Hindustan Oil Exploration Company Ltd
NSE:HINDOILEXP
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Hindustan Oil Exploration Company Ltd
Earnings Call Analysis
Summary
Q2-2024
The company reported a decrease in stand-alone revenue, dropping from INR 108.69 crores in the previous quarter to INR 72.56 crores, attributed mainly to a 1.5-month shutdown of the B-80 field for cleaning purposes. Despite this, the profit after tax significantly increased to INR 38.75 crores from INR 21.34 crores due to improved gas offtake in Dirok and a favorable stock adjustment credit leveraged by higher crude oil prices. Looking ahead, the firm anticipates additional well workovers, which can potentially enhance production once the gas grid connectivity is established, with estimated drilling costs of USD 50 million for three wells at PY-1.
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Ladies and gentlemen, good day and welcome to the Q2 FY '24 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, Mr. Sonpal.
Thank you, Michelle. Good morning, everybody, and a very warm welcome to you all; also wish you a very happy Diwali.
My name is Anuj Sonpal from Valorem Advisors. We represent the investor relations of HOEC Limited. On behalf of the company, I'd like to thank you all for participating in the company's earnings call for the second quarter and first half of financial year 2024.
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. Krishnan Raghavan, Chief Technical Officer. Now without any further delay, I request Mr. Jeevanandam to start with his opening remarks. Thank you.
And over to you, sir.
Okay, thank you, Anuj. Good morning, wish you a -- wishing you a very happy Diwali.
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 heading the operations [indiscernible]. We will be strengthening our team by inducting a CFO, senior production engineers, senior drilling managers and technical advisers to increase the operating [ and manage the capability ] of the company. Some of the technical persons have already joined, and others will also join shortly.
We are pleased to inform you that quarter 2 gas offtake from Dirok has increased to an average of 23 million standard cubic feet per day from 10 million standard cubic feet per day in the previous quarter.
I'll start with the operational update from the Eastern region. Dirok gas [ released 0.56 Bcf. And condensate is 10,350 ] barrels compared to [ 0.24 Bcf ] of gas and 4,573 barrels of condensate in the previous quarter. Though it has peaked and produce about 50 million standard cubic feet per day, we have to restrict the production due to lack of demand and the volatility in offtake due to [ breakdown of ] planned maintenance of major consumers. This was further compounded by dual pricing for gas produced from the nominated fields of Oil India Limited and private players.
The ceiling price fixed by the government of India for nominated field is $6.5 per MMBtu, whereas for private players and for non-nominated fields and for -- non-nominated fields, the price fixed by PPAC is $9.2 per MMBtu as on October '23. Therefore, the customers who are mostly [indiscernible] would like to avail the low-price gas of $6.5 per MMBtu before availing the gas from private players at a higher price. This has caused a lower offtake of Dirok gas. And the situation would get reversed once the gas line of IGGL, GAIL and DMPL are connected and commissioned. We believe that this gets completed, latest, by first quarter of '24, '25. When IGGL lays its own line from Duliajan to Numaligarh, which is about 180 kilometers, the demand constraint will further be eased out. And the connectivity within the gas grid in Central India will be -- by the time it will be -- get fully established. This will ensure an increased and stabilized offtake from 2025 onwards.
In order to keep ourselves prepared and to ramp up production, 3 legacy wells, Dirok-1, Dirok-2 and Dirok-4, will be worked over to enhance the production as well as to get additional data. This program is expected to start in the fourth quarter of this financial year.
I'm happy to inform that the reprocessed seismic data is quite encouraging and the material balance in the field would be higher than expected. In-house G&G study is in progress, which will get validated by third-party reservoir auditors, and the new result numbers will be updated as soon as the study is completed. Data from [ the forward ] results would also include the production data to reestimate the potential of the block. After these workovers, we plan for drilling 2 additional producers to ramp up, up to 70 million standard cubic feet per day, subject to the growth of demand and connectivity to national gas grid.
As informed earlier, the balance 50% share capital of GeoEnpro is transferred; and it's now a wholly owned subsidiary of HOEC. GeoEnpro is the operator to Kharsang block, and as you will see, we'll have both directly and indirectly 33% participating interest in the block. There are 70 wells drilled in the block, out of which 28 wells are on production. 9 are gas wells. 4 exploration wells were abandoned. The wells were drilled and produced from upper Girujan formations. New wells were drilled and tested to know the potential of deeper formations such as lower Girujan, Tipam and Barail. This block is producing from upper Girujan formation for over 40 years. Current production makes about 432 barrels against the 350 barrels in the previous 6 months average. This was possible after some [ assay jobs ] and workover in some wells.
We have an approved [ work program already assessed ] for drilling 6 wells to the depths of about 1,500 meters to target additional production from upper Girujan. Tangibles required such as [indiscernible] and tubulars were already procured. On obtaining EC clearance, which is expected by end December '23, we should be [ in production in ] 6 wells, which should increase the production to about 1,000 barrels per day. Substantial upside has been identified and evaluated by GCA both in the lower Girujan, Tipam and Barail formations.
While drilling 6 development wells, we will finalize [ an operation ] program for deeper formations by drilling a well to the depth of 3,000 meters by obtaining consent from JV partners. The deeper formations are expected to be gas [ and/or discovery. Monetizing gas ] will not be difficult. We believe, by the time, Eastern regional pipelines will get connected to the national gas grid.
Other -- block 19 exploration block, called Greater Dirok, where seismic reprocessing is completed. Our team will release the geotechnical [ order ] before this month ends. [ Data of the ] exploration well will be evaluated [ and risked ] before the commencement of drilling. This block is located between Dirok and Kharsang, which is 100% owned by HOEC.
[ We have work program ] lined up for drilling 6 development wells and 1 exploration well in Kharsang and 1 more exploration well in Block 19; in addition, plans for intervention of 2 wells per workover in '24, '25. We also plan for 2 development wells in Dirok and 1 appraisal in Kharsang in '25, '26. The expected capital outlay for the next 2 financial year is about 200 crores.
Now I'll move to Cambay blocks. In Cambay, all the 3 blocks are having marginal production. And total contract area is about 38 square kilometers, with 34 drilled wells; and the data is available. In-house G&G [indiscernible] team is evaluating the potential of all the 3 blocks to enhance the production. Currently these fields are breaking even with a meager contribution to the [ P&L ] accounts.
In Palej, we plan to have artificial lifts in all 3 wells, and the required SRPs are being sourced. After seeing the results and on signing the PSC for R2 contract area, we intend to have 3D seismic acquisition and drilling of additional wells. In North Balol, we are producing from 2 wells and -- 1 well drilled by ONGC and 1 by HOEC. We plan to drill additional 2 producers immediately after getting the environmental clearance, [ similar to total ] 2 producers in Asjol. And the number of wells will increase based on the drilling results.
Now I move to offshore blocks. In B-80, we have removed the wax deposition in the export line and restarted the production from D2 well. Production from this field is only for 1.5 months in this quarter. D2 well production is a little over 1,000 barrels per day, and the gas is about 5 million standard cubic feet per day. D1 well was producing before the cyclone and was shut in during the cyclone. Post cyclone and post clearance of the wax, we were trying to open the well for production, but it could not be activated. It is believed there could be some mechanical obstruction which needs to be removed.
We have engaged with Baker Hughes to study the issue and come out with a solution. Baker Hughes have come [ on such ] study, and based on the recommendations, we will do the [ remedy elections ] to restart the production from D1 well. [indiscernible] have been received, and the replacement work will begin after securing a [ DSP ] for this job. We endeavor to carry out this work before the onset of monsoons. We are currently focused on activating the D1 well.
Presently, the total oil in stock in the FSO is about 3 lakh 72,000 barrels [indiscernible] [ who have done ] analysis, and the results are expected by end of November '23. We have engaged with mjunction, an e-auction platform, to auction the crude among the potential buyers. This process is expected to be completed by December '23, and the first offtake would begin January '24.
In PY-1 offshore, USD 383 million was invested and mostly impaired by this block as the 8 slots [ drilled forms ] 56-kilometer pipeline onshore processing facilities for about 55 million standard cubic feet per day, with storage tanks [indiscernible]. Currently this field is producing less than 1 million standard cubic feet per day to break even. Seismic data of this block was reprocessed. And our in-house G&Gs team is reviewing [ the ] in-house studies. We will engage a third-party expert in the fractured basement reservoirs in London to review and confirm the proposed well locations. We plan for 3 development wells. If everything goes as per plan, drilling first well will commence in the end of first quarter '24, '25.
Now I'll update the financial results of this quarter.
We report that the stand-alone revenue for this quarter is 72.56 crores compared to 108.69 crores in the previous quarter. Revenue from offshore B-80 block is 19 crores, and the previous quarter is [ 83.4 ] crores. This reduction is mainly due to shutdown of the field for [ one-off ] cleaning of the oil export line which took about 1.5 months. In case of Dirok, revenue in this quarter is 49.68 crores compared to [ 21.17 crores ] in the previous quarter.
The total reduction of [ 36.13 crores ] in sales is due to shutdown of B-80 field for a substantial period in this quarter. We have an improved offtake of gas in Dirok, but there's volatility in offtake [ as well ] once the Duliajan gas station is connected to the national gas grid.
Field operating expenses for this quarter in the stand-alone account is INR 50.46 crores compared to INR 73.07 crores. This reduction is mainly to nonoperating days of B-80 field. Total expenses, excluding DDA, finance costs, including stock adjustment, is 31.78 crores, comparing 62.64 crores in the previous quarter. DDA for this quarter is INR 4.77 crores compared to INR 8.85 crores in the previous quarter.
Oil in stock in FSO as on 30 June is 292,000 barrels. And now it increased to 329,000 barrels as on 30th September '23, out of which 60% belongs to HOEC. Stock adjustment credit for the current quarter is INR 43.52 crores, whereas it was INR 27.7 crores in the previous quarter. The difference is mainly because of price of crude oil, which is 74.93 per barrel in -- on 30th of June and USD 93.5 [ per barrel as on ] 30th of September '23.
Stand-alone EBITDA is [ 49.05 crores ] compared to 37.82 crores. And the profit after tax is INR 38.75 crores compared to INR 21.34 crores in the previous quarter.
In the consolidated account, the total revenue for the quarter is [ 119.74 crores ] compared to [ 187.14 crores ] in the previous quarter. This was due to the [ loss of day rates for ] FSO and [indiscernible] of INR 33.77 crores due to shutdown of the B-80 field.
Operating expenses including -- and operating expenses, including facilities, in the consolidated accounts for this quarter is 63.6 crores compared to 84.38 crores in the previous quarter. This reduction is partly to reduction in the field operating costs due to shutdown of the B-80 field for about 1.5 months. The total cost, excluding DDA and finance and including stock adjustment, in the consolidated accounts for this quarter is [ 42.91 crores ] compared to 77.43 crores in the previous quarter. DDA for this quarter is INR 18.37 crores compared to INR 20 crores in the previous quarter.
The consolidated profit after tax is INR 43.17 crores, against INR 66.07 crores in the previous quarter. The EBITDA for the current quarter in the consolidated accounts is 17.64 crores compared to 96.86 crores in the previous quarter. This reduction is mainly to the shutdown of the B-80 field and the loss of production from D1 well as well as the charter rates for FSO [indiscernible].
GeoEnpro Petroleum Limited [indiscernible] is consolidated in the current quarter, which makes our additional -- which makes the consolidated book value of the equity shareholders to INR 1,090 crores. As of October '23, the outstanding loans in the stand-alone books are 112 crores. And in the subsidiary books, it's 78 crores. Company has obtained a IND A, stable rating for 500 crores from -- for bank loan from India Ratings. With the current cash position and with the continued production, we'll meet all our obligations, including the proposed [ to work with them ] for a contracted -- for the coming 3 years as planned.
Our discretionary planned capital expenditure for the next 3 years is estimated to be 835 crores from '24, '25, '25, '26 and '26, '27. This is mainly for drilling 11 development wells, 2 exploration wells; and 5 rig intervention for workover in '24, '25; planned 5 development wells in '25, '26; 3 development wells in B-80 in '26, '27. This CapEx can be met from internal accruals, and when necessary, additional equity will be raised.
Now I -- and now -- we can open the forum for questions now.
[Operator Instructions] We'll take the first question from the line of Rikesh Parikh from Rockstud Capital LLP.
Sir, I would just like to understand the problem on B-80 D1, so exactly what is the nature of the problem? When it was being impacted. And kind of what will be the costs to remediate it? And when do we expect it to restart?
Okay, thanks. 2 possibilities: one, mechanical issue; second, [indiscernible] issue. This is -- this would be the 2 possible issues. Based on analysis, it is a mechanical issue. It is being studied by Baker Hughes and we expect a solution to this issue shortly. So this is not going to be a very expensive proposal at this moment, and once study is completed, we will get -- we'll have a full update on this.
Sir, when the problem was occurred. And tentative, when do we expect it will be activated?
So when we recommence the production, then after opening the D2 well, we plan to open the D1 well. That well is not getting activated. Since then, we have been addressing this problem with the various experts in house and third-party experts from outside. Now finally we engage with Baker Hughes [ to carry it forward ].
Yes. And my understanding is that D1 well is largely an oil [ parcel ], I mean, sir, oil-producing well, so the oil production [ that was capability ] at B-80 will be majorly hampered because of this, right?
Yes, that's right, in the last quarter.
Sir, second, regarding the Dirok field. It's a good progress. You have made 85% completion. I just wanted to understand. How fast can we increase the ramp of the production [ to 50 MMBtu of gas ], assuming that [ the Duliajan ] pipeline get activated from 4Q?
So as stated as such, we are going to workover 3 wells with the -- and right now these wells are capable of producing up to 50 million cubic feet. And the workover will not take a longer time. With the 3 well workovers and existing 3 new producers, we will be able to go ahead with the 50 million cubic feet per day.
But will it be like 3 to 6 months post our connectivity of [indiscernible]...
As soon as the connectivity is ready, we will be able to do that.
Okay. And last, sir, on the PY-1, what is the estimate we are taking for the drilling of the 3 wells' costs? And do we presume that timely approvals will be there for the 4Q?
So we estimated the total cost. The first is -- the first will be expected to be successful, which will be followed by drilling 2 more wells, the total well drilling [ and the facilities preferred to be ] connected estimated to be USD 50 million. And this next financial year, we will be drilling the first well.
Next financial year. It means we -- it means that when the -- when it will be open, in the...
I think at that time it's -- before October, the weather should be good. We should be able [indiscernible].
The next question is from the line of -- [Operator Instructions] We'll take the next question from the line of [ Abhishek Menon ] from Motilal Oswal.
Sir, first question is if I look at Slide 5 in the presentation. So your gross production is sort of 6,694 in first quarter, 6,531 in the second quarter, but net production has gone down quite a bit, so I mean, why is there a decline in net production but not so much in the gross production? So that's my first question.
This is -- I think that the net production is the right number. And the gross production, I have to check. I'm sorry about it. And...
[indiscernible]...
B-80 and Assam increase.
Because of the B-80 and Assam increase. And probably the right number is -- and what has happened was Assam increase in production is -- our share is only 27%, so that's why the gross number is right. And the left number is due to the B-80.
Okay, okay. That sums it up very nicely. And second, I think my understanding is, B-80, one of the wells started towards the end of September. So if you could let us know gross and net production from that well. And will...
[indiscernible] as I told in my [ portion ], it is currently about more than 1,000 barrels of oil and about 5 million cubic feet of gas per day on the D2 well. And D1 well, we are working on to activate.
Okay, okay, so which should come through in -- like we should have a full contribution in the second quarter -- in the third quarter, right, October-to-December quarter?
I -- it's difficult to take a time line for the D1 well. We are waiting for Baker's study. Once the study is completed, then what type of intervention, we will be looking for it and then accordingly we'll decide.
Okay. So basically Q2 production will at least be maintained and will be slightly higher in Q3, right? That's the number to work with.
We believe that so.
That should be the good number to work with, okay, okay, fair enough. And sir, I also want to check your standalone versus consol. So stand-alone numbers have gone up, but consol have gone down, so again, what has happened over there? Is that Assam which is contributing to this, or is there something else?
We look at it as such in standalone. We had better revenue from Assam Dirok. In that region, it has gone up. And the consolidate is less because we are not able to get the full production from D1 well. And second thing is [indiscernible] and the FSO charges are getting reduced. [ It is just for ] 50%. That's the reason there is a reduction.
The next question is from the line of [ Tejas Shah from Unique stock broking ].
One is just for the information. Mr. Elango joined Deccan Gold in form of -- as a nonexecutive director, but I think, at last con call, what he said, he is retiring completely and he wants to give time to the family, so I really do not understand why he joined over there and why did not continue with Hindustan Oil. On a personal level, if you are aware of something you can throw some light [ to address this ] information. Now question...
[indiscernible] -- okay, okay, you ask your questions, [ Tejas ]...
Yes. You can take it up together.
Yes.
So questions is -- one is the D1 gas production. I think we had a contract with GAIL where you were getting 22% of the value of the oil. Now in the March '22, '23 quarter, they had a call where they said they -- or for the first year of the contract, there is no penalty. It is take-or-leaves kind of thing, but second year, there is a penalty clause, which will be considered at the end of the year, of looking at how much we were able to supply and not supply. But I'm saying, in the last con call, what Mr. P. Elango said, he said there is no penalty as such. So why there is divergence in the -- with the statements. So if you can clarify how much penalty will be levied. And on the second thing, Dirok: What is the average top line that you are expected to generate that is starting from '24, '25, onwards? And do we not again face the problem of the dual pricing when the whole gas grid is connected? Please, can you go ahead?
Okay, your first question, I have no idea. And the D1 is an oil well, and D2 is a gas producer. And we have a gas sales agreement with GSPC, not with GAIL. So that will be running till [ '24 -- March '24 ]. That is [ a year-end ] adjustment, so we have got 6 more months to go on it. And we expect that at the end of the year only we will be knowing whether we are [ short earlier for ] supply. So there is, in between, 1-month shutdown by GSPC also, with overall looking into this. And we should be in a position to say that number is not a big number. And we believe that there will not be any penalty on it. And in case of Dirok -- and we believe that there won't be any penalty on it. And in case of Dirok, that -- the current production numbers I have given to you, it is a little over 20 million cubic feet per day. So the [ gross on the statement ]. And once the lines are getting connected, the 3 lines are getting connected, we should be able to ramp up our production to 50 million cubic feet per day. And once IGGL line is -- gets connected and the national gas grid is fully established [indiscernible] be able to ramp up total production to 70 million cubic feet per day effectively from the financial year of '25, '26.
Sir, the current participant has left the queue. We'll move on to the next question, which is from the line of Ajit from Nirzar Securities.
Sir, I just have one question. How is the stock valued? Like is in -- whether at cost [indiscernible] business or some other way.
It is marked to market, Ajit, so whatever the price based on the closing of the books, that price will be taken into it.
The next question is from the line of [ Darshil Jhaveri from Crown Capital ].
I hope I'm audible...
Yes.
Yes.
Yes. Sir, just wanted to know, sir, if our B-80 field shut down. I think, sir, you mentioned the figure of how much revenues was -- I think were around 33 crores, right, sir?
It's a bit more than 33 crores because, the reason for it, the difference in amount totally, because there is an improvement in the Dirok, okay? And there is a reduction in the B-80.
I'm so sorry, sir. My line just got disconnected. Sorry, sir. Could you repeat, sir? Very sorry for that, sir.
[ What does that mean is ] there is an increase in the revenue in Dirok. And there is a reduction in the revenue for about 1.5 months in the B-80, so the overall net reduction is about the amount which I told you, 33 crores.
Okay, so but, sir, from the field maintenance shutdown of B-80, how much would it be? And will that come in Q3 because -- it's because maintenance shutdown?
No. I don't think Q3 -- the shutdown is not expected for a longer duration. [indiscernible] production will continue.
Sir, maybe, if I recall -- define how much would we be able to increase our top line by in Q3.
Yes, I think it's too difficult to put some numbers. It depends on the price. It depends on the quantities. And let us not presuppose us with any number there onto it. And you can do the math.
Okay, sir. And sir, I just wanted to know: Sir, I think we had to, say, face some issues in the current year, but FY '25 onwards, we will be going in full swing, sir. Like we would -- but what are any other issue that we could foresee, right, sir? We'll be on -- back to the run rate that we were at current, like before the cyclone, right? So that would be a fair assumption...
Yes, I think our -- all technical experts are working at the moment. We are given to the best company, Baker Hughes international. It's a reputable company. And we believe that we will have a solution to the D1 well, and once that comes on it, and better offtake from Dirok, we will be doing better numbers from '24, '25, onwards.
The next question is from the line of [ Ritan Shaf ], an individual investor.
Am I audible?
Yes, sir.
Go ahead.
Yes. My question is on B-80 field. So B-80 field has not produced which -- on the -- both wells with full potential since the commissioning and had some technical challenges like separator leakage and flow line wax choking problem, so what -- I mean, when can we expect like the production from both well continuously? Is it an operational team problem or a geology and reservoir issue? So could you throw some light on this? Like what is the future operation plan? Yes.
Yes. The -- as I told you, we are not finding -- yes. Our technical team is very confident that there is no reservoir issue. They are believing that there's only mechanical issues, which we are discussing with the various people now that Baker is engaged. And with that, we should be able to get a resolution to this issue. And the top sides, we have been improving. There is -- quite a lot of improvement has been made. And some small issues are still coming up, which [indiscernible] getting addressed properly now, so we are looking at the contractor to supply the -- to keep the [ stats ] ready. So the top-side issues will get eased out by March. I don't think any problem on this. Then the D1 well, we will be trying to work it through with Baker and get a solution to it. So yes, it's -- yes.
Got it -- yes. Please continue, sir, yes.
Yes. See, what happens is the total -- we -- effectively you look at the total production from the field is less than 12 months. So the problems are coming one by one. We are trying to address it. And normally it gives -- at least it will take about 2 years for any field to get a stable production. So these are the issues. And every time we come out and say something on it and -- we also speak for it. And we are trying to get it resolved because -- we are getting some experts from different production process. And the reservoir [ and other guys ] are working on it, and they come out with the solutions [indiscernible].
And this should also help us in reassessing the full potential of the field since we've engaged with Baker now. Isn't that also helping it?
Yes. What is happening is, once the issue is resolved, then we will have a production data; and that after 2 years of production data, we will go back to the same reservoir auditors who have done. So we estimate the -- a material balance. And also we are planning for additional 3 wells in the block. That will be on '26, '27, so all this whole process will start after that because now it's more of a firefighting on getting this sorted out on the D1.
The next question is from the line of Ashwin Reddy from Samatva Investments.
My first question is on PY-1. So for the incremental volumes that can come on, on PY-1 post the work that we've -- post the work we plan to do, the price -- I mean, do we have pricing flexibility and freedom? Or do we need to [ set it get at ] the current prices which we have for the incremental volumes?
The incremental volume from the new production will be at the price, market price or PPAC price, whichever is highest. We will not be going -- we have already terminated with the GAIL contract for $3.66 per MMBtu.
Okay, so this is not the APM price. [ And what you said ], this is actually -- these are the market price side, right?
Yes. It's market price, and the market may take the PPAC price as the benchmark.
Okay, okay, got it, got it. And my second question is on B-80. So I remember seeing that we've given the -- that they're going for a fresh crude assay, so I mean, has anything changed in terms of the field? I mean the field, the quality in terms of perspective. Or what prompted this fresh crude assay? Because I believe they already had it done once, the quality of the oil and to get some insights. So I mean any thoughts would be helpful.
So I think we have done one assay. And now what is happening is we have to have an assay of the volume as such, which we have in the -- that's what we have done for it. That is about -- right now when we look at about 70,000, 80,000 barrels of -- from the D2 well. So this is combination asset because the companies mjunction and others are looking [ further to ways test it ]. And the refineries are also looking for it. We will be giving a sample to the refineries based on the [ stuff that we pursued ]. That should be matching with that assay which we are giving it. That's why we have given the third party [ knowledge ], and they are expected to give the results by the end of this month. Once assay is given, we will give it to mjunction and to put it for an auction among the potential buyers.
Okay. Okay. Sir, to clarify: This will give us again a sort of better insight to the quality. [ And that will lead amount in the ] price of volumes from mjunction.
You. You are right.
Okay, got it. And finally on -- and finally, right, on Dirok: So if I understand, Q1 '25, is it, is when the last linkage also will be done. And then we'll have access to the end markets. Or what is the time line for us to get fully linkages to the end market where there is no constraint on the demand?
What is happening is, other areas, most of the gas goes to Duliajan. Duliajan, we've got a gas station. From Duliajan, it goes to Numaligarh. From Numaligarh, it goes to Guwahati. From Guwahati, it goes to [indiscernible]. So that is, again, up to Numaligarh -- sorry, up to Guwahati. From Guwahati, to Numaligarh, it's by IGGL. From IGGL, it was planning to have one more line, which is adding about 3.5 million cubic meters per day, capacity line. That is coming to Duliajan, which is expected by -- all approvals and everything is in place, by 2025. Before that, DMPL is having a line which can carry up to 2.4 million cubic meters per day, which it gets connected to the Numaligarh of IGGL line. There is -- an additional demand will get opened up in that area, so we will be [ a little lease out ] in the -- once these 3 lines are getting connected and operational. And then the next line of 180 kilometers of IGGL comes in. That will ramp up further in a manner that the total production from Duliajan [indiscernible] can go to the national grid. That is what we believe [ in ]. So if that comes on it, there would not be any restriction.
The next question is from the line of Mihika Barve from BQ Prime.
Can you all hear me?
Yes, ma'am.
Yes. I just wondered if you could please [ lay out ] more details in terms of the CapEx spend. You didn't mention the for the next 2 to 3 years, so what will be the CapEx allocation for the different developments where you are planning to -- foresee?
Okay. '24, '25, we are planning -- one workover is on the current financial year itself. We will get completed in Dirok. And 2 more workovers are planned for '24, '25. And 6 development wells are planned in the Kharsang. And 1 deep wells up to 3,000 meter is also planned in -- well, in Kharsang. In a manner, the Kharsang, we can apply for deeper formations. Then PY-1, we are planning for 1 development well. At North Balol, we are planning for 2 wells. Asjol, we are planning for 2 wells. And Palej, we are looking for 3 well intervention by putting the artificial lift. And in addition to all these things, we are looking for an exploration well in B-19. These are the work programs for '24, '25.
'25, '26, we will be drilling 2 wells in Dirok to ramp up the production. We are believing that the market will come in to absorb the gas up to 70 million cubic feet of -- per day, so then we are planning for 1 more deeper well in Kharsang. So the 3 well in North East. And we have PY-1. The first well being successful, we will drill 2 more wells in '25, '26. And then that's our -- the 5-well program on '25, '26. And '26, '27, we will be having 3 wells drilled for B-80. So that completes our work program for the next 3 years. This -- the capital outlay we plan for the 3 years is in the order of 835 crores.
Well, I just have one follow-up question, this capital outlay. What mode of financing will you all be employing?
We believe that, with our current cash flow, we would be able to meet our all obligations through internal accrual. And if any shortfall comes, we will come back to our shareholders.
We'll take the next question from the line of Rahul Mehta from Envision Capital. As the current participant is not answering, we'll move on to the next question, which is from the line of Rishikesh Oza from RoboCapital.
My question is with respect to the PY-1. Sir, when are we looking to start your drilling work here? And also if you could let me know like what is the production capacity? And when can you commence the work here?
See, we -- the seismic reprocessing, the reprocess seismic data has been received by our GM team. Now they are looking into the data, and they may do the reverse to geological model. And that will be given to RPS energy from [indiscernible] for further fine-tuning the locations.
And meanwhile, we will be looking for data grids. And our endeavor is to start on the -- but the end of the first quarter or the second quarter of '24, '25. And the volume estimates, we cannot do it in. Either way, we will be wrong. So because the production potential of this well can be established after drilling.
The next question is from the line of Aditya Padi, an individual investor.
Just to follow up on like the earlier questions. Just wanted to understand what kind of mechanical issues have been predicted by [indiscernible]? Like if any foresight for now?
Actually, what has happened this well has been starting initially for about 6 months and subsequently for about 1.5 months to 2 months in the current year as such from June, actually.
Now what is happening is the people are saying that there is an obstruction in the tubing because the tubing would have been blocked by some wax or some other things. So that needs to be resolved. So that's the reason we get this entire study to the back-end users to come out with the issue as well as the solution to this problem.
Okay. So that really helps. My next question will be on like we have only now D2, which is the flowing well. So how is the reservoir foundation look like improving? Or if you could give any, like you said about 1,000 barrels But what are the reservoir conditions over there?
The reservoir is a little better than expected, but we need to observe it actually for the longer period.
The next question is from the line of Abhishek Menon from Motilal Oswal.
Sir, just on the MOPU and FSO day rate revision, if you can give us some details. My understanding was earlier it was in the range of I think, $40,000 to $50,000 per day. So what is the day rate now?
Same day rate. There is no change in the day rate. Only the day when we are not operating and there is no production, we don't charge the day rate.
Okay. So in that sense, that income is lower by whatever day we are?
Yes. Current cost, that was lower because of that.
Okay. So next quarter, that should improve as well?
Yes, we have completed only about 40 days now, 44 days. And now we have to look for another 46 days. So is that continuing production there, then revenue should continue.
Okay. Okay. And on the balance sheet, there is an investment in, I think, associates, which used to have INR 18 crores, that has gone away. So is that because of GeoEnpro acquisition? Or is there something else?
No GeoEnpro acquisition has gone up now because there's been -- we are part of the wholly-owned subsidiary, so it has been consolidated.
The next question is from the line of Ralson Lewis, an individual investor.
Yes. Considering the challenges that were called out in the Q2 in the conference call, I believe these are different results. So first of all, congratulations to the management. My question is related to Dirok, where we had mentioned that because of the customer shutdown, the production was 1/3, which was predicted to be 2/3 in this quarter. And I think we have crossed a little bit more than that. Can we consider that for Q3 onwards, we come back to your normal 28 to 30 equal gas. That's for the D1.
And considering that we were having -- for BAT, we were having a production of around 1,200 to 1,400 barrels in the last couple of quarters, which are substantially reduced. Can we expect the production to be around 1,000 barrels per day is what we just now heard. So can we consider that? That's the first question. The
second question is with regards to oil India. They also are coming up with a lot of capacity expansion and they would also go live in a couple of years. So would that -- because their pricing is much better in the Northeast, would that be a limiting factor as far as our offtake is concerned considering that we are premiumly priced?
And last, if you can just comment a bit upon the $1.36 million related, the order that was given by the Port of Malaysia, if you can comment on that.
Okay. Your first question is on the -- so you have to understand that, Oil India is a partner to the block with 44%. So they are also invested to sell this gas at the [indiscernible]. And then I told you that '25 onwards, that the Dirok gas stations will get connected to the national grid, then it will not be a local demand or demand automation will get into play a role.
So in the case, whatever the capital program, which we do in association with Oil India. And similarly, the Oil India's program also, all these additional productions can go to the market. So there should not be any issue on account of that. That's the first thing.
Second thing, we are expecting continuing the production of the second quarter from the D2 well. [indiscernible] that's what we believe in it. The third one you are talking about in Malaysian port. The matter is pending before the Gujarat oil port. So it's pretty rich and idea it is not fair to me to comment on. It is subsidies.
If you can just repeat that particular point on the Dirok, would it be coming back to your 28.30 MMSCFD considering that your customers are online for the Q3?
Yes. Once it is connected to the national grid, we should be able to have a substantial demand from this. Whatever the gas comes outcome that and that patients can go to the national market. So there should not be any constraint after that.
Okay. And for the D2 well, you mentioned that it could come back to around 1,000 barrels considering that we'll be having to complete 90 days of operations in Q3?
As we speak, it is about 1,000 barrels and about 5 million cubic feet per day.
The next question is from the line of Rikesh Parikh from Rokstud Capital LLP.
Sir, I wanted to understand what is the minimum offtake commitment we have with GSPC in terms of how much production we have minimal required to offer to them?
It is about 10 million cubic feet that's worth, which is a plus/minus of 10% over a period of 365 days. That's what I remember. [indiscernible], right? 5 million right now. But in the previous year, we have supplied more than 10 million, so the last.
The next question is from the line of Pratik Banthia, an individual investor.
So my question was related to the BATC. Like do we have any Phase II development plan for it? And are you planning any water injection to maintain reservoir pressure for the losses?
Thanks for this question. Actually, we are planning for drilling 3 additional producers as planned. That will be on '26, '27. And before that, we would like to see the performance of these 2 producing days. And after that, we will decide when any what injection refer or not, what injection will enhance -- there is [indiscernible], but that is -- that is still being examined by our team.
Okay. Okay. Got it. And just another question was both the wells produced continuously in the BAT field. Can you manage the 5,000 barrels per day as was expected initially?
Yes, I think that's our plan as such. But we should now activate the well D1 to get it at a better update.
The next question is from the line of Amrit Kabra, an individual investor.
Yes. So basically, my question was do you want to have inoperative. A, what time do you think will it get back on track? And is the management taking any steps that B2 well does not face a similar fate?
See, I told you clearly that D1 well is being lifted by Baker Hughes and D2 well is on production. So we are taking all possible precautions and whatever its report to be done, will be done.
Okay. Also, see, if we get both the wells operated at the same time, like they are operating together. Do you think we'll be able to achieve the target level of 5,000 barrels as you had expected initially?
I just now answered to another investor that we will be waiting for activating the D1 well and then we will be updating after seeing the well activated.
The next question is from the line of Ajit from Nirzar Securities.
Sir, I just have a follow-up question on the valuation of the inventory. Sir, how much is M2M charge this quarter and the same quarter last year in Q-o-Q, if you can give the numbers.
That's a [indiscernible] the last quarter was the increase or decrease in stock was INR 27 crores -- INR 26.87 crores, and the quarter 2 '23/'24 was INR 42.7 crores.
The next question is from the line of Prashant Dahiya an individual investor.
I think a bit of a muted quarter for us. But so I wanted to understand from you, we've recently seen in the global sphere, like Exxon making a big $60 billion acquisition of pioneer natural resources and a lot of M&A happening. Are we considering -- I mean, given the nature of the industry, I mean, we are in the phase at sunset industry over the next 10 to 15 years being a bit aggressive in terms of exploration, in terms of kind of looking at the resources section, right?
Are we looking at some global partners who can come take a stake in, but also bring in their expertise and knowledge, but also help us with the capital and generally kind of help explore the potential, which is out there? Because if these next few years are lost, it looks like a missed opportunity as well. That's one.
And the second thing on that. The government is also coming out with some new exploration licenses, right? Is the company looking to kind of pick up from new fees or new exploration areas or anything you can shed light on?
So I think it's not a sunset at the moment, it will take some more time, more time at least, at least 2 decades more. That's our belief. The second thing, we are always looking for technical expertise in the rest of the world. And as you see, most of our teams are producing and discovered one, except one, which is also lying between the [indiscernible]. That is an exploration.
So we believe that we can do a reasonably a good job. That's why we land up the work program, which you can see that 12 wells in the '24, '25, and 5 more wells in '25, '26, and 3 more wells in '26, '27. So the land of the work program to break a monetization of the discovered ones. And any opportunity, we will be looking at always. There's -- whichever the new license income and open up in the market, we will be definitely getting into it. We will be looking for more and more consolidation.
Great. And one last question. In terms of given the fact that we are very dependent now on these 2, 3 big fees and production areas, do we also take insurance for a production loss or loss of revenue or any means so that once you have established production, I mean, any loss should get covered, right, from that perspective?
Lost of profit policy is not available for the production. But if you have got an accident or anything happened on it that cause loss of production, that's covered under the insurance. So there is no insurance exists for it. But as rightly said by you, we are depending on the revenue of [indiscernible]. That situation we wanted to reverse. That's why we are consolidating on the block in the Northeast Kharsang to increase the production. And similarly, we are looking at PY-1. And similarly, we are going to ramp up the production from the Western region.
So we don't want to have a dependence of 2 blocks. It will be now more of 5 blocks from 2026, '27.
The next question is from the line of [indiscernible], an individual investor.
Sir, initially, our vision was to get the company debt-free by selling the oil parcel. I think we have some INR 400 crores debt, including the long term and short term, some taken last year December due to working capital issues and before that, BAP, which was supposed to be, I think, 3 months from the day of announcement.
So just wanted to understand when we sell this oil parcel, how much rupee will HOEC get as they usher, which would be reflected in the cash flow that you'll be paying back to the bank, leading to somewhat best pressure left on our company? That is my first question, sir.
See, it's not INR 400 crores. The total debt as on October '23 is INR 512 crores in the standalone and about INR 78 crores in the subsidiary, totaling to about INR 190 crores. That is the brand loans. These are the long-term loans and our total exposure on this is very much limited. So we don't have -- it is payable once in a quarter. So exposure is much, much limited on it and there is no issue on it for better using these loans.
Second thing, we are not going to borrow any more for further investments as those, it is mostly from internal approvals. And then if required, we will raise equity from our share holders.
Sir, I understand that when you sell the oil parcel, how much money will HOEC get in the cash flow?
That I'm answering to it. So whatever it comes, including our partners' payable adjustments and all, we should be getting at least INR 150 crores to us. That's what we believe in it. It depends on the price at the point of sale.
So I mean, I can assume approximate INR 150 crores. And will you use that to pay off the debt by any chance?
No, we don't want to use this because this is not a long-term bet, and we don't want to repay it at this stage. And we'll be only one time will be supporting us. And we already have a stable rating for about INR 500 crores for bank loan from India ratings. So I don't think it is all a lesser than 10% is the cost of funds. So we will be leading this loan [indiscernible].
My second question is I understand 85% of the line is already being constructed. So when coming to the remaining 15%, that will be how much kilometers, if you can help you understand?
See, this is about the line, which is around line of 18-inch line, which is connecting from Kusijan to the Duliajan, that is the gas station. Out of that hill area, that is the forest area, 15 kilometers has already been made. The balance 15 kilometers, we are acquiring we have to get the write-up way and some acquisition -- land acquisition was to get completed. And that is not going to stop our ability to sell the gas because we are requesting Oil India to make a tie in line of the already laid 15 kilometers in [indiscernible] where this can get on to the Oil India line.
So additional that 15 kilometers, we will need 2 workstations, one on this season and the next one next year, so that will get completed to the end of '24.
So if I understand you correctly, sir, the total -- the distance is 30 kilometers. Out of which, 15 kilometers, we have already placed the line, which we can reconnect to the earlier. Am I correct?
Yes, we will be connecting it to the Oil India line once after the 15-inch line is fully tested.
Okay. And sir, this will happen by March 2024, if my understanding is correct?
We are working on it as such it is not something block to us because if the demand comes up by the time we should be ready with this time line. And meanwhile, we are procuring the -- we are getting the necessary approvals and other things, sorry, not approvals, the write-up day and other things to get on to the balance [indiscernible].
So If I understand you correctly, sir, we have no issues now that we can produce 50 mmscfd on the Dirok fields because we are already done with 15 kilometers. And currently, 23 mmscfd we are producing, which can go up to 50 mmscfd without any workover or any further enhancement of the current way at the Dirok. Am I correct?
Yes, yes. Currently, we can go perfect to on as I said, we are going to work over.
It would be how much 2 months, 3 months? Any idea?
October, it will be validating about 15, 20 days. That will be per inch well. So we are planning more well in the month of March in the current financial year itself. So we will turn it back to back, we'll get completed on the first quarter of the next financial year.
So from this, I assume that the 50 mmscfd then you had like production from Dirok can start happening by second quarter of next financial year? With that [indiscernible] paper side?
As explained earlier, this is more of a demand driven, not supply constraint on sale.
But since we get connected to the national grid after getting it connected to the Oil India pipeline, so then that there would not be any constraints in demand, right?
There is no constraint with demand as per our geologic. We will do the material balance and we'll come out with that. We can go up to 70 million cubic feet per day.
Okay. And sir, last question, the FSO MOPU for BAT revenue would be the same, considering only one value is on? Or would we basically be charging only half of the revenue?
It is under full revenue most as long as the production is from the field.
So even if one well is on, we would charge full revenue, right?
You only we have got 2 wells. Now one well, we are producing 1,000 barrels and 5 million cubic feet. And we will be charging on to the 100%. So that will be $50,000 every day, if I'm not mistaken?
That is as per the rate, which we have already communicated that is...
And sir, by repairing the D1 well, would we be shutting down the BAT plant by any chance? Would that be a requirement 2 of shut down the plant when we fix the D1 well?
For activating the D1 well, we don't refer to shutdown the plant.
But for fixing the mechanical issues in the D1 well, do we need to shut down the plant?
No need to shut down. No need to shut down.
So that in -- so it is fair to assume that we will not be expecting any further shutdowns in the next 2, 3 quarters, coming quarters?
We will take it as it comes for certain unforeseen, foreseen. We can't predict so much, actually, oil and gas field operations.
And sir, now that we have Baker Hughes, is it fair to assume that [indiscernible] is no more with engaged with our company for maintain this profile?
What is it? I can't get your question? .
So now that we have hired Baker Hughes for study purposes and fixing the well or BAT. Is it fair to assume V NET energy from U.K. is no more associated with our company?
Each one is looking into their specialization. And Baker Hughes is a company where selling and completion [indiscernible] many things, dealing a construction contract. All will continue.
The next question is from the line of Rushabh, an individual investor.
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[Operator Instructions] We take the next question from the line of Jaishal Shah, an individual investor.
What are your plans to start production? And do you have a pipeline, which will again join to Dirok? Or it will again going to begin? How do you do planning for the pipeline from that production?
These are going through the Oil India line at the moment. So it will continue as such. So whatever the line we are having as such, it will get tying with Oil India line.
And how -- when are you planning to get the production up from Dirok or for Dirok?
So we have explained to you that there is a demand constraint. Once that gets sorted out, that all the 3 lines, [indiscernible] line and IGGL and the GAIL line are getting connected and commissioned. It will get into the national grid. Once get into the national grid, that should not be any issue. The demand constraint will get eased up.
In between [Foreign Language] gas issue. Has it been solved?
So that's an old issue, which we collected the money from that.
The next question is from the line of Mehul Panjwani from [indiscernible].
I have 2 questions. One is on fund raise. You did mention that right now, there is no need for capital for the company. But if there is a need instead of borrowing, you will be considering equity. So will it be private equity or will it be right? So can you please throw some light? I know that this is very tentative in whatever you would be sharing with us.
And also, what is the tentative timeline you would be considering for the fund raise? I mean, depending on the various well wishes, which you have already mentioned in your plan. That is #1 question.
Our capital program at the moment, as per our estimates, we don't need any funds for it. And this year, when the programs are going on, we start, we don't have the money, at that point in time only we'll look at that. So at the immediate future, I don't think any fund raising is planned. So we will be comfortable in carrying out the work program with internal approvals.
Okay, sir. Again, would there be any consideration maybe 6 months or a year's time or when do you be looking at this particular aspect?
I don't have any timeline on it. And we have a -- when we have the resources, we'll go it and work the program. We should also understand this is more of a discretionary capital. This is not a committed work program or minimum committed work going with the government or anything. This being a discretionary capital, we should be able to work with our internal approvals.
And still we need -- when we get a better results from the drilling of the risk and we wanted to take in the process further and shorten the duration there in. And if we need any money there in at that point in time, we will go to the inverstors.
We'll take the next question from the line of Manan Patel, an individual investor.
Sir, first question is, so from BAT, D2 well was expected to be primarily a gas well. But from the production data that you are sharing, it looks like a lot more oil is being produced. So can you throw some light on as the reservoir composition changed? Or is any expectations now different versus before?
And second question is, can you share on the -- what is the current level of production in Dirok? Without Indradhanush coming in, can we expect that 25 mmscfd sort of production from Dirok?
To your first question, it is the D2 well we were expecting there is a capital. That's why there is a gas production is retaining at 5 million like at the moment. It was initially higher. Now it is also we are maintaining at 5 million. That should be the [indiscernible] one for us.
And oil, we were -- initially, if you could see the test results, it was about some 800 to 900 barrels. Now it is doing better effect with 1,000 barrels. So what we need to have is at least a 2-year production data or at least continuous production of 1 year data to evaluate this -- reevaluate this wells [indiscernible]. So we are waiting for it. So our priority is to be active at the D1 well.
And the Dirok, as I told you, it is a volatile. Some day it goes to 0.8. It means about 25 million. Some day it's close to 50 million. It is getting average at 20 million to 30 million.
The next question is from the line of Rikesh Parikh from Rockstud Capital LLP.
Sir, in our previous release, we have talked about plant shutdown in this quarter. So anything planned for the BAT field in this quarter?
So in this quarter, assets, we may have hoped for a shutdown only when we are identified at DSC. But that will not be planning for this quarter, it will go only to the next quarter.
And last from my side, sir, the D2 production, I mean can it be increased because we were limiting the production of D1 and D2 initially because we are capping on that revenue share. So by any chance, is it possible to increase the production of D2?
So I think our people are working on it. From the [indiscernible], we don't want to increase the production. But we have to ensure the longevity. So we are producing over 1,000 barrels and about 5 million cubic feet of gas. That's what we will continue.
The next question is from the line of Aditya Parekh, an individual investor.
Sir, just a follow-up on my previous question. I just wanted to ask this time that you mentioned about the wax choking that could be anticipated by Baker. So wanted to understand if there -- would there be a intervention requirement? Or -- and if so, then what would be the expenses for it and when would that be?
So actually, we are waiting for the study completed by Baker and after that only we will get know actual.
The next question is from the line of Rahul Mehta from Envision Capital.
I have 2 questions. One is A -- when do you expect to commission the National Grid project? And second, you just said that there would not be a demand constraint after it gets commissioned. So what kind of difference we can observe in the numbers of the offtake in terms of financial year '24 in comparison to financial grid side after it gets commissioned.
'24/'25, we are expecting the [indiscernible] national pipeline of worldline, which will get connected to the IGGL line. So that will ramp up at least up to 50 million cubic gas per day. Once the IGGL find an 80-kilometer line, also the new line gets connected, then we will be able to ramp up power production to 70 million cubic feet per day. That will be from '25/'26. We believe that would be from '25/'26.
And there would not be a demand constraint issue after we connect to the national grid, right?
Continued natural gas as it comes to move out from the tariff system from Northeast to Gujarat or any other part of Central India, then I don't think any -- we are not able to meet the full national demand with our existing production of formation.
And when we expect it to get commissioned?
This one line, we are expecting to get commissioned by '24/'25. Another one line in '25/'26; that's what we are believing. And the first quarter or second quarter, that BNPL line may get connected to the IGGL. That will [indiscernible] demand issue. And the other line that capacity is about 3.4 million cubic meters per day. That's what I understand. The new line gets connected, that will ramp up to 3.5 million cubic meters per day for additional 1 million cubic meters per order.
So with this and the connectivity established at Central India with [indiscernible], then there should not be any demand constraints or so. That's what we believe in and we are working at.
The next question is from the line of Mehul Panjwani from [indiscernible].
One is how long -- I have 2 questions. First question is how long is we anticipated to be completed by [indiscernible]? That's the first question. And second question is on the demand. You just answered in the previous question that we have seen Q1 or Q2 of FY '24, '25. Can we assume that the demand constraints will be not there by September 2025.
I think your first question is about the demand constraint will not be there. If there is a connectivity established to the national grid. So they are commissioning 3 lines and that get connected and there will be an immediate resource of the demand that will help us to get us to our 50 million cubic meter target. And then the IGGL line up 180 kilometers, which is to be constructed, if that gets connected to Duliajan gas station, further about 1 or 1.5 million cubic meters of demand gas can pumped into that line.
Where is the proposed milestone? What calendar year?
I can't get you because you are not audible [indiscernible].
Am I audible, sir? Am I audible?
Yes, now it's better.
Sorry, sir. When is the first milestone in terms of calendar year for the demand that is out?
So the first milestone, we expect as such because it is not done by somebody -- by the government companies who are working on it. So what the indications given to us is on the first quarter of '24, '25 for the connection of the BNPL with the IGGL and to the GAIL line. And IGGL line is planned to start. They will start work some time in end of this quarter [indiscernible]. So that will come into action only by '25/'26. That timelines are depending on those companies who are working on it. And we get to know only from discussion with them.
Ladies and gentlemen, this will be the last question for today, which is from the line of Parshua, an individual investor.
Sir, I wanted to understand if the D1 well starts, how would you manage the pressure, like the pressure for the D1 and the D2 like could be a little bit of hassle for you? So any plans of how to manage it since you have all [indiscernible] with you on this call. Can you help understand?
Yes. We wanted to complete proactive at the well [indiscernible] . You know that what was the pressure earlier there on to it. Oil uptake should not be any problem because we have got 2 separators therein. But the gas uptick, where we may need a compressor, we may not need the compressor will be known only we fully activated for that.
Okay. And sir, this compressor that you're talking about will cost how much? Or you already have it?
No, we have been sourcing it. It should be less than about INR 7 crores to INR 8 crores. So less than $1 million.
Okay. So anywhere between INR 60 crores, INR 70 crores is a compressor. And you have already sourced it, right?
We have yet to source it. We are working -- talking to various people. First of all, we wanted to activate the well before we commit to the additional fact.
Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you. While we continue to focus on achieving the full production of BAT and Dirok, we will embark on drilling wells, Kharsang, Western Region and PY1 to develop these fields to careful potential. This will reduce our revenue dependence on BAT and Dirok. We will also increase and strengthen our talent pool to sustain the growth momentum and the associated challenges.
We once again thank you all for joining us today and wish you and your family a very happy Diwali. Thank you.
Thank you, members of the management. Ladies and gentlemen, on behalf of Hindustan Oil Exploration Company Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.