Hindustan Oil Exploration Company Ltd
NSE:HINDOILEXP
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
158.7
285.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Hindustan Oil Exploration Company Ltd
Earnings Call Analysis
Summary
Q3-2024
The company reported a surge in consolidated revenue to INR 192.75 crores, attributed to increased B-80 production days, offsetting a marginal rise in EBITDA to INR 80.14 crores. Operating expenses rose to INR 89.93 crores due to longer B-80 sales operating days, while consolidated PAT slightly increased to INR 46.57 crores. A mark-to-market loss of INR 26 crores resulted from lowered crude prices, down from $93.54 to $77.42 per barrel. The company maintains a stable rating on a substantial bank loan and predicts continued production will meet all forthcoming obligations.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Hindustan Oil Exploration Company Limited Q3 FY '24 Earnings Conference Call. [Operator Instructions] Conference is being recorded.
I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.
Thank you. Good morning, everybody, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Hindustan Oil Exploration Company Limited, HOEC. On behalf of the company, I'd like to thank you all for participating in the company's earnings call for the company's third quarter and 9 months ended 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. 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. First, we have with us Mr. R. Jeevanandam, Managing Director; Mr. N Sivalai Senthilnathan, Chief Financial Officer; Mr. Krishnan Raghavan, Chief Technical Officer.
Without any further delay, I request Mr. Jeeva to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good morning to everyone. Hope everyone has received the updated earnings presentations. It is on our website for your reference. I have with me Mr. Krishnan Raghavan, Chief Technical Officer, heading the operations and subsurface team; and Mr. Senthilnathan, our CFO.
We have been inducting Senior Production Engineers, Senior Drilling Managers, Senior Reservoir Engineers, and Technical Advisors to increase the operating and managerial capability of the company.
We're pleased to inform you that quarter 2 gas uptake from Dirok has maintained an average of 23.75 million standard cubic feet a day against 22.9 million standard cubic feet per day in the previous quarter. I'll start with the operational update from the Eastern region. Dirok gas sales for our share is 0.5 Bcf and condensate is about 10,841 barrels compared to 0.56 Bcf of gas and 10,350 barrels of condensate in the previous quarter.
Though this field can produce about 50 million standard cubic feet per day, we must restrict the production due to lack of demand. This is further compounded by fuel pricing of gas produced from the nominated fields of oil and private players.
The ceiling price fixed by the Government of India for nominated field is $6.5 per MMBtu. Whereas for private producers and for non-nominated fields surfaced by PPAC $8.93 per MMBtu as of October to December 2023. Therefore, the customers who are mostly public sector are undertakings 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 makes the Dirok production as a fallback after the sale of production from either producers of Oil and ONGC. This situation would get reversed once the gas line of IGGL, GAIL, and BNPL are connected and commissioned. We believe that both IGGL line lays its own line from Duliajan to Numaligarh. It is about 170 to 80 kilometers. The demand constraint will further be eased out and the connectivity within the gas grid in Central India will be fully established.
And this will ensure that an increased and stabilized offtake from 2025 onwards to achieve the production to the full potential of the field. To prepare ourselves 3 legacy wells, there are 1, 2 and 4 will be worked over and the additional data would be used to revise the reserve estimates of Dirok. We saw some seismic data under review and the material balance is worked out. In-house G&G study will be get validated by third-party reserve auditors and the new reserve numbers would be updated as soon as the study is completed.
After these workovers, we plan for drilling 2 additional producers to ramp up the production to 70 million standard cubic feet per day, subject to demand, which will be -- which will meet the increase in demand by connecting the Duliajan to national gas grid. GeoEnpro is operator to Kharsang block and HOEC will have both directly and indirectly, 35% participating in the center block. After the review of the production data, continuous workover is planned for producing wells to maintain as well as increase the production.
Operating Committee has considered for drilling 15 wells to increase the production from upper Girujan side. One explanation that we plan to know the potential of the deeper formations at the lower Girujan, Tipam and Barail.
This block is producing from upper Girujan formation for over 40 years. Tangible required such as wellheads, X-mas trees, and tubulars were already procured. On obtaining EC clearance, we should be drilling development wells by first quarter of '24, '25. Substantial upside has been identified and evaluated by GCA both in the lower Girujan, Tipam, and Barail formations. This block to unlock substantial value after the completion of the proposed exploratory well. With the connectivity to national grid, additional resources on discovery can be developed and monetized quickly.
We have work program lined up for drilling 15 development wells and known exploration wells in Kharsang. We also plan for 2 development wells in Dirok '25, '26. The expected capital outlay for the next 2 financial lease is about INR 200 crores in this region.
Cambay blocks. In Cambay, all the 3 blocks are having marginal production and total contract area is about 38 square kilometers. Well data is in the revaluation to know the potential of all 3 blocks to enhance production. Currently, these fields are breaking even with a legal contribution to the P&L account.
In Palej, plan to have artificial lift in all 3 wells, we are planning for 2 development wells in Asjol and 2 are North Balol to increase the production as soon as we get the environmental clearance. Environmental clearance is expected before March 2024.
Now I move to offshore blocks. We are pleased to inform you that B-80 was sold at a price of $80.27 per barrel, first outloading of 430,000 barrels of oil was sold to [indiscernible], and offtaking was completed on 30th of January 2024. Price realized is average Brent price for the month of offtake less 0.06%. It means we are getting the Brent price.
While continuing production from D2 well, we are constrained to inform that D1 is activated to put on production. We have removed the possible mechanical obstructions in D1 floor line as well as D2, and now it is more of blockage in the reservoir. We have given the contact to better uses to carry out the chemical treatment to renew the blockage. It is expected that the Baker will mobilize the equipment in personal to offshore on or before 4th week of February '24.
D2 well production is little over 800 barrels per day, and the gas is about 3.5 mmscfd per day. D1 [indiscernible], existing facilities can process upto 25 million cubic feet per day. Currently, the field is producing less than 1 million cubic feet to breakeven. Pricing debt of this block was reprocessed and G&G team was evaluated and [indiscernible] 3 drilling locations. These in-house studies will be reviewed by a third-party expert in London to confirm the proposed well locations.
We plan for 3 development wells and everything goes as per plan, building up first -- building first well will commence in April to June 2025. Consequent to the issue of D1 well and continued lower offtake, we are not able to ramp up the production to the expected level. We are lined up the capital program for about INR 1,000 crores in the next 3 years to build substantial number of development wells and exploratory wells to enhance the production as well as to increase the reserve potential of the company.
Now I refer to Mr. Senthil, our CFO to update the financial results of this quarter.
Thanks, Mr. Jeeva. Good morning to all. We report that the stand-alone revenue for this quarter is INR 109.04 crores compared to INR 72.56 crores in the previous quarter. Revenue from offshore DLT block is INR 48.43 crores, in the previous quarter it was INR 19.03 crores.
In case of Dirok, revenue in this quarter is [ INR 56.7 crores ] compared to INR 48.68 crores in the previous quarter. The total increase of INR 36.48 crores in sales is mainly due to increase in production in B-80 sales. These operating expenses for this quarter and the stand-alone account is INR 76.23 crores compared to INR 50.46 crores in the previous quarter. This increase is mainly due to increase in operating days of B-80 sale.
Total expenses, including depreciation, depletion, and stock adjustment is INR 101.84 crores compared to INR 32.09 crores in the previous quarter. The increased sales is mainly due to increase in operating days of B-80 sales. Oil in stock in FSO as on 30th September was 329,000 barrels and increased to 425,000 barrels as on 31st December '23.
Out of it, 60% belongs of HOEC. Stock adjustment and credit for the current quarter is INR 3.4 crores, whereas it was INR 43.52 crores in the previous quarter. This difference is mainly because of the price of crude oil, which was $93.54 per barrel as on 30th September, and it is [ $77.42 ] per barrel on 31st December. We recognized that this inventory on January '24 at $80.27 per barrel. Stand-alone EBIT was INR 16.74 crores compared to INR 49.05 crores and the profit after tax is INR 4.82 crores compared to INR 38.74 crores in the previous quarter. The reduction in profit after tax is mainly due to decrease in crude price of the inventory as stated earlier.
In consolidated accounts, the total revenue for this quarter is INR 192.75 crores compared to INR 119.74 crores in the previous quarter. This was due to increase in operating days of FSO and MOPU amounting to about INR 35.55 crores, and B-80 production. Operating expenses, including facilities in the consolidated account for this quarter is INR 89.93 crores compared to INR 63.63 crores in the previous quarter.
This increase in cost is due to increase in field operating costs in B-80 sales as days has increased from 48 days to 92 days. Bottom expenses including depreciation, depletion, and amortization and stock adjustment in consolidated accounts for this quarter is INR 137.2 crores compared to INR 69.4 crores in the previous quarter.
Consolidated profit after tax is INR 46.57 crores against INR 43.17 crores in the previous quarter. EBITDA for the current quarter in the consolidated account is INR 80.14 crores compared to INR 72.58 crores in the previous quarter. As of note, the outstanding loans in the stand-alone books is INR 87.55 crores and in the subsidiary books is INR 69 crores. The company has A stable rating for INR 500 crores bank loan from India Ratings. With this current cash position and with the continued production, we'll meet all our obligations, including the program for the coming 3 years as planned. Thanks, and back to Jeeva.
Thanks, Senthil. Now we can open the forum for questions.
[Operator Instructions] The first question is from the line of [ Jigesh Gandhi ] from Discovery Capital.
Congratulations on the quarter. I had a question. How much is the MTM losses you would have on oil, given that the prices that had like come down slightly from the end of Q2. .
You are asking about what is the price?
No. The MTM losses which you had, mark-to-market losses we would have booked this quarter on the oil...
Mark-to-market impact is INR 26 crores.
It was INR 26 crores. Sir, so if I'm assuming the prices to stay flattish of this around [indiscernible], whatever it may be. So then as the existing production rate, we should actually assume our [indiscernible] run rate of effective that INR 50 crores plus, it is INR 26 crores, right? I mean, if that's the way which we should be looking at it?
And that's right because the stand-alone that the impact of INR 26 crores were there. And that's about INR 5 crores would get rather than the next quarter. So it will be in the same range. If everything goes as planned.
Got it. Understood. And the other question was if you could give or throw some light on Baker, who we have appointed. Are they a credible international agency with regards to this particular thing? And is there anything you can [indiscernible] as with regards to any expectations around how long this process will take a couple of mobilization and any risks involved or are they reasonably in that they can resolve this?
The fact remains, Baker Hughes is one of the best internationally reputed oil and gas company. There are only 2 companies, [indiscernible] and Baker Hughes. We have picked one of the best company. They've studied and they've given a report to us. Based on the report now they are mobilizing the chemicals and equipment to do the operations in the offshore. Now the issue is we should have to mobilize all these equipments in place to Mumbai port, then it has to be taken to the offshore.
Once it is in offshore, the job should not take more than about a week's time. So in all probabilities, we are expecting they should mobilize all the equipments and everything before the end of this month, and the operations should start by the 1st week of March.
Got it. Sir, the other question was with the price we have been able to get for the oil. It is an extremely small discount to Brent. So is that the price we should expect going ahead and look while? And is that effectively a reflection on the quality of the oil? Or is it of the factor that even on electric at a small discount on Brent with regards to oil sale price?
This is we got the Brent price, the discount will be only 0.06%. No, I think the expectation that we had was that the discount might have been slightly higher. So just wanted to understand the reasons and if it's going ahead also, we would expect to get around the Brent price on this.
Our quality of the growth is good enough that we should be getting a Brent and the minus will be very, very limited. It should be to 0.06%.
Got it, sir. And the last question was with regards to the mix connectivity of the Dirok with international grid, GAIL, et cetera, actually on track with regards to the pipeline and any expectations around time line? Or is there any big delay expected on that?
See, we are not directly involved with this, but we have been on a continuous discussion with persons involved. In that, we are expecting by October, the BNPL line will get upgraded. So that will improve some demand. Then we are expecting that by March, that's what the time it may be plus/minus. The GAIL connectivity will be with IGGL. And then we will be able to make from a Guwahati to Numaligarh, Numaligarh and Duliajan. So there is expected some demand increase will happen by that process. But in Indradhanush, they're laying their own new lines from NRL to Duliajan.
That is expected to be completed by March '26. So that means the full connectivity to the national grid would get published. By year it should be '26-'27, there should not be any demand constraint to us because all of our gas can go to the national grid.
The next question is from the line of Rikesh Parikh from Rockstud Capital LLP.
Congratulations on the first crude [ offer ] from B-80. So just to start off with B-80, can you just explain what is the real problem right now, means what we have written is that [indiscernible] of the chemical and hot thing has been done. But there is toxoid issues, means there is some further work, which needs to be done. Sir, what is the real problem [indiscernible]?
You're aware that the D1 well was producing after the cyclone, which had the wells. During the cyclone, we have been asked to shut down, so we shut the wells. After shutting down the well, when you open it, it was not producing. So we thought that is initially mechanical obstructions. So the mechanical obstructions owned by 1, we have cleaned it up to the extent that D1 flow line was cleaned up now, and the tubing also cleaned up, now the backup study is completed. We are accepting very some reservoir blockage.
This reservoir blockage is because of the various issues which has happened now, that has to be addressed by the chemical treatment. Now once the Baker comes and do the operations, we'll get to know the difference.
So this reserve blockage is like a general or there is a major concern that's why means after a chemical, there can be some concern because previously, we had a concern around the pressure and all those things. So just slightly more detail, if you can provide on that.
So there is -- at the moment, we know there is a blockage in the reservoir, because this has to be addressed by a chemical treatment. Once we get back to the production from this well by the chemical treatment, then we will get to know how -- at what interval, we have formed the chemicals, and we will be knowing the full impact after the Baker completed the operations. It's too premature to say anything at this stage.
And what is the onetime cost for this overall for the getting it back to the operations?
It's about $300,000.
Okay. The second question on the Dirok. Sir, we have completed the forest part of the laying. Sir, I wanted to understand by when we'll be able to connect it to the [indiscernible] to Duliajan?
That's forest section has been completed. 50% is over. The balance we have to get into the next season, which should be around 2000 -- it should be expected to be completed by -- from our side will get completed by December 2025. But that is not either constraint. If the BNPL line is connected, we have got a time line with the capacity. So that will ramp up -- that will meet our ramp up the production up to 1 million plus.
So will it be fair to assume that from 3Q, we might be able to increase from over 29 against midst 20 to 50 production if the BNPL pipeline is ready by October?
So if the BNPL is there, if they are allowing us, we can go up to 1.2 million, that should be around, say, 40 plus. .
Okay. That's helpful. And then last question on the CY1. So now we're on the study, and we are expecting to start bringing from April to June. So have we closed on the -- means any well or the rig as such to -- or have you okayed the rig?
No, not yet. Because what is happening is we have to go for -- our team has done a good work, and they are very confident about it and they're drilling 3 wells, and they've identified the location also. But we wanted to be abundantly cautious. We are taking third-party expert from under frac and basement from London, and they will be coming here for studying about 15 days.
Then the collaborative study of [indiscernible] as well as experts will be presented to other third-party [indiscernible] there is in London, RPS Energy. And once we have confirming all the facts and everything data and everything totally being reviewed, we will be releasing -- revising or maintaining the same locations as the case may be. And after that, we will mobilize [indiscernible].
The next question is from the line of Rishikesh from RoboCapital.
Sir, firstly, regarding the CapEx that you have mentioned for the next 3 years around INR 1,000 crore. If you could list down what CapEx are we doing and what amount is going to be spent for which well? And also, what is our internal revenue target or a kind of aspiration number from the same and expected IRR in next 3 to 4 years?
See, the wells we are planning for the next year, including total is about drilling up 15 wells, out of which one would be an exploration well. And the interventions we are planning for about 6 well interventions and the expected outlay of about INR 160 crores in the next financial year. And '25-'26, we will be embarking on the program for PY-1 drilling and there are also -- we will be drilling 2 more wells and 2 more deep wells also we are planning on the surface of the first well. That is about INR 540 crores, we plan for it. And '26-'27, B-80 drill as planned, we had to drill 3 development wells on connected, that is about INR 300 crores. This is our plan outlook for INR 1,000 crores. And IRR as such, we will not be doing any project less than 21% post that.
Okay. And if you could also share any internal revenue targets that you have?
So these are based on our cash flow projections, we'll be meeting within our internal approval only.
No. Like I was asking about funding. I was asking about any internal revenue target or any aspirational numbers that you have in your mind from the said CapEx?
So we have our existing producing till Dirok is there and the B-80 is there. And the country workovers, 3 workovers of Dirok, 3 workovers of Palej and immediate drilling of the North Balol and Asjol, we will be able to meet the capital expenditure asset of INR 160 crores next year very comfortably without any issue. And '25-'26 when comes, and we will be comfortable to meet INR 540 crores. And these are staggered expenditures, we take the success driven success. Basically, will be only about $10 million. And that drives the rest of the things. So there should not be any problem of us. We have a problem of getting INR 1,000 crores over a period of 3 years.
Okay. And what is our expected revenue and operating cash flow for next 2 years, FY '25 and FY '26, if you could share, please?
That's what the number I told you. I can't give you the exact number as such. And our internal approval, we do have a cash flow based on the cash flow, we are comfortable with this.
Okay. Also, sir, regarding the B-80, what oil production do we see for FY '25? And what kind of optimum level of production can we do there? And by when do we look to achieve that?
So this would be known to us after the Baker completed operations in the field. So we are waiting for the Baker report.
The next question is from the line of Tejas Shah from [ Laser ] Securities Private Limited..
If you can share, earlier we used to do around 11% to 14% in gas production from D2. Now that has come down I think 5.7%, and I think the oil production has gone up. So is there a problem in the D2 wells wherein the gas production has come down and the oil production has gone up? And is it going to sustain going forward?
See, this is an expected in the D2 well, the gas production will come down, oil production will go up. It Is beginning as per request.
Okay. So this is going to stay the way it is? Or is it again going to change?
See, we can't say this is a subsidiary issue, but we expect it will maintain at this level.
Okay. And from the D1, earlier I think we were targeting around 3,000 barrels of oil approximately. Now that way kept reducing around 400, 500 now write up is not there. But you're saying expectation is only around to 800 to 1,000 barrels after it opens up or there is no clue on that.
Tejas, you asked a question about the D2 well, right? If I answered as such, 800 plus 3.7 million, right? We've not discussed about the D1 wells. The D1 wells will be known after the Baker treatment is completed or Baker operations is completed.
Okay. And can we have an update once the process by Baker is done on the stock exchange? Is it possible?
See, it's a continuing process. If the Baker will come out and they do some operations, they'll find something more to be done, we will engage continuously to do that till the well is fully activated. It's not a one....
That process is understanding. Once the Baker is occupied and done with everything whatever was there, this is the result that is there. After that, can we have -- basically what I want to say, I don't want to update on the next results, wherein then I invested okay, what is the problem with D1. As a shareholder and being a co-owner of the company. And basically, I want to stay updated on the -- because I think it is a material event for me because how the D1 production accordingly the results will also get affected. So that is my concern. So that is what I'm trying to ask.
Tejas, we would like to tell you one thing. You are our co-shareholder, co-partner in the business. We fully appreciate that. You have to understand, this is an oil and gas field operations, right? So it is not a name, it is a success rate. Once the well is continuously flowing through our satisfaction, yes, we will be able to maintain it, then we will definitely inform to you. We cannot come to you and say that sporadically it is producing today. And within a day, we cannot say again it is closed. We can't do that. So we established ourselves a continuous flow of the D1 well, and then we will certainly inform to you -- inform to the [indiscernible].
The next question is line of Aman Chowdhary from Motilal Oswal Financial Services Limited.
So 2 quick questions from my side. First one being -- so with respect to Dirok. So Dirok production has remained stable. When should we see this trend move upwards?
See, Aman, that once the gas could get connected, either in a bigger way means that is 180 kilometers line of IGGL to Numaligarh to Duliajan, that will ensure the full connectivity to the grid. And limited connectivity to the grid will be established with the BNPL line because it is having a patch of some 50 kilometers [indiscernible] done. Now once that gets completed, we would get leased out to the extent of at least 1 million standard cubic feet per day, comfortably.
So these are linked to various facilities and gas grid connections and all. We cannot predict the exact number. Once the BNPL line gets activated, we are sure that we should be able to ramp up 40 million standard cubic feet a day.
Then [ '25, '23 or '24 ], we will be able to reach up to 40.
Sure. And second question is with respect to Cambay. Any update on enhancing the production to 500 barrels of oil per day?
Yes, we are working on it at the moment. We take -- we have submitted the proposal to the partners. And once that gets approved, and we will be lining up 3 wells on the artificial lift, that our people are confident that should increase the production from field offtake 500 barrels.
And just to chip in with respect to B-80, sir, how many days did one well contribute in the third quarter? And secondly, I understand the second well, when do we expect operations to begin?
One well was on a continuous operation for the entire 91 days. There is no issue on it. And the second well, that's what we are looking at Baker to commence it.
So probably this quarter, we maybe end up with one well as well.
Sorry, I did not catch it. When will the second well start operations?
The fourth quarter, we may end up with only 1 well, unless the job on operations will get quicker on it, but that will be only in the mid of March as such. So we can count that one well production will continue till B-80.
Okay. Sure. Sir, from the second well in FY '24 at least?
Yes, we believe in it and Baker is working on it.
The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investment.
I hope I'm audible. .
Yes. Very much.
So I think you mentioned about the BNPL pipeline when it's ready. And I think you mentioned sometime around October, it would be ready, if I'm not wrong. So then we will be able to increase our production up to 40 million. So is this 40 number is because of constraint on the demand side or the pipeline capacity or the constraint on the production side?
There is no constraint on the production side. This is constrained on the pipeline as well as the demand side.
Okay. Okay. So basically, I think the pipeline will -- we will not have rights to use the pipeline beyond that number?
Because there is a capacity limitation. [indiscernible] we'll also have some issues there on to it, that has to be addressed.
Okay. And if I'm not wrong, this will be ready by October, right? October '24?
That's what we believe in it actually.
Okay. And IGGL pipeline that you spoke about that would be ready by what time?
That is what the new line Numaligarh to Duliajan, that we're getting fully connected to the national grid by [indiscernible]. IGGL would be expected to be on March '26.
March '26, Okay? Okay. So basically, then you are saying that with the full constraint on demand will be removed and pipeline -- well, after commissioning of this pipeline also, we will have a pipeline capacity issue as such because I'm sure there will be other production in Assam which will have right to use this pipeline. So will we be able to have full production given the pipeline constraint?
See that's why they were looking at around 5 million standard cubic meters per day. Ours is going to be only 2. So the balance then work on to it. There should not be any problem. That is what is being projected because this is, at the end of the day, to continue to get and Oil India is one of the private producer and ONGC is also there. We are making the Eastern grid should get faster. That's their endeavor and we are working on that direction. So with us also, so they will be able to help us in a sense where we'll be having [ 45% ] of revenue from this block. So we will be able to ramp up to that level of 3 million. That's our endeavor also.
Okay. And the third pipeline that you mentioned in the presentation about GAIL UrjaGanga. So this is connecting which point to which point if you can explain? And what is the expected completion time line for this.
UrjaGanga is to be commissioned, it is up to Barauni to Guwahati. That should get completed by March according to the plan.
March '24.
Yes.
So this -- will this lead to some kind of relaxation on the -- I mean, will it offer us an opportunity to increase our sales or there is nothing to do with our...
What is happening is we are at Duliajan. So from Duliajan, this goes to Numaligarh. From Numaligarh, it goes to Guwahati. From Guwahati, it goes Barauni, that gets connection compete. Now there is a limitation of the BNPL line. So can I take more than 2 million standard cubic meters per day. So out of this, we'll have some share. So that's why, we are -- that line is fully operational, at least we can ramp up to 40 million cubic feet of gas per day. And then the whole connectivity has come, we can ramp it to just double of it, it is about 70 million.
Got it. Got it. And finally, to understand this whole issue. So finally, the IGGL pipeline is going be a thing which will remove all the constraint on the sales. So initially, it was said that it will be completed by March '25. Now you're saying that it's March '26.
So it's not directly operated by us directly, we have no connection to that. We have been talking to the people of the authority and then we get to have some dates actually.
Okay. Okay. Got it. No. But what I was trying to understand is, based on your understanding, is it March '26 is also realistic time line? Or do you think that there are some forest clearances issues or something that is holding up and delaying the pipeline?
I don't think [indiscernible] March '26 is the entire connectivity of the grid is established.
The next question is from the line of Sanjeev Damani from SKD Consultancy.
Am I audible?
Yes, sir.
Sir, actually, want to understand certain things about our B-80 operations update that I'm watching right now on my screen, your presentation. So it is the first volume that we have sold, I want to confirm from you. From this particular site, the first consignment has been sold of the crude. Is it correct, sir?
Yes. Yes. So what is happening is whatever the crude we produced, it has been sent to floating storage offshore. So there and the storage of oil reached to a size of 400,000 barrels, then we will be inviting the [indiscernible] from the various refineries, and they have done the auction results, then we will be making an offloading. They'll bring their own tankers, then we'll offload.
In your case in field at first time we have reached to a parcel freight of more than 400,000 barrels, and we offload [indiscernible] oil to ISC.
Right, sir. So by this time, how much stock we have already built up? Can I know if it is not otherwise?
So, I think as we speak, we'll be having 407,000 barrels has already been sold. Now we'll be having stock about 35,000 barrels.
35,000, that's all. Am I right, sir, 35,000 you said, sir?
Yes, yes. 35,000 barrels in stock, and we are continuously on production about 800 plus barrels.
Yes, yes. So you told us, sir. And regarding the gas also, have we sold some gas from these fields?
The gas we have been continuously selling for the last 1.5 years, but currently, we are selling about 3.5 million mmscfd of gas to GSPC.
It goes to GSPC. And the price which is mentioned being realized is 19.98 MMBtu. Am I right, sir?
Yes, that's right. Prices [indiscernible] high price as such. The oil price is a bit more, and [indiscernible].
Got it. But I think -- I mean, compared to other sites, we are getting good realization here. So that is something very good, sir. I mean there is no ban by the government that you can sell at x price or y price, there's no [indiscernible], sir, as such for gas prices.
You are right, there is a domestic market obligation. Premarketing rights have been given to the private players. So that works well.
So sir, are we also subject to windfall tax on petroleum or no?
No, we are not because we have not reached to a threshold limit of 1 million barrels of oil.
Okay. That's also very fine, sir. So one more thing I just want to confirm that you are storing all these collected oil in the offshore area only. So again, if some cyclone comes, it may get damaged. Can it not be transmitted to the onshore to have safety of our storage?
Sir, this is actually a facility [indiscernible]. It is a Aframax tanker, that is got a floating carriage offshore. In any emergency, it can disconnect and move to a certain location. There is no question of any damage will occur.
Okay. So it is like a ship. The storages are on the floating ship, as you rightly said. I could not understand. Now, sir, in other fields where we are trying...
Sorry to interrupt, Sanjeev, can you please rejoin the queue. [Operator Instructions] The next question is from the line of Ashwin Reddy from Samatva. Sorry, the participant got disconnected. The next question is from the line of Ashwin Reddy from Samatva Investment.
The first question is on Northeast block. Regarding the work that has been outlined for Kharsang. So is there any limit or constraint on the offtake in pipeline, given that a good number of [indiscernible], is there any constraint on offtake?
No, there is no constraint. No, there is no offtake limit. The facility can handle up to 5,000 barrels, and we will not be able to reach that level even by drilling 15 wells, which will be lesser than 2,000 barrels, there should not be any limitation.
Okay. And sir, the infrastructure, the unlike in gas, there is a [indiscernible] constraint in terms of what can be...
I can't get the question actually. Can you repeat?
While in terms of -- unlike in the or gas, there is no constraint on the offtake, for whatever reason, you can drill and you can [indiscernible].
Yes. Because a line is there connected given Arunachal Pradesh gas production with Oil India also has in line in a manner that gets connected to the national grid. So there should not be any problem of monetizing the gas producing in Arunachal Pradesh.
Okay. And what are the time lines that you expect to come [indiscernible] next [indiscernible] 1 year? Or how do you think about Kharsang in terms of...
Development wells starting in the first quarter of the next financial year. Then we are embarking on a continuous drilling program. We are not stopping it. After drilling a 6 wells, we have a small [indiscernible] for a few drills to review the data. And then product drilling will continue there on to complete a minimum of 15 wells were on development wells [indiscernible].
And meanwhile, we are beginning getting 1 more rig, which can go to lower division formation or lower region in Tipam and formations. So the deeper well results successful, then we will continue to drill 2 more exploratory wells and all the exploratory wells in onshore can be put on as a development well. So we will start producing to [indiscernible] exploratory wells also. So this we expected about 2 continuous financial years '24-'25 and '25-'26.
Okay. Got it. And my second question is on Dirok. For these quarters and now on, should on the minimum that we'll do it is there a chance to go back to what you sold in the quarter was the norm, right? Something to them again there was offtake issue issues, et cetera. So as it peak, as it ramp up from the of [indiscernible] 2024, or are you [indiscernible] something '23-'24?
Actually leading into the production because the demand is not in my hands because it is basically the [indiscernible] in any public sector undertaking, GCPL and NRL, and now it should be continuously operating since of the [indiscernible] continue. This is too difficult for me to predict the volume at this stage.
Got it. Okay. And regarding B-80. So regarding the D1 will, is there a chance to be maintain to the other window for this time? Or is that out of scope? Or is that a possibility as well in terms of [indiscernible]?
We are looking into all the interventions without a risk. If any interventions [indiscernible], it could be only under after the monsoons. But we needed to know only the Baker completes the job, not before that.
[indiscernible] not will be confirmed, say, by March, is that a fair assumption?
So we -- they'll have to carry out the job once they come out the results and what it comes out and how do they feel it and then again they have to go back to the study on it. And some resolutions we expect on this and if everything goes worse only, we have to go for the drilling. That is the last option.
The next question is from the line of Darshika Khemka from [ AV Fincorp ].
My question is that could you help us with the breakdown of the revenue by B-80 and Dirok, please? I'm sorry if this question is a repetition.
The revenue from B-80 and Dirok, right?
Yes.
This is the number. See, Dirok number is -- B-80, we have got the total revenue of -- total revenues INR 44 crores.
Could put repeat number, I'm sorry?
INR 44 crores. Okay. And the Dirok is about INR 51 crores.
All right. And how about the balance number?
Dirok, the net revenue I've given to you because our adjustments would have been more to the [indiscernible] profit and everything, the government share and everything.
The next question is from the line of Jayesh Gandhi from Harshad Gandhi Securities Private Limited.
If I heard you, correctly, you said that in production from D2 well in B-80, 2800 barrels per day. And our inventory is closer to 35,000 barrels. If I account the [indiscernible] for the current quarter, then we should not be able to spend more on 110,000 or 120,000 in that case. Is my understanding correct? .
Your understanding is correct. That is why we are working on the D1 well to put it on production quickly.
Got it. So last quarter, the volume which we have done is 430,692 barrels. That means we had a lot of inventory, which was already there. Is my understanding correct?
Yes. This is since beginning whatever the production that was....
The next question is from the line of Manoj [indiscernible] from KSA Shares and Securities Private Limited.
Very good set of Q3 numbers. My couple of questions is regarding the D1 well. We have given a contract to [indiscernible]. So you have said -- you have mentioned in the presentation, currently, they are going to start the work studies and all that, everything. So what is the probability of the success for the problems which are there in the D1 could be started out? I mean is there any time frame for that, sir?
See, Manoj, if I know the probability of success of an exploratory well, I could have told you that this is the probability of success, which we're working on it. This is the well which was producing before the cyclone and after the cyclone it stopped producing. So it is a surprise to all of us. And now we have looked at all the possible way means why it stop producing. So we look that now there is a blockage in the reservoir. That is what they are going to address it.
I cannot assume any probability or numbers, which you can assume. Whatever the numbers which I can assume, you can also assume. So we will be waiting for Baker's effort and let us see after that, what they come out with.
Okay. And my another one question is regarding the all results which we are holding right now. What would be the probable sales value, we can assume it in the Q4, sir?
I mean you are talking about our products, which we can start at the moment.
The 35,000 barrels of oil, we are holding right now, sir? Am I right sir?
Yes, you're right.
So what would be the probable sales value it could fetch once we sell that, sir?
That would be the expected price in the month of March, right? End of the March that mark-to-market would be the price. If the Brent is $80, it will be taken as $80. If the Brent is $75, it will be taken as $75.
The next question is from the line of M.N. Kumar, an Individual Investor.
Is it possible to make the clarity with respect to when you said production, is it a gross or net? Or what is the quantum that will get for taking the participator interesting, what comes to this part becomes a little bit difficult, sir. can you make any presentation on this aspect a little better, sir?
Okay. Normally, they should indicate that whatever the value [indiscernible] with gross production and you can see the net production, right?
Some locations, it is driven at a gross, some locations it's production. So it is always confusing, sir.
Yes. I think you are right, and we will update out something next quarter.
Sir, the next question that I have on that one is related to Dirok. And the Dirok, after making the pipeline because you will have to still complete 20 kilometers additional line. How much middle market we will get, sir? How much more gas that we will be able to sell? In connection to the national grid.
That's what I am asking.
So see you're asking me the question after connecting to the national grid, right?
No, sir. Right now, there is a pipeline that we are laying, right? With the current pipeline that we have and the consumers we have, we can actually 30 [indiscernible], correct?
It can go up to 1.2 million if BNPL line get connected, 1.2 million cubic meters per day. So we were also initially producing about 40 million -- 1 million cubic meters earlier. Now the price difference has come, that is why the fall we are more or less like a fallback. Once oil gas gets sold and the ONGC gets sold at a lower price, then difference come there.
Okay. So by completing the pipeline, we are not going to be able to sell anything more than what currently we are selling. Is my understanding right, sir?
No other line is getting to augment our line to make a 2 million cubic meters is. It's more or less like connecting to the nation grid as such.
Kumar sir, can you please rejoin the queue for your further questions.
This is connected to the same question. Sir, if that is the case, why you should start drilling the 2 development wells and increase the capacity to 70 mmscfd?
We are drilling the well next year, next financial year. I mean 75 -- the drilling will take about, say, 3 to 4 months. And that's why we plan in such a way, if the lines are getting connected, demand picture we should be able to ready to get into the market. That's the reason we are planning the development wells up to 70 million cubic feet per day.
So that means pipeline connection, completion and the drilling of it, everything has to coincide with the national grid connection. Is this my understanding right there, sir?
Right. Because we are looking at demand pickup to keep the that our capital investor is earning revenue on it. So that's why there is a delay in drilling. If there is a connectivity to the national grid, we would have completed the drilling by this time.
The next question is from the line of [ Manan Patel ], an individual investor.
Sir, first question is on B-80. Sir, you mentioned the production is around 3.5 MMSCFD and 800 barrels of oil. So is that assumption right that the Q4 revenue from D2 well will be lower compared to D3? And on the same like we have auctioned a lot more gas than we are producing. So what kind of penalty would we have to pay if we don't sort of fulfill our commitment of the auction?
Manan, this is being an issue towards the reservoir then there shouldn't be any penalty in it.
Okay. And so the D2 production right now is lower than the Q3. So the revenues will fall further?
This is somewhere around the range of 4 to 3.5, so we are taking 3.5 as the basis for continuing for this cohort.
Understood. And sir, on the Cambay, so you have mentioned around 300 barrels oil through artificial lift. And so by what time can we expect that to come on production and third question on Umatara. So is that substantial which will move -- substantial production which will move needle for us or is it just a small well type?
So actually, the artificial lift of 3 wells in Palej's plant, our estimates are there. With artificial lift we should be able to increase to another 300 barrels. That's what has been stated in the report. So we are looking for the partner's approval there. Once it comes on, we will be trying to get on to the [ modes ] because it is -- duration of the work is very short, it's not taking more than 10 days for each well. So we would be able to ramp up faster. And your next question is related to Umatara, right?
Yes.
Umatara is a well drilled by Oil India and we are a partner there in with only 10% -- IOCL, sorry. IOCL is the operator for the block. I am sorry. IOCL is the operator, and we have only 10% stake in the block. They have already mobilized -- they've ready to mobilize the rig and by April, they will be starting the well.
So the question is, sir, is it substantial or it will be small?
Actually, this is a bit of a small field itself. There cannot be anything called as a substantial out from there. The results are about 2 million barrels. So once we build the well, we will know the potential much better.
The next question is from the line of [ Vivek Joshi ], an Individual Investor.
Congratulations on a steady set of numbers. I have 2 questions. One is that given the production, if it remains the same, do we expect, sir, similar results or there are certain one-offs like you had last year on expense adjustments, which you do at the end of the year, like something which is not there? That is my first question.
And second is in the balance sheet, there's -- in the comprehensive income, there is an item not classified as profits for about INR 41 crores for the 9 months. Can you just tell me what does it relate to?
Okay. Senthil, can you look at what is the INR 41 crores. Because Mr. Vivek, the number relates to that based on one, we should have continuous production and second thing is about the price. Subject to this, we will be maintaining the same numbers if we don't expect any adversity. Okay. This INR 41 crores, where is this INR 41 crores, can you show me the number?
Yes, it's in the line item 8 on the consolidated, other comprehensive income, the first line item, items that will not be classified as profit or loss. INR 41 crores for the 9 months. 4193.
Okay. This is actually -- sorry, that will not happen this year. This is related to the cost recovery limit on the Kharsang Block and that issue got sorted out. And by this only, we have got the extension. That being one time aberration that has been sorted out, that INR 41 crores, but we don't expect anything like that to happen there.
Not the loss. I'm asking the profit number, why is it happening? What is the 4193 that we are showing as profit, which you are saying is actually not profit. The line item above that, 41 -- 4193.
4293, which is the line number, can you just tell me?
Yes. 8a on the...
Exceptional item 1, right? That is INR 12 million. That is what...
In the consolidated this thing, item #8, sub item number A. For the quarter, it is 1,879 and for the 9 months, it's 4193. Sorry, sorry, sorry. I got it wrong. My bad. I'm sorry. My mistake. Sorry, sorry. I am looking at the...
I couldn't see the numbers.
No I am sorry, I got the wrong members. My bad.
The next question is from the line of [ Nirbhay Mahawar from N. Square ].
Just wanted to know what would be the net debt number post the oil sale for company?
That consolidated level our net debt number would be as on date about INR 150 crores.
INR 150 crores. And what would be our 9-month CapEx sir?
Our CapEx, which we landed is about INR 1,000 crores over a period of 3 years.
So for the first 9 months in FY '24?
FY '24, we don't have much capital outlay at the moment.
So sir, at a company level, would it be fair to assume that our medium-term growth plans have now moved beyond B-80 or D1, I would say, D1 production coming, would it be fair to assume that. I mean our dependence on B-80 has reduced now or medium term growth for that?
We have a road map for the -- we have a plan for at least 3 years, we have lined up a program in such a way that our net production should move from at least 1 million barrel of oil equivalent to 1.5 million by next year, and it should go to 3 million by '26 actually. That is what we are planning for it.
3 million barrel of oil equivalent annual production.
And that's what we wanted to ramp up and we -- that is on our base case process. The minimum actually, when you look at the P-90 case that is the level we are looking at.
This is 3 million gross or net, sir?
Net to us.
Net to us.
Actually it is net production [ P-90 ]. We have a plan in such a way because our INR 1,000 crores program, which we are lining it up, we should be ramped up in such a manner, we should reach at least minimum of 3 million barrel of oil equivalent.
Yes, that would be around 8,000 barrels of net daily production if I'm 7,500 to 8,000 barrels of oil.
We are expecting because that is the P-90 case. If we look at P-50 case, our target is to reach 10,000 barrels of oil equivalent net.
That's great. And how much we are factoring B-80 in this, sir, would you be able to quantify? Or...
I can quantify that. There's no problem on it. We are expecting at least some 3,000 barrels of oil from the B-80 well.
At least 3,000 barrels, sir, net, Okay.
The next question is from the line of Rishikesh from RoboCapital.
Sir we had an FSO and MOPU. Could you share what is the revenue for 9 months and for the quarter for the same. And how do we see steady state revenues from FSO and MOPU going ahead?
See, steady revenue, we cannot say that because what is happening is, it's linked to the many repairs and maintenance. We believe that we have been trying to carry out all the repairs. In between there maybe if you change the pipeline and others, I'm sorry that [indiscernible] those and other things will take some time. So what we can look at it, it has been giving you a run rate of about INR 50 crores net revenue in this quarter and the previous quarter, it was just INR 17 crores. And year-to-date, it is about INR 120 crores.
The next follow-up question is from the line of Tejas Shah from [indiscernible] Securities Private Limited.
Sir, what is the program for next year's gas contract for B-80. Is there any movement on the same? Or is it automatic renewal or you will go for a new deal sir?
For gas sales? What is your question actually, Tejas?
For the B-80, we had a gas contract till this March of '24 after that [indiscernible] that is what sir. Is that process started? Or...
We will let you know actually because this contract is valid up to 31st March, we will be asking -- we'll be starting the process by 1st week of March -- 1st or 2nd week of March.
Okay. And earlier, we used to have a problem on [ VAP ] for a high-pressure unit, where I think it was not able to take much higher volume of oil. Now when you said in your presentation that everything on the top side has been done. So is this problem solved and now will it be able to take a higher load of 3,000 barrels a day if whenever we reach that output.
Yes, we should be able to do.
The next question is from the line of [ Rajesh Sharma ], an Individual Investor.
My question is, what was the production from D1 before the cyclone?
I think it was about 1,200 barrels per day and 6 million cubic feet of gas.
Okay. So if it comes back, normally, maybe we can expect 12 [ boxes ] or higher?
Yes, I don't want to predispose something to you at this stage. Let us wait for the Baker report.
The next question is from the line of [ Ravi Nagda ], an individual investor.
Sir, my question on D1 there. Why it has taken so much time that Baker Hughes is conducting in February because monsoon is nearing, if they're conducting the survey in December, then you have enough time to do the repair work.
See Mr. Ravi that it doesn't affect monsoon, it doesn't affect this operation. This is going to be on the platform.
Okay. So when do you expect that report? And when do you see D1 well producing oil?
So there -- I told you as such that Baker has completed the studies. After the study, they are mobilizing their equipment and the chemicals and personnel. And that is we expect it before the end of this month. Once they go to the platform, it will take about another 7, 8 days. You'll get the know the results after that. Whether we need to get further something like chemicals and based upon days or in the first instance itself we'll get a good results. We will be not waiting for the Baker reports.
Okay. So the problem is wax deposited, okay, sir?
So we have a feeling there is an asphaltene and wax deposition, which needs to be cleaned up.
The next question is from the line of [ Mehul Panjwani from 40 Cents ].
I have one very basic question because I'm new to our company. How will FSO and MOPU contribute to revenue, because earlier you are using it oil offtake, right?
This is actually -- can you repeat Mr. Mehul your question?
Yes. So I'm just -- I'm trying to understand very basic thing that how the FSO and the MOPU, which are basically used by us, how do they contribute to revenue?
Yes, right. So MOPU is actually like a process facility, right? When the oil produced from the well comes to the MOPU there they segregate oil, gas and water. The 3 things comes out of the well, which gets segregated. And that has been pumped because there is no storage facilities at MOPU. Then it is sent through an export pipeline to the FSO. FSO is a storage facility where the crude comes there and gets stabilized. Once it reaches to the parcel site, then an offtake is undertaken. This is the process. FSO is a storage unit and MOPU is a process unit.
Right, sir, but I'm just trying to understand because maybe pardon my ignorance. How do this contribute to revenue because we get revenue only when we sell oil, right?
What happened B-80 is a block and that is a field, right? Any field you need these facilities, right. These facilities are to be hired from the third parties. Now the company to look at these facilities are hired in the third party, in our case, it is our own facility, which is being charged to the field. That is where the revenue is earned. The three is separate subsidiaries, which can be used for some other companies also. But tomorrow B-80 is not producing or B-80 is to be shut down after 7, 8 years, then it can be used elsewhere.
Right. Right, sir. one last -- 1 follow-up question. So when did we acquire this FSO and MOPU?
It has been 2019 and 2020 I suppose.
Okay. And sir, also, is it a fair assumption that since some of the blocks, we don't have 100% entitlements. We have only 35, 40 whatever depending on the block, which we are talking about. So we also get 100% revenue for this -- from these 2 FSO and MOPU?
See what happened currently we're participating in the block, somebody would be called as an operator. We will be holding certain percentage. Non-operators will be holding certain percentage. It varies. And that is where the fee revenue is shared. This is more or less that what you are talking about MOPU and FSO is like a [indiscernible]. It is like an equipment, it is not rental. If you want to keep 100%, that entire revenue of the rental comes to you.
The next question is from the line of Shivam Shah from Smart Sync. The participant is not audible, got disconnected. The next question is from the line of Ashwin Reddy from Samatva Investment.
Thank you so much for the color. So my question regarding B-80. If I just give a simple ratio of that for oil from Q1 of FY '24 to Q3 of FY '24. The [indiscernible] of graph is lower towards oil. [indiscernible] If you can talk to the concern in terms of the reservoir itself or whatever expected it can be. The reason I'm asking is because in the past con call, you told that if there is more [indiscernible] the well can run longer [indiscernible] in terms of reservoir.
This is a gas cap well. So initial production of the gas would be more than over the period, the gas will get reduced and oil will come up. So that's why we have seen the initial oil production from this well was 400 barrels then it went up to now 800 barrels. The gas is about 8 million to 9 million cubic feet of gas is getting reduced now. This is a typical phenomenon expected from this well.
Got it. That's very good to know. And second question is on D1 well. If we see the previous presentation it is outlined as a mechanical issue with water filled as issue in D1. And this time it is totally reservoir issue. Either there is -- has there been any change in terms of our understanding or because our understanding was it is mostly -- moving mostly with the evacuation of the mechanical material issue like right now is there a lack of clarity on the reservoir itself or what is the reason. I am just trying to -- so what I want to understand is there a change in our understanding about the issue [indiscernible] .
Mr. Ashwin there is a well which was producing well got shut. Now it's not producing oil there. So the first priority is to find out is there any blockage, right? You start with your flow lines and then you go with your choosing and you feel it one by one, then you get to know, then there is a reservoir. So we have initially looked at it is more of a mechanical issue because it is there in abrupt one attempt. Now the mechanical issue is getting resolved because we have put the pumps and chemicals and other things, we have now cleaned it up. Now we have come back to the reservoir issue. I mean, in the same blockage in the reservoir, which is now being addressed by the Baker. Are we clear on this?
Okay. Can you clarify even though it is a mechanical issue [indiscernible]. It is nothing to do with the quality of the mix there.
Ashwin I couldn't get you questions, but I'm saying right now, it is nothing to do with the well itself. It is more like a mechanical side blockage issue in the reservoir. Is what can understand it.
It's not a mechanical issue. Mechanical issue is resolved, now it is blockage in the reservoir. That's why we need Baker to come out with circulatory chemicals to clean that or remove that, right? Mechanical obstruction means that is on the flow line or on the tubing, which our people are -- done lot of work on it and they clean it up with the best of their ability. Now the Baker will come, and they will try to address the issue on the blockage in the reservoir.
As there are no further questions, I now hand the conference over to management for closing comments.
Thanks, while we continue to focus on activating the D1 well, and increase the offtake of Dirok, we will embark on drilling wells in Kharsang, Western region and PY-1 to develop these fields to its full potential to reduce the dependence on B-80 and Dirok. We will also increase our talent pool to meet our growth targets. We once again, thank you all for joining us today. Thank you.
Thank you. On behalf of the Hindustan Oil Exploration Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.