Hindustan Oil Exploration Company Ltd
NSE:HINDOILEXP
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Hindustan Oil Exploration Company Ltd
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Gentlemen, good day, and welcome to the Q3 FY '23 Earnings Conference Call of Hindustan Oil Exploration Company Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [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. Good morning, everybody, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of HOEC Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and 9 months ended of financial year 2023. 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 poor 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 it. Let me now introduce you to the management participating with us and hand it over to them for opening remarks. We have with us Mr. P. Elango, Managing Director; and Mr. R. Jeevanandam, Managing Director and Chief Financial Officer. Without any further delay, I request Mr. Elango to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good morning, all. Thanks for joining. I hope everyone has received the updated earnings presentation. We've also uploaded it on 14th February on our website for your reference. Our apologies for the delay in holding this call. I'm pleased to state that after successfully dealing with several challenges, we have finally managed to operate both the wells in BAT simultaneously. Since December, both the gas and oil wells are on continuous production mode, contributing to about 15% production growth at operated gross production level and 30% growth in net to HC level compared to Q2. Issues of topside facilities are limiting the production of well C1 to produce at its optimum capacity, HP separated is being repaired and any -- all other issues, if any, need to be addressed when the HP separate is put on production by our contractor. When we flow both the wells through a single separator, there are limitations to the volumes, it can handle safely. On a continuous basis, our operations team monitors the fluid flow and determine the quantity of oil and gas that can be safely produced in parallel, while HP separated as being rectified, the possible options to increase the production is being examined with the contractor. Since October, we have executed 2 critical operations at BAT. One, was to repair and replace sections of the [Andaba] and export poses and other was pumping sealant to address the loss of hydraulic fluid in [indiscernible], enabling D1 oil wells to be brought online. These rectification works have been executed safely by adopting innovative and cost-effective methods. As part of monsoon preparation, we have placed orders to change the horses after carrying out due technical assessment. This cost replacement work will be carried out pre monsoon and we are closely monitoring the manufacturing progress to expedite the delivery. Oil produced is being continuously transported to FSO for storage and the gas is being sold to GSPC through the ONGC and GAN pipeline network. When we recommenced gas production in November, after rectifying the [Andaba] resources, GSPC requires more time to tie up with consumers and were unable to immediately update the gas. To continue the production, we exported the gas into ONGC gas pipeline network, while GSPC was working on tying up the demand, and we expect that to be resolved within a few days. However, due to unprecedented gas market conditions prevailing at that time, they could do that only from 16th of November. Therefore, 3.78 among CM of gas that was supplied into the ONGC GAIL pipeline network remains in the GAIL network. We initially tried for dam to redeliver the gas for uptake by GSPC along with the December volume by offering to pay them the transportation and parking charges. Since that was not feasible, we have now offered the gas for sale to GAIL and the same is under consideration by GAIL. We remain focused on achieving optimum and stable production operations at BAT as well as possible by addressing the remaining process equipment-related issues and carrying out permanent replacement of hose system pre-Mason. Moving over to Dirok. At Dirok, we achieved an average gas sales of 33 million standard cubic feet per day during Q3 against 34 million standard cubic feet per day in Q2 and 25 million standard cubic feet per day in Q1. Dirok gas uptake has seasonal variations. Maintenance activity of any major consumer also impacts uptake adversely. The PPAC notified gas price was revised to $8.57 per MMBTU effective 1st October 2022. About 36% of Dirok gas sales was sold by us in Q3 at a premium price of $9.57 per MMBtu. Overall, in Q3, we achieved record-level revenues from Dirok. For the next phase of development at Dirok, pipeline construction work in the difficult forest segment has commenced and is progressing as planned. This 18-inch pipeline will transport Dirok gas to Duliajan Marketing Hub independently without relying on oil India pipeline network. This will enable connecting with Northeast gas grid in future, significantly enhancing the market size for Dirok Gas. We are closely monitoring the Dirok gas sales uptake rates at different seasons and at different price points. We are proactively engaging with multiple stakeholders involved in building the Northeast gas grid to achieve greater demand and consistent uptake. This and facilities have demonstrated capacity to deliver nearly 46 million standard cubic feet of gas per day. Depending on the demand, we have the flexibility to execute workover operations to enhance the production capacity further. Both in PY-1 and in Kassan, outstanding issues have been resolved with the government to secure 10-year PSC extension and formal PSC amendment is under process in Ministry of Petroleum and Natural gas. We are continuing the small volume of gas sales to GAIL from PY-1 that was recommenced in May 2022. In Cambay assets, while production operations are continuing, final execution of ring-fenced PSC for our 2 area by government is still awaited. Meanwhile, we are progressing the environmental clearance process to undertake a drilling campaign in 3 marginal fields of Cambay in future. I now invite Jeevan to share the financials.
And P. Elango,Ă‚Â we report that the company made a total revenue of INR 36.37 crores in the current quarter against INR 8.69 crores in the previous quarter in the stand-alone accounts. The consolidated accounts, it is INR 171.5 crores against INR 4.19 crores [indiscernible] -- is it okay now?
Yes...
We report that the company made a total revenue of INR 16.37 crores in the current quarter against INR 8.6 crores in the previous quarter in the stand-alone accounts. In the consol accounts, it is INR 171.56 crores against INR 25.79 crores in the previous quarter. If you take the revenue for 9 months of 2023, it is INR 38.39 crores, comparing INR 123.56 crores in the corresponding previous period. This increase -- this increase in revenue is mainly due to sale of 45 days of continuous production from BAT field. This has contributed about INR 30.96 crores revenue in the current quarter, comparing INR 10.34 crores in the previous quarter. Dirok revenue also increased about INR 11.7 crores in the current quarter. In consolidated accounts, about INR 45.77 crores increase in the current quarter comparing the previous quarter. This both MOPU and FSO are in revenue mode, which has contributed to the increase in the overall revenue. Stand-alone profit after tax is INR 15.92 crores against INR 6.57 crores in the previous quarter. This does not include the 15-days sale of gas, which Elango has explained.In 9 months accounts it is INR 56.7 crores in the corresponding previous period is INR 46.7 crores. In the consolidated accounts, the profit after tax is INR 37.33 crores against INR 17.7 crores in the previous quarter. The 9-month consolidated account is INR 87.39 crores comparing INR 47.2 crores in the previous corresponding previous period. In effect, continuous production from BAT is inevitable to have an improved and sustained bottom line of the company. The total expenses of all stand-alone, including the DDA is INR 9.48 crores comparing INR 75.2 crores in the previous quarter. Crude oil produced and stored is INR 16.5 crores, which is reflected in the stock adjustment. Cost increase is associated with the full operating cost of FSO for BAT fuel for 2 months. Other operating expenses are increased due to ForEx lag and loans mark-to-market about INR 5.68 crores and provision towards discoid production in contact with Isle. The total expenses in consol accounts, including DDA is INR 13.16 crores comparing INR 1,057 crore in the previous quarter. 9 months accounted is INR 28.9 crores for 223 comparing 75% come first period. Our operating costs accounted for 18 control accounts for NOK 223 INR 72.54 crores for Hathor's share. Finance cost and DDA in control accounting INR 81.86 crores for 9 months comparing INR 20.3 million crores in the corresponding previous period. The EBITDA in control accounts for this quarter is INR 81.37 crores, comparing INR 47.7 crores in the previous quarter. 9 monthly accounts for INR 222381.29 crores, combining INR 9.4 crores for all of the previous year. Consequent the commencement of production from BAT field gas well effective 1st November and both of was from 1st of December. All the assets are BAT, including the subsidiary companies on revenue mode. Most of the operating costs are not linear under fixed, which means turning our process to get better net realizable value to the company. Continuous production from BAT field and to produce a top level on completion of topside repair is inevitable to create value to the investment in BAT, including the assets of only own subsidiaries. Even with the current level of production and the prices, the company can meet all its obligations on achieving the optimum protection from BAT, the company will embark on drilling wealth in PY-1, having secured 10-year extensions for the block. Thank you, Anuj. .
Thank you,Ă‚Â Jeevan. I think we can now open the forum for questions.
We will now begin the question-and-answer session. [Operator Instruction] Ladies and gentlemen, we will wait for a moment while the question to [indiscernible]. The first question is from the line of Rohit Potti from Marshmallow Capital.
Congratulations for bringing VAT back on track. My first question was on BAT itself. So if we see the gross production number in the first slide, we have indicated that we've produced around 1,700 barrels last quarter. But in the BAT update slide, we've mentioned that the current flow is 1,400 barrels. So -- and the gas has gone up from 9% to 11.5%. So could you explain this a little more, sir? Yes.
What we explained what we are doing is because they are operating the -- both the wells to single test of separator. On a constant basis, depending on the fuel flow that comes in, we adjust the volume of gas and oil to ensure there's no sites are operated in a safe manner. With a single separator, we are not able to pull the full volume from the oil base. And while that is set right, you'll be able to see higher volumes from module.
So just to clarify, once the separator is fully online, we will be able to go from -- go to 4,000-odd barrels, which we have indicated in the past, right?
Yes. We will put the separator back in flow and then test it at different levels before we can confirm with the volumes.
Any time line on this that you would like to share right now, sir, because you said the full house replacement you intend to do by -- before the monsoon, but what was the test separator?
We are looking at a couple of other options right now with the contractors to see with the existing setup, how we can, by adding a couple of equipment, whether we can increase the production further. That work is still in progress. We just give us some time before we come back with the results of that.
Perfect. So that was helpful. And turning to Dirok, my understanding was that, I mean, as you mentioned in this call as well, we can produce up to 46%. And right now, we are producing only around, let's say, in mid-30s for the prolonged period right now. So why are we accelerating the setting up of the new pipeline at this moment and drilling of the 2 new wells to increase production to 55%. Do we expect the demand to increase rapidly in Northeast in the next couple of years because of [indiscernible]?
Yes. The answer is yes. And what we are doing really is the Phase 2 of the Dirok development plan really consists of drilling the wells and laying the pipeline, also setting up the distribution facilities in the consumer units as such. To move away from the dependence on Oil India facilities. Two things are happening in Northeast. One is the production from Oil India is increasing, therefore, relying on their infrastructure would create a problem for us in the future. Therefore, this pipeline is a very critical element on that infrastructure. So right now, as you know, from Kusijan to Duliajan, we are using Oil India pipeline. Therefore, irrespective of the scenario, even to evacuate the current production, we thought it would be appropriate to have our independent line so that we are able to target the market without any disruption. That is number one. We don't have any plans to drill the well. As you pointed out, the existing wells are able to give us 46 million cubic feet per day, and the wells have the capacity to produce even more. Perhaps if required, we will do some workover operations for which we have budgeted.Ă‚Â The third is in the 2-year time frame, we really see the not that grid being connected with various demand centers in different phases. The first phase is going to be to connectivity with Gohati. Right now, the gas can go up to Numaligar refinery through the existing pipeline network. And there is a pipeline coming from Numaligar refinery to Gahati being under construction. So once that is ready, which we expect in 12 to 18 months' time, that will be ready when Dirot gas can flow all the way to gate market in Phase 1. Subsequently, multiple demand centers are being connected, and we have the flexibility too. We will wait for the demand to build up first, and then if required, we will do the work or operation is required to increase the production from the existing wells and features the demand increases substantially, we will look at considering drilling well. In all scenarios, this 35-kilometer pipeline is a very critical part. And what we have done is we have started laying the forest segment only. That can be done during this season. That is the most critical and difficult part of the pipeline network, that's what we have doing.
Sir, my last question is on the capital structure right now. So with BAT producing at the current levels, and we have other CapEx set up. So could we give us share a summary on the working capital issues that we faced in the past. So what is the priority? Is it debt reduction to 0 and continuing to have the INR 100 crores cash on the books before we embark on other CapEx. So what is the management thinking of in terms of the balance sheet and the capital structure right now? And could you also address the capital raise that we were talking about in the last couple of quarters? Are we going ahead with it? Or are we doing away with that idea for now?
Rohit, you could have seen the accounts, we have raised INR 100 crores from the INR 100 crores from the bank to tide over all the working capital issues. We have no working capital issues anymore. -- having -- we are having -- we have now have -- we are having a BAT production and at the current price, at the current level of production, we will be able to meet over all our obligations. And assets, there is no capital program at the moment other than PY-1, which will start planning for it at the end of this year. But once a monsoon, because you should have seen that the monsoon is in East Coast, the picks up in the East Coast. So we -- once the East Coast monsoon is over, we should ready to drill some wells in the first well in the PY-1. So as I put your question right now, we are organically, we will be comfortable with our position of cash generation to meet all our obligations, including the discretionary capital.
Ladies and gentlemen, in order to ensure that the management will be able to answer questions from all participants in the conference. Please limit your questions to 2 per participants. [Operator Instructions] The next question is from the line of Hardik Shah from Taurus Mutual Fund.
Congratulations for successfully confirming the BAT side. So my question is that, if at all for some reason, if we are not able to solve the remaining problems of BAT before the commencement of monsoon, sir. Can this be done during the monsoon, the hose pipe and the separator, which you have mentioned, sir?
I think it should be done on then, because this has nothing to do with the monsoon as such. This is a repair work carried out at the also base form. They should be able to continue with that.
Okay. So even if, sir, we have missed the weather window. Still, we'll be able to operate and will be able to scale up the production. Is that correct, sir?
That's our endeavor asset.
Okay. Understood, sir. Sir, my second question is, sir, that if you could share some number in terms of what is the current number of barrels of oil, which we have stored. And what is the first delivery expected time line, sir?
As we speak, we have about 142,000 barrels in stock. And our first uptake plan comes once we reach to a level of 250,000 barrels. And the parcel safety expected to be in the other of 200,000 barrels. So 50,000 barrels would be in stock all was. So that's what we plan for it.
The next question is from the line of Daniel Desai from Total Capital.
Sir, the first question is regarding the sales which we have not booked this quarter, which was in the ONGC pipeline. So can you elaborate a little more on that, whether the custody transfer has happened for that gas to the buyer? And if not, then whether that gas is still at a line pack in the pipeline or it's been told to somebody and yet to be settled in terms of accounting, how -- what is the situation?
Let me just, for the benefit of everyone. The gas that we produce in gets treated in the -- in our facilities than the treated gas initially gets connected to the ONGC pipeline. That is from the Bombay High to Hazira terminal of ONGC. It goes through the ONGC pipeline, we pay a tariff to ONGC for that transfer. Now after it gets into the Hazira terminal, ONGC, Hazira terminal is connected by the HPDA pipeline of GAIL, when it gets custody transfer to GAIL in 2 streams. What is going to see gas and the remaining gas is treated as the HOEC gas or HOEC gas as received by ONGC and the remaining gases to each other on ONGC gas. Then GSPC will have to book capacity in the GAIL pipeline in advance to lift the gas from GAIL system by GSPC paying whatever we say, tariffs today. And then GSPC in turn delivers the BAT gas to the end consumer. That is the system. It has been working very well. Though it's a fan complex system. We have a contract with ONGC and we have a contract with the GSPC. We do not have any contracts with GAIL because we don't deal with GAIL as far as this distribution network is concerned. When we recommence the production in November, and so we could not give GSPC adequate advance notice. But we told them as soon as the production started, we informed them. They said just give us a couple of days' time to tie up with the customers because you have not given us the adequate time. But they could not conclude with the buyers or book capacity till 16th in November. So from 16th November onwards, all the volume that we produce go through the same system and GSPC has been taking the gas and making the payment to us. But the volumes, about 3 million cubic feet that we delivered in the -- that has gone from the ONGC system to the GAIL system. Our first approach was to contact GAIL and told them, look, we will pay you transportation and parking charges, you redeliver the gas to GSPC being listed along with the December Unfortunately, in the current scheme, there is no parking concept, and that was a time where there was excess supply of gas in the market. So there was the huge -- there's no facility to store. But both ONGC and GAIL acknowledge that this volume is not going to see gas and they acknowledge it to be BAT gas. The subsequent once we count, which is not feasible for GAIL to redeliver the gas to us for uptake by GSPC. We have made a formal offer to GAIL now. You take the gas. You buy the gas. That offer is under consideration by GAIL. We are waiting for them to confirm and conclude the transaction. So right now, the volume is acknowledged what we produce, what volume received is acknowledge and GAIL acknowledged that, that volume has been delivered into their system. Since we do not have a contract with GAIL, it has taken more time and because it has to be a retrospective contract, GAIL has certain formalities to conclude.
Okay. So sir, just a follow-up on that. So essentially, it means that the volume that went into the HVJ was eventually supplied by GAIL to somebody, but we have not yet built for it because there is no contract between GAIL and [indiscernible] , right?
They've not supply to somebody because it is a long pipeline. So there is a gas in the fiscal, right? It just needs to be reconciled with GAIL.
The next question is from the line of Riddhesh Gandhi from Discovery Capital.
Just a couple of questions. If we were to understand the revenue recognition from the BAT, which we have done in Q3. And obviously, given we are restoring the oil and this entire in ONGC gas and GSPC we started operations only some point in November. How does this is kind of compare to the existing run rate in Q4 right now of...
It's either in volume or revenue or however we want to show that. Even in the existing production as a base, so that is for 1.5 months virtual revenue. Now it will be double of that in the current quarter.
Got it. But even in this entire level, like actually 1.5 months where we were operational, the oil was not sold, right? It was stored.Ă‚Â The gas is in the pipeline. So I mean, would that actually be less than actually half then in terms of the normalized run rate at this rate of production?
Yes. I agree with you that we should add additional INR 6 crores for the gas itself and the oil would be around, say, INR 20 crores. So we'll be adding additional INR 25 crores more than that.
Got it. So I understand if we look at the BAT, it's another INR 25 crores from just the unbilled stuff and then I mean double it in terms of the production.
That's right.
Got it. Sir, and just from a separator angle, just wanted to understand the reason for the delay? And I mean, are there other options that we can just maybe start from scratch? Or will that take longer? And if you could throw some light on to some of the issues and how quickly we expect to resolve it?
If you know that actually what we are producing at the moment is from a test separator. This separator is designed for us about 4,000 barrels of oil and about 7.5 million cubic feet of gas, which setback with the separated pressure thereon. Now we look at both the wells. One well is about 2,850 PSC another well is about 1,900 PSC There is a differential -- the velocity difference is too high. If you increase the production, then what will happen, there will be an oil carryover into the gas derision unit. Then that is a big one, then we cannot be able to continue, then we have to start the production. So our guys, what they are doing at the offshore in a manner that maintaining the gas supply and what is the maximum quantity of the oil they can pump it into the system assets. That's where they come out with the level of 1,400 barrels and about 11 million to 12 million cubic feet of gas, which is that they can optimally produce at the moment with the test separator. Once the HP separator comes in, the volume is high, then we will be able to pump more of oil. But there is a limitation because the issue is more towards the velocity difference. So there is working on the different permutation combination with the process engineers in India and with the contractors and abroad to work it out to put both the wells to its optimum capacity. That is being worked on it. So once HP separator comes, we'll put both the Wilson production. We will be in a better position to understand and optimize both avail production to its tested capacity. At least little lesser than the tester capacity. That's what we believe in it and we are endeavoring to do it.
The next question is from the line of Rohit Suresh from Samara Investments.
So my first question is, could you just indicate the current volumes in Q4 in Diroc and how is the demand going forward for this quarter?
The Diroc uptake has been in the 30s right now. And so we expect the same trend to continue unless any major shutdown by any of the major customers, then that it over.
Got it. Sir, and my second question is, right now, at what price are we supplying gas to GSPC, is it at the existing contract? Or is it around $12 to $13 that you mentioned in the last call?
We are supplying at the existing contract.
Okay. Sir, and my final question is on the QIP. So I read we raised around INR 100 crores in working capital. But in the last call, you had mentioned that we may need around INR 150 crores of additional capital for the development of other fees. So do we plan to raise that also in the future?Ă‚Â As you mentioned that PY-1 maybe drilling wells post the monsoon. So will we be raising INR 150 crores additionally, any plans on that?
With the current cash flow, we don't need it.
The next question is from the line of Tejas Shah from Unique Stock Broking.
Can you explain the revenue from Dirok for the current quarter? And also the expenses are Dirok, I understand earlier was that the expense on the Dirok only $1 for doing the production and expenses. And also, if you can share the BAT revenue breakup wherein at 400 barrels of this point and also the gas price, I think this is at 22% of the earlier person was 22% of the oil price of average oil price starting dollar.
Okay. You asked the first question on the Dirok revenue. Dirok revenue, the gas revenue is about INR 55.62 crores. And the condensate is sold because nothing is stored there. That is about INR 8.6 crores. And the total revenue generation is about INR 74.25 crores for the whole quarter or the full quarter of 3 months, right? In BAT, gas was about INR 31 crores for 15 days production. The staff we are having mark-to-market is about INR 16 crores. If you look at both the things, it should be around INR 47 crores, right? And the revenue...
Of INR 7 crores is for... 15 days... Sorry, 45 days because... From Right? That is including the stack. And...
That's what I said.Ă‚Â If you take the MOPU and FSO we make about INR 51 crores sorry, INR 61 crores. for our revenue for higher charges from BAT. Okay. So that is the revenue base. Managed revenue base comes from these 2 blocks on is on the data, Kantonen the DAT. So that's what we said. The continuous production of the BAT, we'll be reporting better numbers. Okay. And the prices, if you can share, which is the 22% or is at high...Ă‚Â Now that BAT prices, we realized was for the November, it is $13.55 gas price, and they were not having an uptick because up to 31st March, it is a best endear basis. So they have not honored the price as agreed in the contract. So this is based on the exchange -- price gas exchange price of $13.55. November, it is $14. And December also in the range of -- sorry, November is $13.5 December, it is $14. And January, we got back to $18. That is January and prices based on the brand 22.2% of the pure price...
Is from March by before, they will be honoring that 22% concept
Current...
So first April now the first plan. Now the next question was, sir, on the test separator, there's still no clarity why is it taking so long to replace that higher purchase that separate? Because what I understand from your answer is still I'm not getting the clarity whether the separator is going to get replaced and repaired to cure, and we are still looking at other alternatives in title.
I would like to state that the total rate of the HP separated is about 8x. It has come to the offshore now sitting in the offshore. We don't have the train facility to lift it 80 tonnes to bring it sure and getting it done faster. Now what we are doing at the moment, the contractor is doing not, we are not doing it. The contractor is getting a group of people, and they are doing the repair works in a slower and steady manner. The reason for that was safety because one side, we are funding oil and gas. On the other side, we are doing the repair work. So that's why they are cautiously doing the work and it is a bit slow on. So once the completed job, then -- then we have tested, hydro tested for at least 6 to 12 hours to find out that there is no need for the league in the HP separator. So that's why it is taking more time than what we normally do in an onshore about less than 15 to 30 days.
The next question is from the line of Manan Patel from Airavat Capital.
Congratulations for BAT. So sir, first question is regarding the report of [indiscernible] committee. So they recommended changing the pricing formula to 10% of the bread. So will it affect Diroc production from April onwards? Or how do we look at it?
Yes. Whatever -- BAT will not be covered. BAT will go with the e-auction determine prices. And once the firm commitment comments from 1st April, we comfortable we'll go back to the contract price model. Diroc is the rough market, the Northeast market is used to the PPAC price. Therefore, any changes that the government makes in that would kick in here. But you remember what we have done a separate action for belongs, where we had said premium volume will be sold at the PPAC price plus $1. And what we are seeing is in an average after the volume that gets taken about 40%, we are able to sell on a premium basis. Once we lay our own pipeline, we expect those volumes to increase as such. So the short answer is, yes, the PPAC price will have an impact in Northeast, but we will continue to explore the market determine prices to marginally increase our realization.
Understood, sir. And sir, second question is regarding the whole placement that you are planning and manufacturing is going on. So when you replace the hose, the production will need to be stopped or the production can go on and you will replace the whole whose primary...
The hose replacement is only the floating hose and under the recent under bios. It should be a stoppage of production for at least about 1 or 2 days, not more.
The next question is from the line of Hitesh Doshi from Nadra Securities.
Sir, will you please quantify the additional expenses incurred so far in stabilizing and repairing the oil well since we announced the technical shutdown and how much increase in cost we think will remain and how much was one-off in nature and what is the operating cost we are incurring for oil and gas from...
So we see that the oil well, we have not incurred much cost. The cost income for the well is about GBP 75,000 we paid to the U.K. company for comping the sealant and arresting the class of hydraulic floors to open the wall subsea opened the wall at the bottom, we use the ONGC lesson for a day. That is the one major expenditure of about INR 1 crore. These are the 2 major costs relating to the repair of the oil well. The next question is about operating costs. Operating costs per day is more or less fixed, which is about $140,000 per day. Out of that $98,000 is coming back to HUE through its subsidiaries for the FSO and MOPU. The effective third-party cost in this log is above $40,000 a day.Ă‚Â Okay. Anything more?
I mean, I'm not asking just about the oil well, but the other cost in now delay of the BAT overall entire cost, whatever...
I agree with you because the wells have not been put on optimum production and that is a constrained assets. And the second thing is the repair work is being carried out by the contractor, not by us. But at the same time, we are incurring the cost towards our supply boats, helicopter, and the transportation cars is incurred by us, which is in the dollar of around $40,000 per day. Without considering the last being suffered by us on account of the [indiscernible] ability of revenue earnings.
The next question is from the line of Mayur Patel from Equirus Securities.
A couple of questions. One on BAT, let's you stabilize the separators and everything. I think as per the earlier discussion you had one more real to do that, right, in the second phase and you earlier mentioned that the next priority [indiscernible] the next couple of months.
Sir, your audio is not clear. Maybe request to use your handset to ask the question.
Yes, is it better now?
Yes, sir, please.
Sorry. So do you want to drill a well in Q1. And after that, you will go for another will drill in BAT...
Mayur Patel,Ă‚Â the fact is that we need BAT continuous production of 2 years before we're embarking on the third one, right? So we have not started. We have just had a continuous production of only 3 months, right? So that's why the BAT program will come after 24 months continuous production of both the wells to its action capacity.Ă‚Â Y1, we will be embarking, -- we have completed the geological model, and we had identified the locations. Now we'll be embarking on sourcing of the materials based on the well planning, phenomenally well planning and sourcing the material takes about 6 to 9 months. So by the time the end of the -- this monsoon is over from the West Coast and the next monsoon comes to the East Bostan East post monsoon is over. We'll be ready to drill the first well in Dyn because we have got now 6 to 10-year extension of the block.
Got it, sir. Sir, second question on this M80, our contract with SBCs for 2 years, starting from April 22. And as I remember, the first year is on a best basis and second is on a firm basis, right?
Correct.
Okay. So in the second year, we will start getting in the 20% of oil price, right, at the brand average price of the previous month as a realization.
Correct.
Okay. And in that case, what is the minimum level volume which we have committed to the GSPC for the gas?
The volume is 10 million cubic feet for the sale lakh cubic meters per day. And we have what is called a takeout pay, which is 75% of that volume. I mean if I don't -- I mean if they don't take it, they still have to pay if I don't deliver that volume, I have some penalties to such -- but this reconciliation will be done on an annual basis. So the whole idea is to ensure that sell the volume at the contract price and real as well.
The next question is from the line of Rikesh Parikh from Rockstud Capital.
Congratulations for getting the BAT on track assets. So just a couple of -- most of the questions -- my question is answered. Just a clarification, this 3.7 Mcf of gas from GAIL, which is probably the value will be around INR 6 crores order as such which is not accounted in the numbers?
Yes. We have not accounted that number because we have not raised the sales in months. Even we take the administrative price for the volume we supplied, we should be getting for over 60%, we should be getting a net of around INR 60 crores.
Okay. And second thing on the oil, what we have valued at INR 16.59 crores. So that is at market value or how have we valued at in our stock? It is market-to-market.
Market.
And lastly, on PY-1 development plan. So what is the kind of CapEx we will be looking at next year because we are planning to drill one well in the next year. So what is the protect CapEx we'll be doing looking at it?
As you all know, that is a discretionary capital, we will be -- because you know the block, we made an investment of about INR 1,800 crores and since beginning. So we have to do a capital investments. First, we will be drilling one well that would cost us around INR 65 crores. if the well is successfully tested, and it is -- the test results as per our agnosis, then we will be embarking on the next 12. So likely to be able to plan to drill 3 wells together because we assume that first is successful, we'll go to the second one, the second many successful we go to the third one. So then it will cost around $25 million to $30 million. Once that work is get completed, then we will connect all the wells through subsea and connect to the platform. So if you put together all been will be making a stage investment on such dry success basis, about $50 million.
And then last one on the YC-1, the current rate of 3.67%, what we realized is lower than the government formula. So I mean any native on a fixed price basis and are we able to sell the full capacity over there?
So when the new discoveries are happening, the prices are renegotiable and we will be getting back to the best price in the market.
A reminder to all the participants kindly limit your questions to 2 per participant. We have the next question from the line of Ravi Sundaram from Sundaram Family Investment.
I just have one question. Maybe this is already clarified. In the Q3 numbers, have we accounted for oil and the reported numbers?
Sales number is the obviously that it is a start adjustment, it gets reflected in the accounts.
Okay. Just to clarify on that part, I think earlier in the call, you said we have so far had a contribution of INR 25 crores in Q3 from BAT and roughly double in Q4. Is that a fair understanding?
That's right. If you sell the oil, if you could -- one of date makes a lot of difference in the company. That's what we ended in to do. So currently, we have about 140,000 barrels in stock.
Okay. Okay. And last question, was there any seasonality in Q3 from Dirok? And are these numbers sustainable for Q4 for Dirok?
Gas in January, we are -- have seen similar uptake. So we've not seen any major changes. It is in the 30s...
The next question is from the line of Vibha Batra from Honesty Integrity Investment.
So I think earlier you said that separate work can go on even during monsoon, but what we need to do is the hose replacement that need to be completed before monsoon. So and I think you also said that this -- you place the order and you're monitoring manufacturing. So are we going to import the who or the -- our contractor is taking care of that and he will import on his own and basically, he will then do the house replacement?
Hose replacement because the existing houses are holding at the moment, the new horses comes, use will change the floating hose. For that, it is -- with the existing ONGC we have got on DP1 vessel with that we will be able to do that. On the under by host, we need support from ONGC. We'll get a DSD and with that, we will replace underbuy hose. So when we are doing a revised to moving analysis by the guys in the net energy in Suba. With that, we will be able to put a new system in place in such a manner that we don't get affected by the monsoon.
Okay. Okay. And so is there a complication in case earlier you indicated you're monitoring manufacturing of this new one. So I just want to understand, is there a complication in the design of the roles? Or is it very complicated to do the day and get it here?
What -- I mean, just to clarify this #1, whatever is the topside work -- that is being done by contractor at is cost. It has to be separated and deliver to us. And as Jeevan explained, that will continue -- I mean we really expect it to be over much before monsoon. Even if during monsoon is something to be done, that will continue. So that's no weather-related issues as far as top side is concerned. And as Jeevan explained, it is lower because we are in trying to do it in offshore, and we have to do it safely, but there is ongoing traction. As far as the whole replacement is concerned, these are long data. We have played broader since it is very critical for us to replace it before monsoon. That is why we emphasize that we are closely monitoring, and we are on track to do that before monsoon.
Okay. The next question is from the line of Rohit Suresh from Samata Investments.
I just had one follow-up. Can you just give some clarity on the revenues from D1 oil well in Q3?
See, D1, we cannot segregate. Now what is happening is our production, our uptake is getting limited because from the well the D2, I cannot produce to its full level, the D1, I cannot put it from the full level. That's the reason you see the gas production of about D1 about 5 million. And the D2 is about $6 million, where the D2 can go up to, say, $12 million to $13 million on its own. So this being the case, actually, that what oil produced from the D1 is about INR 70 crores. And the gas you take the revenue of that would be from D1. But it is more of an allocation -- theoretical allocation that that's not a practical way of looking at is offshore.
So at 1,400 barrels that you said at the current level that we can produce. So what will be the revenues for a quarter if some indication on that? Like assuming we can...
Based on the oil prices, you can multiply price...
So INR 1,400 crore will be -- we can assume INR 1,400 crore for the quarter, right consistently... That's what...
Yes. That's what we have...
Okay. Sir, and just one more question. So just to summary I just wanted clarity on apart from the got that we have to replace, that is only dependent on the monsoon, right? All the other work can also be done even when the monsoon season is, right?
Yes. Correct.
The next question is from the line of Gaurav Shah from Harshad Gandhi Securities
So my question is on average price. So sir, in respect of Dirok, we said that 32% of sales has been at 9.57% per MMBTU. So what about the balance, 68%?
Balance is sold at the PAC price of $8.57 per MMBTU.
Okay. And my second question is in respect of Carson segment. So I understand all the pending issues with government have been resolved, right? So by when do you expect the production can be like increased to 1,800 BOEPD from the existing an [indiscernible].
So the -- in CASA, the joint venture has submitted a field development plan to drill additional wells, which will take the production to full potential. That has been approved and the remaining cost facility-related issues. Part of them have been resolved and the other part, both the government and the contractors has agreed to refer it to a Dispute Resolution Committee. So that is -- I'm paving the way for execution of the 10-year extension. So the first thing is for that to happen, which is a format now. And then the contract there -- I mean the operator will propose a drilling campaign that will be reviewed with the government, and then we will undertake the drilling. Before that, somewhat jobs will happen to increase the production. So we -- once the PSC gets extended, then we will be working on those programs.
So can we say after 6 months all this can be achieved?
No, no, drilling wells will take much more time in that region. We'll give you once that comes on with a clear plan, we'll give you an update, maybe in the next.
The next question is from the line of Sunil Lapa from Lotus Investments.
Sir, congratulations on bringing BAT back online. One more follow-up question regarding the test separator, would you give a time line to this repair of the separator? If not for the other options that you're considering, not if we are looking at only the repair of the test operator, would you give a time line for that?
Really, we don't want to give any time line because in the past, whatever time when we gave, we were not able to meet that. All we can assure you is we are doing everything we are listening at every option to achieve it as soon as possible.
But will that also take till monsoon or we can expect, say, by the first quarter of next fiscal.
We are doing all of the best possible efforts. And as one said, completed written because the contact is working, there are 54% to on go the facility at the moment. Now we have to leave them. We cannot pressurize too much on them considering the safety issues.
I understand I understand. I was just wondering if this would take the same time as the post maintenance or it can be done earlier.
We have been pushing the conductor to get it done earlier. For us, it is always yesterday. But we saying it is always to model. That is the problem. We will oat...
So hopefully, it can be done sooner than the monsoon.
Yes.
The next question is from the line of Vasu, an individual investor.Ă‚Â Mr. Vasu, I have [indiscernible] your line, proceed with your question. As the current participant is not answering, we move on to the next question, which is from the line of Rahul Shah, an Individual Investor.
Yes, just after listening to everything. Just a question on your -- can you provide any outlook in terms of revenue growth for the next financial year. I mean, so far, the trajectory has been really well in terms of quarter-on-quarter and even year-on-year. So if you can provide any guidance earning outlook, it would be the region. Thank you.
I think we will airing any tons at this stage focused on giving you
A reminder to all the participants kindly limit your questions to one per participant. [Operator Instructions] The next question is from the line of Parag Korian, an Individual Investor.
Yes. Congratulations on the company's performance is open, sir. I would -- my major questions have been addressed. I have just a single question. So when are we going to reassess our results? And what is the current status?
We will announce -- we will do the reassessment as we do as we enter the financial year and provide as part of annual statement, we provide as we do that...
Okay. Got it. And what is the current state? Okay. Okay.
What has happened, BAT, we have already announced the results because only a very minimal production there on towards. We don't have any the supportive data to reanalyze the reserve assets at the moment. As an ongoing exercise, we will -- our geologists will be working on from 31st of March. And before the declaration of the business, they will give the result numbers. That would be included in the cuts.
The next question is from the line of Vivi Dusian, individual investor.
Yes, congratulations for a good set of numbers and all the effort. Okay, to get the production that... 2 questions.
[indiscernible] your voices. The audio is not clear. I would request you to use your handset to ask a question, please.
Is it better now? Yes. I just wanted to note that given our various deals are under like various schemes of production sharing at all. Can you give us some idea or a metric in a presentation at all as to in future or now that what are the variables on which the pricing is determined. Like for the BAT gas, it's 22% or percent of Brent or somewhere into the gas exchange prices. So can you just throw some light on like how should we estimate like crude moving or gas moving. So how do we estimate changes in revenue? Just my idea in the presentation for the future to sell the feedback. And My second question is just a quick question. The second question is that what are the material events that you will be reporting -- like if the teeter gets fixed, can we expect an announcement? Or like -- so just can you just give us like what are the events that -- that you are going to announce as material so that we can look out for that and not wait for the next quarter results. So can we give some clarity on that. These 2 things.
I think on the pricing, if you really look at it, the major production for us is coming from essentially Dirok and Bestari -- as far as the DDA is concerned, it is primarily a gas field. So the gas prices, whatever is a published PPAC price, which is revised by the government once since 6 months, and that is the price that is prevailing for roughly about 40% of the whatever wanting we report, we're able to get premium gas, right, which is $1 more than the PPAC, that's a pretty slight forward publicly. As far as BAT, you've got oil, you've got gas, oil is as you are explaining -- we've not sold any oil, oil produced is stored in our facility. And every quarter, we report based on mark-to-market basis. And once we have a tailable parcel size of oil, we would engage with the refineries and conclude parcel sale as such, a single parcel, as Jeevan was explaining about 200,000 barrels of parcel size that we are looking at.Ă‚Â So oil prices, you can always track on what is publicly available internationally traded prices. There will be some discount to that when you actually enter into a sales contract. Our gas price for BAT is straightforward. It is 22% of the Brent price inverted we converted on a memo basis, which will kick off from 1st April. But during this best endeavors period, when the prices are around either take that or the another alternative way of determining the fat prices in the gas exchange, which is also reported, and we gave you the numbers as such. So roughly, you can -- we can keep watching the Brent price and 20% of that is for the gas price of BAT and some discount for that -- for the oil side. And you have a good suggestion. We will update our investor presentation with those pricing formulas in the next update. As far as material event is concerned, we follow what is the general norm followed in the industry. Then there is a major shutdown due to any reason, lasting for longer. We will provide update. And in the past also, I think all of you one positions why you don't update immediately. The whole reason for that was we just wanted to put the well and see that there is no other problem occur to put it on a continuous production mode and see it stabilize before we update. Otherwise, what happens is we say it is producing net volume. And after a couple of days, if there is any issue, then it becomes a difficult area. The first thing is the test follows once we are very sure that the -- that there is a sustainable increase in the production volume of any of the main reason we provide the update as such. So I think once it stabilizes, which we hope soon it will happen, then we are.
The next question is from the line of Jangu Pita, an Individual Investor.
My question is regarding the Dirok marginal field. The drilling program is going to be only in Polish field and what is the production is there from Palash? Second is, our PY-1 field, are we producing gas now also is completely shut? And thirdly, sir, is PY-3, any development is there because it was a producing fill, which has been shut for more than 11 or 12 years if I'm not mistaken.
The PY-1, we are currently producing about 0.9 million cubic feet gas. It is not completely shut down. And the PY-3, we are not operating, you know that well. And then marginal fees, we have got in name are planning for the environmental clearances, and we are going for drilling those cells. Paliou current production has gone some 80 barrels and one, we need to have a cluster drilling. That means we have to build a number of wells. So that's what we are planning for it. And whether we do it in-house or through somebody else, we will decide at the late stage, our priority at the moment is putting the BAT on a full production mode and then go to Kevin and then come back to Western.
The next question is from the line of Uday Warensha, an Individual Investor.
I just wanted to know if there is any update on PY-3. Currently, the operator has secured a space. So just wanted to know, I think by end of this year, they are planning to put that in production. So is there any view from as we are also a shareholder in that?
Yes, we have 21 person stake in the company. And we have to decide desirable any development plan comes on it. We will, at that point in time, decide whether to participate or not provided it makes a commercial value to us.
The next question is from the line of Karan Meta an Individual Investor.
Hello. Sir, I just have one question. So if we assume the current rate for DRO PY-1 and conservative numbers for BAT oil of around 4,000 barrels per day and 12,000 MMBTU of gas operating nearly for 330 days. Can we achieve the INR 650 crores of EBITDA, including the INR 150 crores EBITDA from MOPU and FSO?
Probably your number is right, but we have to have that all the parameters, which you said should be achieved.
Okay. Okay. Yes. And sir, just one small suggestion from my end. If you can just update the production volume from all fields on a monthly basis. This will really help the investors get a good clarity on how we are progressing.
I think we have to go with the reporting standards followed by the oil and gas companies. We are small. We are talking about, say, the 6 to 8 plus 4 and another well production is there, and we cannot update on a monthly basis. That's the reason we do it on a quarterly basis, which will continue to do on got.
There is a follow-up question from the line of Tejas Shah from Unique Stock Broking.
Sir, on the top line, with the INR 106 crores. So you said 70 or 65 some drop the from -- I think, other things from Dirok, what is the rest kind of top line versus there?
Can you repeat the question, please?
On the top line, the BAT is giving us INR 65 crores by Dirok, INR 8.65 crores from condensate and the stand-alone numbers, what else top line is added, means this is only adding up to around INR 75 crores odd. So the balance INR 30 crores is coming from where.
See, we have talked about -- see, the total revenue, if you look at, it is requiring not only from BAT is coming from BOI Dirok and can be put together the revenue is made up, right? So you look at BAT is INR 68 crores and PYR6.15 crores and Dirok is INR 182 crores and can be INR 4.3 crores. This is what the revenue breakup for the total year. I mean 9 months.
The next follow-up question is from the line of Riddhesh Gandhi from Discovery Capital.
Just a question. So just a clarification question. So in terms of the equity raise, given now we are producing from a BAT is the equity raise on hold for the moment? Or are we still looking at an equity rate?
It's an enabling resolution and -- as I told the entity for organic growth, but meeting the applications, we don't need additional equity at the moment.
Great. And just a clarification with regards to in terms of this rate kind of how much would it be if we just decide to, let's say, order like you and how long would it take? Because I mean, obviously, this has been a reasonable amount of the challenge, and it's obviously impacting the production levels. Is there any other way to expedite it or maybe just restart it at repairing it isn't going to happen in a reasonable time frame?
I think we've answered very extensively on the question. I don't think we will look at creating a new order for a new separator state. We're not -- we don't find -- we believe we'll be able to fix the problem. Only thing we don't want to commit to a time line at this stage, we are doing everything possible to be on.
The next follow-up question is from the line of Rikesh Parikh from Rocket Capital LLP.
Sir, just want to clarify, I mean, sir, we'll be realizing our first oil revenue in this quarter the understanding side?
See, I think this is having 2 factors. One, we have together production to reach the volume of 250,000 barrels. Then at that point in time, what is the price we will be getting on there because we have a storage capacity, which is in dollar of about 900,000 barrels. So that is one of the things available to us. We can market at the right time at the right place.
The next question is from the line of Vashu, an individual investor.
If I have understood it correctly, the hoses are being ordered by Hindustan all exploration, Am I correct?
No, it is not. It is called -- the order is made by our subsidiary company that is indeed kind oilfield services. This is -- this cost is a CIM of compliance and then that will be inspected during the manufacturing, and we are planning for a factory acceptance test and after the well mobile to go see...
So that is being done by Bennett energy? That is in...
Bennett is our consultant... We use...
They are not manufacturing the hoses for the month -- Is it being done in India? Or is it out of India?
It is out of India?
And have they shipped or they are yet to be shipped?
We have placed an order, and now they are manufacturing it. Once a manufacturing is over, then we will have a factory acceptance test and physically input the hole before they get moved out from the paste. That is being monitored by Bennett.
Okay, sir. Secondly, I think we have around short-term debt, which is repayable. That is around INR 200 crores.
If you look at our debt profile as such, our long term is INR 231 crores and short term is INR 123 crores. So short term, we will come out by all these things by end of July.
The next question is from the line of Jayesh Gandhi from Rosedale.
If I heard you correct, you said that we have a contract with GSPC for BAT, which is like 10 MMSCFD until FY '24, that is take or pay. Am I correct, sir?
Correct. For the next finance ''25...
Okay. And what would be the status post that? I mean, would they continue to buy whether -- whether or not take or pay or then we have to enter into a fresh contract? Or how is that going to work post that?
Post that, we will, at some point in time, before that, we will go for another option. And now that we have kind of -- we will -- by the time would have a very stable production operations continuing. So we will offer the volume on a firm basis to conduct the e-auction secure customer.
Okay. And can you throw any light on pricing then? Will it be the same like 22% plus concert or...
Whatever is the prevailing price in the market because you observe the cash prices are pretty volatile, India deals with multiple gas price regime, you have imported ONCG, you have domestic PPA price and the prices is core to such e-auctions as such. Whatever the market size overall, we should very difficult credit what will be the price at that point.
Ladies and gentlemen, I now hand the conference over to Mr. Elango from Hindustan Oil Exploration Co. Limited for closing comments. Over to you, sir. Thank you.
This has been a quarter where we have finally addressed multiple challenges in our asset portfolio and made headway on multiple trends towards a stable production growth. Apart from bringing both BAT wells on simultaneous production mode, we also managed to reach agreements with government, paving the way for PSC extension in both PY-1 and Kassan. We are well sufficient to step up production from Dirok field as the Northeast grid implementation makes it progress connecting new demand centers in various stages. We are expediting environmental clearance and plans to drill well in our PY-1, Cambay, Kassan, to continue to build on our production growth journey in future. However, our top most priority and attention will continue to be on BAT to achieve optimum and stable production rate. Thank you once again for joining.
Thank you, sir. On behalf of Hindustan Oil Exploration Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.