal.
Sir, just on the Dirok assets, how are production trends or sales trends in the second quarter between July and early August?
In the same line of the first quarter. I don't think much changes have happened.
Okay. So no real impact because of monsoons?
Yes. I think that onshore doesn't get impacted by the monsoon except about day -- 1 or 2 days as of, nothing else.
But even offtake is not getting impacted like from tea assets and all, tea plantations and all?
Getting affected because of the flood situation in Assam. And the flood situation in Assam, then the -- some of the tea factories closing down and some of the companies, our ultimate consumers like BVFCL and Numaligarh refinery and BCPL. They are also shutting down for some days. Those days of production get affected.
Okay. And sir, the oil service assets will be under Hindage, right? How much stake do we have in Hindage and who is the other partner?
It is a wholly owned subsidiary of the HOEC.
The next question is from the line of Nirbhay Mahawar from N Square Capital Advisors.
This is a question more on the sector. If we look at last 5, 6 years, sector was facing -- the sector was in general capital start and not too much of support was there from banks or capital market. Are you seeing it changing in last 1, 2 years?
See I think if I tell you the fact because it's not fair to ask banks to get funding for exploration, which is rolled out. On the development front in the rest of the world, you are getting it easier. But in India, it becomes difficult. But that -- but we also are getting some limits here and there. But in essence, we wanted to do the exploration development through our own internal accruals. We don't intend to borrow any more for that.
That's fair, sir. That's very prudent also. But support from government or equity market, has it -- I mean, are you seeing much more interest towards sector? Any significant change in recent times or...
Yes, it's quite proactive, and they are considering even the small contribution by the smaller companies also, they are appreciating. And lot of impetus from the government side to get the sector to move it, at least it will substantiate it's own production to reduce the imports. And that endeavor is there with the government and small operators, we are contributing our mind what the best we can do for it. And we will continue to do so in the years to come.
Congratulations and all the best for good work you're doing.
The next question is from the line of Rakesh Roy from Boring AMC.
I have one follow-up sir. Sir, out of INR 136 crores for this quarter, INR 50 crores, we get from Dirok and B-80, INR 18 crores, how much from others, sir?
Others, you look at actually the service companies -- we get the revenue from the service companies. The 2 companies are there, BAT and all, MOPU is about INR 31 crores and the FSO about INR 30 crores in the consol revenue. And the Cambay is a small contributor, about INR 2 crores, PY-1 is about INR 1 crore. And Kharsang is another contributor about another INR 10 crores.
Kharsang? So you're saying Kharsang?
Kharsang is about INR 10 crores.
Cambay is INR 2 crores and service company, how much sir?
This consolidation you are asking? Or what are you asking for it?
Consol sir, consol.
Consol is the number which has been given. And it should be about INR 143 crores.
INR 143 crores. And sir, it will come near the half. Remaining sir?
See, you can look at assets that Cambay is...
INR 2 crores.
Cambay is about INR 51 crores.
Cambay?
Sorry, sorry. Dirok, I'll go with the revenue. You want the revenue allocation, right?
Yes, sir. Yes, sir. Yes, sir.
And Dirok is about INR 51 crores, B-80 is INR 18 crores, MOPU is about INR 32 crores. FSO is INR 31 crores, Kharsang is INR 10 crores and others INR 2 crores.
Okay. Sir, one more question, sir. Last time when we spoke on the call, you said that for B-18, we are targeting nearby 200 BOEPD -- 2000 BOEPD. But this quarter only we get 700 BOEPD, because of bad weather or what happened sir?
No, in between, there is a small shutdown which we have informed to the market also, if you would've seen.
Okay. And for Q2, how much we are looking, sir? Normal rate.
Q2, we have to get into the hawser connected. So our expectations would be the same level of production per day.
Near to 1,500 barrels to 2,000 barrels per day oil?
No, no, 1,400 barrels of oil and about 8 to 9 million cubic feet of gas, [indiscernible].
The next question is from the line of Jason Shah, an individual investor.
Sir, can you throw some light on the Dirok, the new gas pine, which we found in sand. So if you can throw some light, what is the quantum that we can expect? When are we planning to do more development on that? And when can we expect the gas flow from that?
So this is an untested sand, and we have -- initially no volume has been attributed to it by testing it to the surface and we are able to produce 6 million cubic feet [indiscernible]. This extent to the entire contract area.
The sand is prominent in all the 6 wells. And the volume estimations we know in-house, as I can't tell you now the reason further, it needs our partners' approval and then the DGAs approval. After that, we can tell you the numbers. This is a proven and discovered resource -- reserves, not resources anymore.
And these reserves will be predominated in all the 6 wells. And if we wanted to produce additional production more than our current capacity, if the grid connectivity is established, we will be able to drill some shallow wells. That is about 1,000, 1,200 meters wells we can drill and exploit it.
And normally, how much time we can look at it, a year or maybe more?
No, It's about the grid connectivity is stablished, then we can monetize it. So -- even if there is a demand constraint. And if the demand...
Basically, if we can expose immediately. It's basically what you are saying subject to the grid connectivity.
1,200 meter drilling should not take more than about 30 days -- drilling and completing per well.
Okay. And can you throw some light on the Numaligarh refinery expansion, which will basically expand or give more demand, any time lines or any idea on that, how the demand is panning out for the Numaligarh refinery.
I think we are expecting shortly once it to turn it around, all would happen by '25, '26. That's what I'm expecting. That would be -- once the grid connectivity is established, then this gas goes to the Barauni, Central India, then it gets connected to the national grid. Then there should not be any demand constraint. That's what we believe in. Because the natural gas is another clean fuel. So the government should be [indiscernible] also to increase the gas consumption.
The next question is from the line of Ashwin Reddy from Samatva Investments.
Firstly, could you talk about the potential inorganic opportunities that you see? And what kind of investments or what are the opportunities that you're looking at?
Ashwin, I am -- we are scouting for every day, actually. So if any opportunity comes on our stream or in the service sector, we would like to buy the assets or acquire the assets at a cost.
Accordingly, our team is always looking for what are the opportunities within India, but we are not looking anything outside India. There are many blocks which has been awarded under [indiscernible]. And we are always looking at such. If somebody wants to sell it, we will be looking at -- if it comes good value to us, we will go on it.
So would this be offshore or the onshore ones? What are you preferring? What are you looking at?
Anything within India except defaulters.
Okay, understood. Understood. Got it. And then -- so you talked about your plans or at least you kind of talked about the plans in the services sector. So what are the opportunities there? And who would be your clients potentially? And would -- what is the amount of money you need to put up in equipment, et cetera, that you use to invest and what time lines for these.
So -- because it's a completely new field. Again, the context I tell you, which is -- now people are actually waiting for the operational -- for things to settle as operationally. So obviously, because if intervene is completely stable, it would have been easier for us as investors to appreciate the move, but right now, we just -- it would be good to have more clarity given that the operations have not stabilized yet in BAT and all.
See, what is happening is -- there are -- there is a consignment of equipment there in the market for onshore, right? So in the market as such, we would like to look at something to resource ourselves to meet our own captive consumption first. The captive consumption itself it gives a value for us, which will almost cover the cost of the equipment, if I say so. So that's the reason we are interested in this sector.
But we will do our detailed planning, and we have to have our resources, both the man power and technical resources with ourselves, before we are committing any capital there on. So it is a wishful projection, and we will not just jeopardize the whole thing by ourselves on upstream side. It should be independent on its own. In the right opportunity, we will embark on it, provided it gives value to us.
Okay. Okay. And regarding the PY-1, what -- could you again reconfirm the time lines as to when would the next activity start...
PY-1, as I explained to you that the gas water contact an issue, once if we take the gas water contact, the drill to debt, that is substantial volume. If the other constraint explained by my friends in the G&G that the volume is low. Now these 2 has to be sorted out.
We had an expert who have reviewed it. And he also confirmed the volume therein. Now we wanted to get into some more third-party experts who have experienced in the basement reserves which we are scouting some people are firm in London because RTS Energy has been sold to somebody. So we are looking at somebody else.
So on thorough examination of the whole thing, then we plan to drill the well in June 2025, somewhere in that April to June 2025.
Got it. Got it. Understood. And B-80, is it fair to expect the work will resume only post monsoon or you think there is a chance for post monsoon as well because the...
I am waiting for the hawser to be delivered to us. Order has been placed in Denmark. And once the material is received, then we will start working on it immediately.
Got it. And for the quarter, which has gone by, for how many days was BAT operational?
So I think it should be about -- exact numbers, I do not know. It should be about 75 to 80 days -- 75 days plus.
Okay. So then the impact is mainly because of the pricing only more than anything else in terms of the numbers of [indiscernible].
See, the total impact is about INR 10 crores. Out of that about INR 7 crores to INR 8 crores comes from the price.
And you're saying that rise on the pricing is back to around $13 you're saying.
$13 was the LNG price. Ours is the contracts, which we have...
Right, right, right.
So it will get about $10 to $11, actually, that's it.
The next question is from the line of Rushabh, an individual investor.
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[Foreign Language] Duliajan is only connecting to Numaligarh, right? From Numaligarh, it goes to Guwahati, from Guwahati it goes to Barauni, right?
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The next question is from the line of Pariswa, an individual investor.
Regarding BAT, initially we were expecting 8,000 barrels 1.5 years back. After which, we were told it will be 4,000 barrels. And then it came down to 2,500 barrels for oil production. And then we were informed that we will try to maintain up to revenue of $350,000 per day. Is this understanding correct, sir?
Whatever you are stating that I'll explain to you. Yes, during the test, the wells have flown up to 8,000 barrels. When it was connected, it was producing 4,000 barrels. When [indiscernible] shutdown happened and we opened the well, it was not flowing. Then we reactivated the well. It was flowing now only about oil and gas together, barrel of oil equivalent 2,500 barrels. So in the context, you can look at where the 3,500 comes, now where are we now. That's a fact. This is a reference, right?
Now we have to look and go back to the drawing board, what went wrong, and that is the reason we will reevaluate because we are sure about the underlying assets, and there is no issue with the reference to the field or the reserves and the wells carried out and the [indiscernible] facilities and the associated paraphernalia to collect process and collect the oil, there are issues which we are trying to solve one by one.
We are a small guys, and we are venturing into Mumbai Offshore. So we are finding a lot of [indiscernible] troubles. We are overcoming it. And when we drill '26, '27, we may get the number which we have projected initially.
With the new wells being drilled, we may achieve the numbers in '26, '27. Is that correct?
That's right.
But with the current wells, it is not possible?
Current well, we have given a reference of about 2,500 barrel of oil equivalent.
So as on date, while we were speaking, the last time when the well was shut I understand it was 740 barrels, right? As mentioned in the investor presentation.
See, the well will shut, and the field will shut depending on the...
Sir I'm talking -- before that, the production was 740 barrels.
Exactly, which number, which date you are talking about?
As mentioned in the investor presentation, that production was 740 barrels.
That might be from 1 well, actually.
Okay. So can you please throw light on the 2 wells production?
That's what I just now told you, it should be oil equivalent of 2,500 barrels, we said 2,400 to 2,500 barrels.
So that's including gas?
Yes.
So the gas price, we are accounting at $60 or $12. When you say oil equivalent. Because it gets a little confused...
Please understand there is nothing called $60. It is actually on MMBtu, that was $17, now get reduced to $10.
So when we say 2,500 barrels, [indiscernible].
Pariswa, I have to answer others also. You have to compute the numbers.
Okay. Okay, sir. Okay. And are we reaching to $350,000?
With this current production I [Technical Difficulty].
So what revenue are we reaching with the current production?
You have to compute the numbers. It depends on the price. I told you 2,400 barrels of oil and about 1,100 barrels of oil equivalent of gas. It varies with the price. And the price is varying on a daily basis. So I can't give correct number on that.
Can you give an approximate number for my understanding?
For approximate number, you can take 1,400 multiplied by 80 and 900 multiplied by [Technical Difficulty], Okay?
The next question is from the line of Nishant Shah from Millennium Capital.
No real questions from me, just like a request. Whenever BAT is operational, just would request you to kind of put out a press release for that.
Yes. I think we already announced in the -- as soon as recommencement of production we will inform to the exchange. And every shutdown we inform [indiscernible] inform.
The next question is from the line of Manan Patel, an individual investor.
Sir, most of the questions have been answered. One question regarding Kharsang. So you mentioned environmental clearance is pending. So do you have any kind of time lines when it should come in?
See what has happened on 25th of July, we have submitted a revised environmental impact assessment report. Whatever the data wanted by the previous Minister of Environment Forest that all data have been included and submitted to them. Now they have to take it into the portal, and then they will call for a meeting.
In the meeting, if they cleared, it's well and good, otherwise, they will ask some additional data. So we have to provide the same thing. So we are trying all our best to get the things as quickly as we can, but the process is there. We have to follow through the process.
Okay. And from what I understand, Kharsang will largely be an oil field, right? So no restriction on demand based on the pipeline or anything like that, right? Once we drill the well, we can produce and start selling it. Is that understanding right?
Right. That is on the lower -- upper Girujan, upper Girujan already that has been in 40 years, it has been on production. We'll drill additional wells that will ramp up the production, that can get connected immediately as soon as the wells are get completed, but the lower Girujan and Tipam and Barail, we are not -- we are expecting it should be more like a gas block. So the gas as such, '25, '26, the grid connectivity established, that monetization should be much easier.
Understood. And sir, one more clarification on this. One, deep exploration well, I understand that will take much longer than the other 9 wells that you are planning as of now. So after the clearance is there, can you give a time line of when the -- how much time will the exploration well take?
The exploration well take minimum 3 to 4 months and -- but we need to secure approval from our partners. And technically, it has to be evaluated by the partners. We are quite bullish about it, and we will take the consent of the partners and mobilize -- think it is high pressure well. So accordingly, we have to have a BOP and other equipments and materials, a little different from the shallow wells, which will procure it, and then with full precautions, we will be drilling those wells.
The last question is from the line of Mehul from 40 Cents.
Sir, can you please elaborate what does the hawser do? I'm a -- pretty layman question. What does the hawser do? Why is it required suddenly? Because we never heard about the hawser from HOEC actually.
I'll explain to you. There is a single point mooring that has been moved permanently. There is a rope cum chain. One side it will be a rope, that is a nylon rope, which has tumbles on the other side, which will be connected to the SBM that will be connected to the FSO. Now FSO will be in that rope holding it, right? In adverse whether the rope gets parted. That's called the hawser.
Okay. Why it was not required in the last previous monsoons. I mean so many monsoons and...
Acting on every time we have some spares and replaced it. Today, this time it's both, one we have a spare, one installed, which was new, which was also parted. Because the weather was rough, and that's the reason it has got parted. Now we are talking to the manufacturers why it has gone and all sorts of things. But the fact remains it's parted.
Okay. Sir, one other question on the revenue allocation, which you mentioned to another question. So you mentioned that MOPU is INR 32 crores and FSO is INR 31 crores. So is it like, are we building ourselves? Can you please elaborate on this revenue?
Not I think ourselves, there is a partner there in. And this is an ongoing rates in the market. Suppose you have got -- you entered into a contract with some third-party, you would have paid this money. But that is the reason. It is also our contract with -- it is resourced at the corporate level, outsourced at the block level, which normally happens.
Okay, okay. Because we have participating -- other participating interest for our resources. Is that correct?
That's right.
Ladies and gentlemen, that was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments.
Okay. We continue to focus on achieving the optimum production from BAT and to increase the uptake from Dirok. We will also impact on drilling wells in Kharsang, which will move substantial volume of resources to reserves. Planned drilling in Western region and PY-1 will enhance the production as well as the value of these blocks.
In addition, ongoing workover in Dirok and an explorative well in Block 19 will increase the resource base of the company. Our existing talent pool and continuous addition of both in-house and external experts will ensure our growth targets.
We once again thank you all for joining us today. 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. Thank you.