Hindustan Oil Exploration Company Limited (HINDOILEXP) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Hindustan Oil Explorations Company Limited due to an H1FI 27 earnings conference call. As we start, let me introduce you to the management. We have with us Mr. Pararoche Mishra, Managing Director and CEO, and Mr. Deba Brata Das, CFO. 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. Should any assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Barurochi Mishra. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us for the Hindustan Oil and Gas Oil Exploration Company Limited's earnings call for the second quarter and half-year ended September 30, 2026. I wish you all a very happy Dunk Teres, and we are very close to the Festival of Lights, so happy Diwali as well. Given this festive calendar and the Diwali holidays, the company decided to align the results announcement and the earnings call on the same day, this quarter, rather than have the two engagements separated by a day, as has been the usual practice. We much appreciate that. You have taken time to participate, even in this festive season. This is indeed a departure from the normal schedule, and we really, really thank all of you for accommodating this revised timing. And with that, let me start with a little bit of... Analysis or a view on the global oil and gas scenario, and then we will deep dive into how we as a company are performing and indeed contributing to ensure energy security for the country. Both what we have done in the quarter that went by, but also what we would like to do in the future. So, as you all know, the oil market has been pulled in two directions. The growth supply disruptions have supported prices, even as higher fuel costs and weaker economic activity have curbed consumption. Thank you. International Energy Agency projected that the global oil demand would fall by 2.6 million barrels a day in 2026. A sustained recovery in Gulf exports could ease prices. Further disruption, however, could push them higher even with weak demand, and that's a key thing to note. That range of outcomes reinforces the need for us as a company to exercise capital discipline. Still, this cycle stabilizes, and that's going to take some time. In gas, the disruptions through the Strait of Hormuz have reduced Gulf LNG shipments, as you all know. New supplies from North America and Africa have pushed in part of those losses. Even so, the IEA estimates Asian stock LNG average around 21.5. Dollars per mm BTO from March to October. That has given us a good cushion, although we did not realize the same price for, you know, gas sales, and because this is LNG, and therefore there are imported LNG costs. Two capacities are coming in, but we have also, as you all know, 17% of Qatar LNG's capacity has been taken out in this war. So we have price-sensitive buyers in India, and reliable domestic gas delivered under firm contracts have a particular value. However, it will need to be seen how many of those firm contracts can be honored, and how much sport cargos take over and manage the situation. So, India's crude import bill has risen by 46 percent, and that is a no-brainer. And in this first half, I'm told it's $91 billion, and the import volumes have increased by less than 1 percent. So we're fairly steady on the demand side from that perspective. The domestic, what is not a very happy news as The domestic crude and condensate production fell about 3.5 percent, so to 13.7 million tons. The domestic production fell about 4.4 percent in gas, while LNG imports rose about 4.5 percent. Now crude dependence continues, as you all know, above 88 percent. So the gap needs to be breached. And we, for HOEC, the opportunity is to deliver more domestic oil and gas reliably. And I'm very happy to say, except for BAT, all our assets, and of course, PY1, which had low production, all our assets continued full stream, 100% of the days in the last half of the year. And that speaks to the maintenance capabilities and the maintenance competencies of the individuals in our team who are running these facilities. We have a lot of opportunities, and we'll talk about them as we go to the next step. PY1 will make gas or wait that our oil tubing intervention, which we're trying to do before monsoon, or got a bit delayed. Because the call-tubing units could not be mobilized in 10 minutes. We have a firm contract with SLB for this, and that will increase production from TY1. That is intervention in the existing wells, and then we also have plans to drill to new wells. So, I will talk a little bit about that, but that will be in the middle of next year. In Diroc, we have to do a lot of work where we have the capacity to increase production as we speak. There has been a good increase from the time that we talked last quarter. We were averaging around 0.4, 0.5 million standard cubic meters on a gross basis. We are now averaging around 0.70, but there is an opportunity to go up to 1.2 million standard cubic meters, and we'll talk a lot about that as we speak later in the call. So BAT is our focus. It is the sort of, I don't say it's with that one because J-Rock has done remarkably well, but BAT, where we have two subsea wells, a Moku mobile office production unit and a tanker tied to the, moved to the SBM, is our flagship asset because when it works, it works really well. So we have two wells there, D1 and D2, and we have had some issues, as you know, about HPCL, with HPCL, to say, last year, and we'll talk a little bit about that. We have the 216 roads, 417,000 barrels of crude which we have sold to HPCL. And for various reasons related, from a PCOS point of view, after a few days of processing, they felt the quality was not up to scratch, and they had to stop processing. And so there was a situation where we could have got into an arbitration, or there was an arbitration, but we delayed, we requested for deferment. And we are trying to work hard to get to an amicable supplement, and we will soon get there. We have started lifting, and we have made decent progress there. Now, D1 and D2, these are our two wells, and D2 has watered out, and it has 93, 94 percent water. And that is the nature of the beast. You can't do much about it. If water coning happens, it happens. Of course, there is a reservoir management issue also that we have to be... Thank you. Taking into consideration, but if water ingresses in the well, then you have to go for remedials. And that's exactly what we are doing in our two workover plans. For G2, well, we will shut off the water zone through rig intervention. So the rig, the LOA, et cetera, has all been awarded, or the contract has been awarded, and the LOA has been given, the contract is awarded. And we will have the rig-on location by end of November, early December, and we'll start work over on D2 and D1. On D2, we'll blank off or shut off the water zone, and we'll open up new zones for create new place, and then we have quite a few places, including a very decent gas gap, which can produce a lot of gas. So we will be working on that. And on D1, they will do... The standard perforation clean up and we will also perforate new zones to be able to produce more from D1 and D2. So after we have done the workover, we will get on to drilling three new wells in VAD. And the workovers will get us around 1,000 to 1,500 barrels of food per day, of oil per day, and gas in the range of 5 to 7 million scotch. So that we hope to be on stream end of December, early January. We were supposed to have the rig by 15th of November, but for various logistics reasons, we will now have it. The rig was working with ONGC, but for various reasons, we now will have the rig towards the end of November, early December. Not too late for us to catch up on the production, but that will have a minor impact on the export of 15 days DLA. So that's about the two wells that we'll do, and then three new wells. We have identified the location for the rig. We have done the deathometry survey, and we are in the process of, in fact, we have let out all the contracts for tubulars, etc. They will start arriving in December or a bit earlier. We have awarded all the integrated service contracts in line to award all of the final negotiations that have been nailed. And we would be in good shape to then continue to drill after the workover program is done. Now, there is one thing that I would like you to know about our Bombay High, or West Coast, operations. Under our development rights, we today have close to 800 square kilometer of area. And that has come about because last month or the middle of the year, we were awarded P-174, which has multiple discoveries and 2P reserves of DGH-cited 2P reserves or DGH-coated 2P reserves of 21 million barrels of oil equivalent. And we'll talk a bit more about that when we get into the presentations, but that's an area that I want you to keep in mind. That we are sat on a huge opportunity in Bombay High. We have B-15, we have B-80, we have B-15, and now B-174 has been added. In Kaveri Basin, we just talked about EY-1, we will do well interventions and also drill new wells. But do realize that the new wells will be, will be done or will be drilled. Only after we have a firm take-or-pay agreement with the buyers, which could be either IOC or GAIL. It's very important to understand that this field came on with 15 million standard-to-day feed of gas every day, and it produced well for a while, but then we were done in by There were disruptions in the domestic consumption, so we were asked by our jail to stop production, etc., because there were disruptions in the final consumers of the gas, and that meant that we had to keep this field shut-in. And in a basement of Granite Reservoir, which has a lot of... Ruts and fissures and vertical porosity, if you keep the wells shut in for a long time, you would have a lot of water ingress into the gas zones and overwhelm the gas zones in many instances. And therefore, we lost production. We tried to revive it. We tried to revive it for some time, a bit, and then we got back to square one. We then went to Petro-Vietnam, which is the only other company that is running a basement in Cronaut Reservoir. At its peak, it's called White Tiger Field, and at its peak, they were making 80,000 to 100,000 barrels per day. We requested their core competency to assess our field, and they did that, and they have come back with a report that we can still make 15 to 20 million scuffs of gas in this field. And that is phenomenal, because even at a $7 to $10 price, you're looking at $120,000 to $150,000 per day. And that is very material, and it will bring back the old glory of PY1 as a producing fuel, and we are very hopeful that we'll get there. So that was, that was the one. Let me take you to Assam and there have been many questions around Assam and De Rock. So De Rock field has five producing wells and our capacity, the potential there is to produce 1.2 million standard cubic meters on a gross basis coming from all the wells. I realized that this was a wire. It has very high pressures, and that speaks to the potential of the reservoir. The header pressure, which is the pressure on the surface, is 3,000 psi. For those of you who understand this terminology, it's 3,000 times more than the atmospheric pressure. Normally, the pressures in Bombay High and other wells, flowing pressures, are in the range of 20, 30... 40 bars or 300, 400 or 500 psi, the header pressures. This has 3,000 psi header pressure. That tells you about the potential of this hydrocarbon system. So we have the capacity to go to 1.2 million standard cubic meters from this field. So as soon as we bottleneck on the When the pipeline evacuation of this gas is lifted, we should be able to ramp up within a matter of one or two days. With that said, we have additional wells which have been approved by DGH, and that will bring our production from 1.2 million standard cubic meters to 2 million standard cubic meters. So roughly an 80% increase, a 70 to 80% increase. In our capacity to produce, but we'll drill those wells only when the gas evacuation route is totally de-bottom-act. There's enough knowledge in the existing pipelines to be able to evacuate our gas. And also, indeed, if local demand develops, or we get a connectivity to the national gas grid. We have been talking to all the... All the stakeholders in this area, decent progress has been made in the DNPL line, and also in the spur line in the NRL facility, which will connect the DNPL line to the national gas grid. So NRL will not have to take a shutdown to depressurize the DNPL line. They can buy back the gas from the national gas grid and depressurize the DNPL line. And purge it with nitrogen so that the new sections which have been laid to replace the sections which have corroded or which have lost assets and integrity can be connected or tied in. So all the material for the spur line, etc. was delivered three or four weeks ago, and that is in process. Our hope is that by the end of this year, or by the middle of December, We will be in good shape to increase capacity for the stakeholders, the NPL, Assam Gas Company Limited, would be in good shape to increase the capacity of their DNPL line, which will increase the production. From the current 1.2 million standard cubic meters, which is going through that line at 40 bars, to 2.5 million standard cubic meters. Which will go at 90 bars, because the asset integrity of that line would up the investor. So, that is pretty much the discussion on DROC. Karsang, we have had multiple opportunities in the gas and oil, as you know, last call we have said we have doubled the oil production in Karsang. And we have approval to drill nine more wells in Kharsan. Or we had that we were a bit delayed in a war of contracts, etc., because of some issues with the partners. Now all of it is sorted, and the tubulars have been ordered, the rig has been awarded. Hopefully, January, early February, we will start drilling again. And then we will again double the production in Kharsan. We have found gas horizons two wells have. We have a gas potential of 8 to 9 million standard cubic feet as we speak, but we have to keep them shut in because we cannot sell the gas due to the lack of infrastructure locally, but also the pipeline. To connect to the Assam pipeline, which is not there, which is a 24th along the pipeline, and we are working to, we have started, we are about to start the survey for this, and then within 18 months, that line would be late, but we are very actively trying to look at opportunities. To sell the gas locally as much as we can. We've been talking to the audience and to the Assange bureaucrats to try and see how we can use this data. We have two new webs to build again. I'm sorry, there's a lot of background noise because of the problem. Thank you. Thank you. Can you still hear this from any others?

Yes, sir, there is a lot of background noise.

Thank you.

That's why we continue, sir.

So I'll speak closer to the mic and hopefully you are able to see and hear me, but if you are not, please call me that, yeah?

Shut up, Andy. Please go ahead, sorry. You are audible.

Okay. So, just a second. And then, uh, In Karsang, we have two deep wells to be drilled, and we believe they have huge gas and oil potential, and that would be done sometimes during the third quarter of next year. We are in discussion with the partners for those two wells, and they will really provide a huge fillip to the opportunities that we have in Karsang. Coming back to Assan Exploration Block, B19, holds 127, 130 BCF of gas, with lots of upsides, and that's an exploration block which has been awarded to us. There are some disputes with the government and the local villages about, between the government and the local villages, about the compensation to be paid for road for the access in Pinsular Ab. That is being sorted. In the middle of next year, hopefully, we'll start this. We have the full North Dirac starting January, February next year, and that, by many reckonings, reckonings is almost as big as the Dirac field that we're producing now. So Assam is going to be a huge story, not only for HOEC, but for India and also for other operators. It has been... There is so much of potential currently limited by evacuation. The government is aware, PNRGB is aware, and they are working hard. Oil India and all these stakeholders are working real, real hard to ensure that every molecule which can be produced is produced. So with that, let me come back to Campbell, and then hand over to our new CFO. Who has joined us on 1st of October, and I'll talk a little bit about that just after this. Canby, in Gujarat, we have three blocks, Asyol, Balol, North Balol, and Palaj. In Palaj, we have doubled the production. In Asyol, we have to do two wells. In North Balol, we have to put sucker rod, punts, etc. We have put a... A bed drive, which increases production, but not by a lot, which is a new technology. So we have to make Gujarat or Cambay as material. And we are teaming up with the GSPC to put our heads together to produce the limits of the world from Cambay. We are trying to engage. Third parties for enhanced oil recoveries, et cetera, and we will ensure that we get to a good position there. So let me just conclude by saying that our operating target of 11,000 barrels of oil equivalent by the middle of 2027 stays. By 2028, FY2028, we are looking at 22,000 barrels because by the time I'll bring in B15, we'll bring in B15. And 30,000 to 32,000 barrels of oil equivalent net HOEC by 29 because B174 would have kicked off. Our farm new wells would have been drilled. TY1 would have been streaming at that time. So we stay on our target, and we look forward to your good wishes and support to make that happen. We have been helped by the finance ecosystem in India. We have raised... A decent amount of loan, 125 crores, for the workovers, because some of our monies are logged in in the HPCL sale of loot. And also, we have to still dispose of the 120,000, 130,000 barrels, which we have in the FSO in Bombay High, in B80 field. At the right time, When we get a replacement tanker, we'll take that tanker out completely, and we'll do some dry docking, etc., which is also required on that tanker. But that is something that is an operational issue, and we are dealing with it on a regular basis. So these two things, the B80 in place, fresh crude and HPCL crude, if both of them are liquidated, we are looking at around 250 crores of additional funds going in in two hours. Bank accounts, and that will set us up very well for the development expenditures, but also we are looking at a higher facility with the banks in the tune of 600 crores, because 600 to 700 crores, so the total could go up to 1,000 crores, including what we have already got, because when you are drilling offshore, stuff happens. And you could have delays, etc. So you should be sat on good cash positions to be able to deal with eventualities. And because the peak of expenditure will happen all in the next three, four months, it is important that your reserves are certain, your cash reserves are there to be able to, or you have access to cash, to be able to take on the risks and, in fact, indeed drill these wells with certainty. So that's pretty much what I had to tell you. And I'd now like to introduce you to Debravata Das, Debravata Das, Chief Financial Officer. He's taken over on 1st of October. As you know, Alan Andrade and he and I worked together for a long time in British Gas and in Shell. He has told me to step down. The only and the only reason for him to step down is Because he had to commute from Mumbai. It was not possible for him to commute a lot from Mumbai at his age. So he decided to step down from the CFO role. But he will be our financial advisor. He isn't gone anywhere. He is part of us. He'll be our financial advisor. He will continue to guide and spear the finance team and all of us. He will help tremendously with our fundraising. So it's a win-win for him and for us. And he will also mentor our new CFO wherever he needs help. So with that, let me hand you over to Devirata Das. And I'm very happy to take any question that you might have.

Thank you. Thank you for introducing me. So, good evening, everyone. So, this is my first earning call at CFO of HOEC, and I would like to take this opportunity to thank our shareholder, analysts, and investors for their continued interest in the company. I look forward to interacting with all in the coming quarters. So, let me now take you through this financial performance for Q2 and H1 FI 27. So, there is a strong recovery of the profitability in the quarter 2. And quarter 2 versus quarter 1. So, revenue from operation was 25% quarter and quarter from 117 crore to 147 crore. EBITDA more than double from 21 crores to 46 crores. So, the main driver of the profit, it is that increase in the gas sale and the relation of the mungation of that stock, that HPC stock, that previous year. So, that monetization, we sold more BAT HPCL stock, which added close to the 57.79 crore of the revenue. Altogether, so, close to 80 crore of that HPCL stock, we liquidated in H1, HOE-1, F527. So, another, that lower inventory moment valuation, the charge from that Thank you. From inventory moment fell about 23 crores, from 41 crores to 18 crores. So coming to that half-year FI27, half-year FI26, so half-year revenue is down from 405 to 265 crores. So there is not a decline in the revenue in the absolute term because last year the first half includes 258 crores that sell to that HBCL. So that is a one-time sale that during that quarter. In addition to that one, so there is one that one-time adjustment of reinstatement of investment that is close to 32.5 crores. So in our BAT investment. So EBITDA is up 20% from 56 to 67 crores. Profit is up 46% from an adjusted profit of 30.07, so after elimination of that one-time adjustment of restatement of that investment. So now on the liquidity part, so we are having that operational cash surplus of 39 crores during this half-year ended September 23rd, 26, against that 18 crores negatives last year. So, there is a swing of that 57 crores largely contributed by, I can say, that HBCL stock relation of 80 crores. We raised 179 crores, and that including that credit facility from that financial institution close to 125 crores, and that largely will be spent on this, that BIT work cover and effects of BIT work cover and for that really. So, we are having the closing case of 158 crores, and so large part, as I mentioned, is going to be spent on the effects across all the fields, including the BIT in the large. Thank you. So, that is coming to FI27, Q2 FI27, consolidated revenue stood at 151.78 crores, while EBITDA was 37.51 crores. Translating into EBITDA margin of 24.71%, profit after tax for quarter stood at 19.03 crores. For H1 FI27, revenue was 275.78 crores. EBITDA was 63.18 crore and profit after tax at 25.10 crore. So our performance during this first half was primarily influenced by increase in volume as well as the stock relation. As you enter in the next phase of development program, an important focus for us is to conversion of the earning into cash. So, that will be the priority. So, during H1 operating cash, as you mentioned that we have 18.23 crores. So, with the cash conversion primarily generated by the relation of that previous year, B80. We expect this to more improve as there will be gain in the momentum of the relation of the previous year BAT inventory, as well as the current stock of FSO. Our focus remains stronger cash conversion from our existing production asset, which will fund our development of portfolio internal. When it comes to BAP, We have made progress on in one day in the inventory, and we have so far realized 80 crores, with approximately that 36.103.90 million metric. So, on the balance sheet side, we will close September with cash and cash equivalent at console level 166 crores. And gross debt of 211.11 crores, resulting net debt of 44.90 crores. Our net debt to EBITDA, so it is at 0.71 times. Our approach will be to balance the internal cash generation and external funding requirements. So while ensuring the capital deployment remains aligned with project milestones, And expected production edition. So with that, we can open the floor for questions. So that is from my side.

Yeah. Thank you. Thank you. Before we open the floor for the questions, let me just put in a snippet there. That with the award of B174 field, the SF field, for the first time, HOEC has crossed its 2P reserves to more than 100 million barrels of oil equivalent, and that is a good place to be in. So that is something that I wanted to share with you, because I have not followed the flow of the slides. But I just wanted to bring it up to you that now we are sat on a two-key reserve of more than 100 million barrels. It is 104, approximately, and that is a good place to be in. That puts a lot of challenge on us and expectations from the shareholder community to fast monetize this reserve. Because out of the 104 million barrels of oil equivalent, we have not produced more than five or six. So, there is an opportunity for us to run as if there is no tomorrow. So, we will have to do that, and we look forward to audio help and support. So, let me stop here with a huge thank you to all of you, because it's a festival season today, and you have still chosen to dial in. So, thank you very much. And let me stop here.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Thank you.

Your first question comes from the line of Anupaf Goyal with Cosma Ventures. Please go ahead.

Yeah, hi, sir. So, you have given very detailed comments, so really appreciate it. So, first, I just want to start with a very broad question. Like, it's very hard to nail where the EBITDA and PAC numbers will land up on a successful ramp up to 10,000 balance flats. So if you can just share some thoughts on EBITDA and tax margins across our four key assets of Dero, Kharsan, PY1, and DAT, I'd say a $70 crude price, because there are so many factors like difference in pricing, cost of production, government share, the mix of oil and gas, onshore, offshore. So some broad thoughts across these four assets.

So, I think you yourself have said very well that this is subject to a lot of variability, and not in the least the gas and oil prices themselves. The first one, for B80, we are, we have the operating costs in B80 are the highest. Because we have to have offshore OSVs, offshore support vessels, SBM maintenance, tanker maintenance, and all of that, on a consolidated basis. But we also realize high gas prices on the gas exchange in BAT. And the crude does not immediately support the cash flows. So our margins are in the range of 30 to 40 percent. On a regular basis. Every $10 increase in the oil prices contributes roughly 30 to 40 crores in the revenue flows. So let me stop there because otherwise there are multiple steps in profit petroleum calculation and profit petroleum calculation and it follows different tranches. And so for this quarter, we had 10 crore additional profit petroleum and things like that. So I will reserve my comment on what would be the return. But 30 to 40, we are in the range of 30 to 40 dollars of margins in NBAT on a company basis. And the quarter on quarter, we can give you exact numbers, but it is very difficult to predict. What we can predict, though, is the volumes. And then we'll leave it to you to calculate what could be our profits. Operating costs, and we can tell you that operating costs on a company basis ranges from 20 to 25, 20 to 30, depending upon what is the diesel prices and others, commodity prices. So, we are on track for the volumes that we have said we would produce. As of today, we believe we'll get there, or be it that we have 15 days delay in the workover, but we will get there. So, with the volumes, I suggest that you do the first pass calculations and get back to us, and then we will get into the details, because there are at least 10, 15 variables which determine what would be the final realization from these volumes.

No, sir, this was helpful. So, $30, $40 on a company level. Okay, got it. And so, just for B80, so you mentioned the targets we have for work over. So, the targets post the two new wells drilling stage, right? That's $5,000, $6,000, $8,000. And I just wanted your thoughts, sir, on the monsoon risk, because, you know, that risk is always there during the monsoons, we say, sir, disruption. And that has really hurt us in the past. And, you know, in case we do successful drilling and encounter that risk, you know, are we, like, any, like, are we better at this, like, learning from the past few years? How should we think about this risk?

Very good point. Our volumes are premised on new wells and workover of two wells. The drilling itself will finish by 15th of May because we will have to demobilize the rig by 15th of May. Otherwise, they lose tow insurance and they will have to continuously stay and we will incur standby charges throughout the monsoon. So whatever will be the status of completion of the wells, we will have to demobilize the rig. So that's, and we do hope that we should be producing from these wells by that time. So that said, monsoon disruptions are for real, but what we are trying to do is, we have created a very small... We have the capacity on the MOPU itself to have at least three, two to three days of production, but with increased production, it will be lesser. So that if there is a short disruption in the SBM and the Jankar, etc., we don't stop production. I mean, you should note that this year, even when our B80 is down in this monsoon period, there is not one day we shut down the total production. We continue to produce from B1. Throughout the monsoon. So, we are getting there. There will come a time. Next year, we are doing a complete evaluation of our... Subsea infrastructure. We are changing some flow lines. We are looking at the design itself of the SBM. Not that things are wrong there, but is there a better design to ensure that the subsea hoses, et cetera, are not impacted by the metocean conditions which prevail during the monsoon in the western offshore in India. But we are working towards it. This year was a... Good story on monsoon reliability, I mean, continuing our ability to produce through the monsoon, because we were continuously producing, albeit at a lower rate, because of D2 well completely watering out, or 93% watered out. Had that not happened, you would have seen zero destruction in monsoon this year itself. But we had a problem. So we had an SVM problem, and we created space in the mopu, storage in the mopu, so while the SVM hoses were being repaired, two, three days, it took four days, we were continuing to produce from one of the wells. So at least that assurance we have, and we have a line of sight on how to improve monsoon availability of our facilities. Let me stop here.

Got it, sir. And so the PPT mentions the drilling rate contract has been awarded for the workover and the two new wells. So is it like it's been awarded for the workover and then we will see the outcome and then take a call to bring the new wells? Because you had mentioned earlier, it's a single campaign. So just want to check if you have procured everything to do both. We have procured everything.

We have procured everything to do for the workover and the drilling of new wells. Because look at this. How wrong can we go? I mean, things can happen. Things have happened. ONGC's reserves, they had to take 70% downgrade in 98 bar 2. Reliance had taken huge downgrades in day 6. So stuff happens. But right now... Thank you. We are sat on roughly 35 million barrels of oil equivalent in BAT, 26 million oil, and 11 to 12 million BCF of, I mean, the balanced gas equivalent, oil equivalent of gas. So totally 35 million, of which we have produced 2.5, 3 million, or not more than 2.5 million. So how long can we go? That's the question that we have to answer. Even if I have half that amount, I'm still doing well. So we have to go for these wells, and we have clear structures we can see on the logs and other seismic data, and we do hope they will turn out to be a good thing. What is important for you to know on how we are managing this risk is, I'm not putting a platform, a marshalling platform on top of these wells. I'm doing it on the, this is a new, there's not a new technology, but not often done, which is a muddle suspension wells. We will drill the well and test them without bringing a superstructure on it. We will drill through a template that is being designed, and then we will drill sea wells. If we find we have problems, we will change the well trajectories, or in the worst case, we may not do a third well, but that is 0.01 probability, 99.99, we will do all the three wells. But what I'm saying is, I still have an opportunity to save some money in building a new platform. I'm bringing it on the top of a valid platform on these three worlds and tying it back to these three worlds. If this wealth don't turn out the way they're supposed to be, but that chance is mean. Obviously, it is very low, but that's how I manage it. We are managing the rest.

So, just my last question before I...

Sorry to interrupt. Mr. Goyal, we request you to return to the queue for follow-up questions, please. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, we request you to limit to two questions each and reach on the queue for any further follow-up questions. Thank you. The next question comes from the line of Nirbhai Mahavar with N2 Capital. Please go ahead.

Yeah, good evening, sir. Sir, could you please repeat your volume guidance for H2, FY27, and FY28 on gross and net basis?

Okay, no, so I've said by, you guys are all finance visits, so let me save a month and then you can say it is a FY or F2, because I'm guided by the monsoon in the West Coast. So by June of next year, we are looking to have roughly 10,000 barrels. of oil equivalent net HOEC production. Now, that could be 8.5 or that could be 11, but we are looking at 10,000 barrels of oil equivalent by June of next year. Why do I say June of next year? Because drilling, et cetera, all stops by May. We have the final wells, the testing data and everything. We have put the offshore facility. To start and late the pipeline, additional pipeline, etc. After that, we can't do anything. If it slips, it goes post-monsoon. But we have a fair handle on our ability, on the scheme of things to get to that production. By that time, Assam will also... Produce from at least from 0.8 to 0.7 that they're producing now to 1.2, which is 0.5 more. So that adds another volume. Karsan will have drilled six or seven wells by then, and that adds the volumes. And then we have Kambay and PY1, the interventions will have been done. And then we will be in a position to do the new wells by June, July of next year. So 10,000 barrels is our base case for next year, June. And then by December, when we have done the, or by December of next year or January of next year, we will get to PY1 production completely, 15 million stocks, which is roughly in barrel terms, will be Roughly 1,500 barrels to 2,000 barrels of oil equivalent, so that takes us to 13, 12 to 14 million barrels, and then we'll have B15, which we are hoping to develop in the quarter one, quarter four of 27, 28. And that will be on stream by June of 2028, and that will give us additional 3,000 barrels, 3,000 to 3,500 barrels. And then B-174 will be online. So our target is by end of 2028, or the financial close in 2028-29, we are looking at 22,000 barrels. And then... Then we do B-174 and get 230, 32,000 barrels.

I'll just clarify this. When you're saying 10,000 barrels by next, by June 27, this is gross or net?

This is net BOE, net HOEC. I thought I said that, HOEC, net HOEC.

You said net, so you're saying what you're producing right now, 2,000 will become 10,000 by the next one year.

Yeah, and that is a... And that foxes many people, because unlike manufacturing in other sectors, where increasing five times is not heard of in eight to ten months, here we are drilling wells, and the reserves are there to be produced. So it is something that happens in the oil and gas sector.

So, this 2 will become 10,000 as per your projections in next one year, and in next year, it will become 30,000 is what you're saying.

Yeah, that's right, sir, because as I said, we are sat on 2p reserves of 100 million barrels of oil equivalent. And typically in the oil industry, if you have 100 million barrels of reserves, you can easily have a production plateau of 6 to 7 years for 40,000 barrels of oil equivalent.

Thanks a lot, and wish you all the best. Thank you, sir.

Thank you. The next question comes from the line of Manpreet Aurora with Northern Lights Wealth. Please go ahead.

Yeah, thank you for the opportunity. Before I ask my first question, just a clarification on the numbers, DPT. You've given, you know, oil and gas realizations for some of the fields. Can, for DROC, can you tell me what was the average realization for gas?

$7? Oh, DROC was $8? Just a second, I can give you that number. I have a, what was that, what, let me see. I think 7.8 or thereabouts, sir. 7.8. I have it in the slides. Give me 30 seconds. Let me get there.

No problem. So should I go ahead with my first question?

Yeah, it's roughly around $8, $7.8 to $8.

Okay. Okay. Thank you. So, you know, my first question is on, you know, the volume ramp that we've seen in Dirok this quarter for 22.1 million scuffs per day. Now, our understanding was that You know, because of the APM pricing, the way it works, customers are going for, you know, lower-priced cash and then only choosing the premium cash, and that's why we were in the range of 14, 15 for the past few quarters. So has that materially changed now, and should we see this around it, or, you know, there's something special happening this quarter?

So, in Assam, we are not in, so this is the DGS, Director General of Hydrocarbon, prescribes the PPAC price, and we have to go by that price. So, it was, it was, just to give you an understanding, in August, we were around 7.78, we were in, so we have, from year, month on month, it has varied from

Thank you.

Seven and a half or 7.78 to today we are on $12. So every month, and this is linked to the Indian basket of food. So today's realization in Biroc is $12 per MBTA.

Yes, sorry to interrupt. I'll just clarify my question because I think I may have not communicated it well. What I meant was, you know, we were in the earlier years doing 20 plus million scouts. But then we came down to 15, range of 15, 14. And the reason that was given to us was that the premium gas was being taken as a second option because, you know, the customers in Assam were taking a lower price gas from, you know, the other producers. And so therefore, the volumes had reduced. Now, this quarter, I see that it has gone up from 15 to 22. So, just wanted to understand, has the demand increased, and can we assume that 22 million scuffs will be going forward the run rate, or, you know, something special happened this quarter?

No, it will be. It will be. Why? Because our gas is a rich gas, and IOC will realize it. Oil India, which takes the gas in market set, they also make decent volumes of natural gas liquids. And, but you are very right. The Assam Gas Company, AGCL, which is our other customer, it has a huge price sensitivity. And they take, and they take roughly 20% of our gas. So, there is a price sensitivity there and they take at APM because NRL takes that APM from Assam Gas Company. But as soon as this pipeline is linked to the National Gas Grid, NRL will become a reseller. And we will try, they will probably charge a marketing margin, and that needs to be understood, or they will consume our gas. And if they are not able to take our gas because of our price, then we will have the opportunity to sell at the gas exchange through the National Gas Grid. So my hope is that gas will be impacted, but to an extent of 10 to 20 percent. So, not more, because Oil India will continue to take our gas at this price, and they have been taking it for a while now, and we have increased our production on that basis, therefore.

Okay. And on the DNCL pipeline, you know, you had mentioned in the last call that, you know, there will be some hot tapping required, and, you know, there will be certain sections that are going through, and, you know, if you can update us on the call, and because we...

Sorry to interrupt. Sir, we are losing your audio in between. Am I audible now?

Yes, you are audible. Go ahead.

So, I'll just repeat my question. On the DNPL pipeline, you had mentioned in the last call that it needed an upgrade, and there were spot-tapping options that we had performed. And, yeah, so just an update from Jim on that side.

Yeah, no, I will. So, look. Hot tapping, we talked with all the stakeholders, and AGCL very actively considered it, and they got all the bits, they evaluated all the bits, but they got a very high price on the hot tapping, and the access to these locations was a bit tricky because the Assam floods had made that access very switchy. So, instead of hot tapping, and an RL came in the picture, and they said, look, guys, I was earlier making the depressurization of DNPL dependent on the shutdown, because only when I take the shutdown, I will depressurize the DNPL. That strand has been changed now. Because we are putting a bypass line, NRL is putting a bypass line, which I had shown last time also, which connects the DNPL line to the national gas grid. And there will be a tap-off, small tap-off there, where an RL will buy back the gas from the national gas grid and continue to produce while it will depressurize. It will not take any gas from DNPL line, depressurize it completely, flush it with nitrogen, and then allow a standard conventional tying in by cutting the wasted section and creating laterals or welding sections with valves, et cetera, to connect the new section which has been laid alongside the sections which had reduced thickness and asset integrity issues. So the hot tap was very actively considered. It went to their board. Cost had come in high, and folks like T.D. Williamson and others were giving them a four to five months schedule for hot tap, and also the access was an issue. So NRL stepped in, and they said, we'll give you a shutdown. We'll depressurize the line without us having to take a shutdown. So that's happening now. The spur line material was all delivered in NRL's premises. Early last month, and they should have completed, or they will complete the bypass line soon, an RL bypass line soon, and with that, they will start buying back the gas from the national gas grid and depressurize the DNPL for the rest of the work. Did that make sense to you?

Yes, sir. Yes, sir. Thank you for that. So, that's the estimated timeline for this. Sorry to interrupt, Manpreet, sir.

We request you to return to the queue for follow-up questions, please, as there are several other participants waiting for their turn. Thank you. Your next question comes from the line of Andrei Pursottam with COGI to advise us. Please go ahead.

Thank you for taking my question. You know, last time we had a conference call, the time plan for us being connected to the grid and gas was stated to be somewhere around December of this year. Where are we on that right now? I know this is not something that you directly control, but what is the information that you have as to what is the time plan or the revised time plan with whatever information that you might have?

Okay, sir. I just said that five minutes ago that when the spur line is done, which would be end of this, which would be in any time in November, they will take another 15-20. December as of now still stands. This is what I said, and you are right, we are not, but we are very active. Following up with our stakeholders, help and trying to help them, whatever they need from us, and they have reached out to us on many things. AGCL and us, we are on very good terms for discussion on technical opportunities or aspects to reduce the cost and the time. But, yes, December end still remains, sir. Our best case is middle of December or early November or early December. But by 30th, it should be done, sir.

Thank you. That's very good news. Very encouraging.

It's anything for the country because we all have to now discard company hats and put on the India hat and that $24, $25. Yes, price. Every molecule that can be produced should be produced.

Thank you for answering my question.

Thank you. The next question comes from the line of Manan Patel, an individual investor. Please go ahead.

Thank you for the opportunity, sir, and thank you for the explanation, very detailed explanation. Sir, one question, our CAPEX on B80 has been increased from $45 million to $65 million compared to last quarter. So, can you explain why is that?

BAT, Wells, you're saying Wells was always 45, and Workover was always 15. So, 60 was our case last year also, last quarter also.

For Wells, 45 still remains. Okay. So, I was under the impression that total is 45. No, it's not. So, and just one confirmation. So, once that NRL and DNPL connection happens, our realization should be closer to the IGX realization, or how do we look at that?

So, I will not count the chickens till they come home, but we would be allowed to sell on the national gas grid. And that will definitely be higher than the APM. Right now, my realization from Assam for this month is $12 per MMBDU. We hope to be in the range of $9 to $11 on an average. That's the hope, sir.

Yes, sir. Thank you and wish you all the best for the coming.

Thank you. Thank you. Thank you so much.

Thank you. Your next follow-up question comes from the line of Anubhav Goel with Cosma Ventures. Please go ahead.

So, can you just elaborate more on the likelihood of T-by-1 drilling happening next year? Because, again, in the last quarter, you had mentioned, until the contract is firm, you will not drill the wells. And, you know, so far, the contract is still not finalized. So... You know, what are the odds of this actually happening?

Very good question, sir, and I'm asked this by my board and everyone. So here is the thing. If I don't have a firm gas sales contract or pay contract and I spend 20, 25 million drilling these wells, And then I have to shut them down. I'll be back to square one, what happened 15 years ago when these wells came on stream. So that is a condition precedent for us. But it is not that after it is signed, I'll go. Once we have all agreed, then we'll start drilling because we are already planning from a technical perspective. We'll be ready at the drop of a hat, but we'll not award. When we contract till we have a clear line of sight or an agreement, or even a heads of agreement for the take-off pay with IOCL or GAIL. Now, there is a very clear line of sight. IOC has a has a Station, which is roughly 24 kilometers from our PY1 plant, and there they are running that facility or that pipeline, which is going to their national gas grid at 63 bar. From the PI1 to that line, that line is a gale line. From PI1 to that IOCL terminal, there is this 24-kilometer line exists now, but that's a gale line, and that operates at 10 bars. There is a need to put compressor. On the IOCL premises to be able to boost up my pressure from 10 bar to 63 bar so that it can go into the national gas lead and into the distribution networks of IOCL. So what we have suggested to IOCL is because the compressors have two years of lead time, let's get rented compressors. And we have gotten quotes for rented compressors. And as soon as we have further discussions with them and there is an agreement, We will very actively look at this. So, with the rented compressors, we can boost up the pressure of the PY1 gas, and then it can go to their national gas grid. Gale is also showing interest. They are currently limited by a volume of 3 to 4 million scuffs or 2 to 3 million scuffs from PY1. But they have shown interest that new buyers might also come in. So, we will closely watch the situation. So, whether I'll sign a take-or-pay agreement next year, I give it a P50 chance because rented compressors have a cost and it has to go through a board. There's sole sourcing in many instances. So, what we will be prepared as soon as the gas sales contract is signed, we are ready to go. So, we are in the game. But before that, we are doing the well intervention to take our production to 3 or 4 million scouts per day so that we can continue to sell to Gale.

Okay? Got it, sir. So this was clear. So just confirming, essentially, it is the sourcing of compressor, which is the bottle stack. What about, like, if this issue is solved today itself, like, do they, can they absorb this gas? Like, do they, do they have the...

Oh, yeah. This and more. This and more. Because then it goes to their gas grid and they have multiple opportunities to sell. They are also into, they are supplying to a lot of, so IOCL, if you... Try to find out they are getting very heavily into gas plays. So they are operating their pipeline at 63 bar already at that from their station. And our line going to that station is roughly 24 kilometers operating at 10 bars. But they will take all the molecules that we produce. That confirmation we have from them.

Got it, sir. And, sir, for Kharsan, for the next nine wells we are drilling, I think earlier, we had shared targets of 1,800 barrels of oil per day, but, you know, the gas part is difficult to evacuate. So, in terms of oil now, what targets should we hold, once we are done with the next nine wells? And they are still in the range of... Yeah, so right now it's a grocery store. The gas connection will take many hours.

So we are currently making, so 12, on a gross basis, we'll look at 1,400 barrels, 12 to 1,400 barrels from Karsan. On a gas and oil equivalent basis, if you include all the gas, we have exceeded our target. But because we have struck gas and we can't sell it, oil will be... Doubled from 680-700 barrels per day to 1,400 barrels, 1,200 to 1,400 barrels per day. That is the ambition, sir. I mean, that is what the technical studies tell us.

Got it, sir. And sir, just on this territory, I'm going to request you again to call back to the queue for follow-up, please. Thank you.

So, Anubhav, please come and have a coffee with us, and we will go into the details. I don't want to leave you shortchange. Come over sometime, and we'll talk. Surely, thank you so much.

Thank you. Our next question comes from the line of Uday Warnaker with an individual investor. Please go ahead.

Hi, can you hear me? Yeah, sir. Just on the B-174, this new field which has been awarded to us, the area is very large. Would we be looking to replicate B-80 model in that? I mean, buying up new offshore facilities and setting up, and what would be the timeline of B-15 and B-174 coming online? What do you think would be a suitable timeline, three to four years or more than that? And also, one more thing, the Palais R2 area, did we get the production sharing contract from the government? I think we were going to get...

Yeah, it is eminent. It is with the MOPNG. There are some bank guarantee issues and other stuff which we are sorting out. But it is imminent, sir. And that is, thank you for raising it as a very prolific drop, because next to that, folks have discovered wells or produced wells at 300, 400 barrels per day. So we are looking forward to that block, sir. So it should be, my hope is that by January, we will have that all in place, all the PSE extensions, etc., will all in place for the R2. Now, coming back to your first question, which was the B-174, it has a lot of discoveries, at least, and different locations. So, we have to come up with a very innovative development concept, where if we are close to ONGC's facilities, we'll try to time there and pay them a trailing charge. Or we might look at a minimum facilities platform. There are eight locations, six or five material discoveries for us. So we will have to plan that very well. But yes, there would be new facilities that we will build there. And under the Samutra Mantan, the government has come up with this support for facilities. And there could be... The sharing of facilities is also there, and we will talk to the local, the other winners or awardees of the blocks, and we'll come up with a situation where we do not duplicate efforts and duplicate resources and waste money. Now, from a timeline's perspective, here's the thing. We will finish drilling in BAT by next year, June. I mean, try to be on stream in BAT next year, June. Come October 2027, we'll start drilling and hope to be on stream by 2028 June. Come October 2028, we'll start drilling in B174. B174 will take us two years for complete development because they are spread out field. Multiple accumulations are there. And therefore, we might have to do more than one facility. The 2P reserves are 21 million. That is the DGH reserves. And historically, we have seen, and we have just seen in Dirog, what was given as 1P for condensate was already produced. So we have gone into a 2P situation, which is now becoming 1P for Dirog. So, similarly, we will assess this field completely, and our hope is 21 million will go much higher, and therefore, we will have to have more structures of age that will pull in resources with other operators. Does that answer your question?

Yeah, thanks, sir. Sorry to interrupt. Sir, we would request you to fall back to the queue for any further questions, please, as there are other participants waiting for the turn as well. Thank you. Our next question comes from the line of Manfri, the Aurora, with northern lights, but please go ahead. Yeah, thank you for the follow-up.

Sir, on the DAT... You know, you mentioned that the FSO will go for dry dock between January and March next year, and that's when we'll probably sell the oil that is there. And, you know, given that what happened with HPCL, you know, what steps... Have we not taken to ensure that this, you know, discrepancy doesn't happen because, you know, even then we had a COSA and the oil was taken, but, you know, we had to go into arbitration. So have we taken additional some steps? So when the oil is taken, you know, there are some, you know, guarantee that nothing like this happens again.

Yeah, we are testing, so long story short, we are testing the samples on a regular basis, and we don't find any aberrations. Why I said January, February, it could be earlier, but we are not getting small barges or vessels, given the situation on the tankers to lift up, lift small carbos. We have given our sample structure to IOCL. They have not seen problems in that, but we are waiting for the finalization. And the samples that we have given, we have all the contents of chlorides, et cetera, for them to have a first-part view so that folks don't come back later. And we have done that, done the same in HPCL also. But we will be very rigorous with the testing. We'll have third-party testing. I plan to be on the barge myself, on the tanker, to ensure that everything is done properly. Not that I will add a lot of value, but I just want to be sure that things are being done right. That said, we are regularly testing our wells, both D1 and D2, and they have zero. When I say zero, it means zero, nil, to write content in these wells. So we have to, but your point is taken, we are doubly careful that the repeat doesn't happen. And that repeat is, I'm not saying there is a causation there or admitting any liability by saying this. But all I'm saying is, we don't get into issues with any party, any of our buyers. We want to give them confidence that, at an issue, everything is right.

Yeah, that's great to hear, sir. And, sir, on the USD $65 million, you know, that we need for CAPEX, are you looking to raise some equity as well, through rights here or something, or all through cash flows and debt? Say again, sir. You know, we have a major CAPEX program coming up, and, you know, I was asking whether, are you planning to raise some equity as well to finance that, or it will primarily be our cash flows and debt only?

So it is not off our table, at least in PY1, if we, and it will take a lot of discussion, but if we have a strategic partner who wants to partner with us on PY1, At the right price and percentages, I think I might be speaking out of turn because all of this has to go through the board. But on PY1, we can definitely take partners and infuse equity, et cetera. I mean, dilute equities and whatever is needed to be able to raise funds. But that said, we have got good response from the market, from the banks, and we are hoping to have. We have cash both from our books, but also from the lenders to be able to go through KPEX plans. But if there are some firm proposals, Very happy to look at that, especially for people.

Yeah, I'd like to add one thing here. So, whatever that CapEx, we do have the plan. So, we'd like to meet those CapEx, mix of that internal accrual as well as the external funding. So, if at all, as he mentioned, MD mentioned that anything that, okay, that project level, any investor is interested. So, the funding and all this structure will be at project level. So, may not be that equity at HOEC level. Yeah, so as I said, for PY1, you cannot opt for that.

Yeah, yeah, so there are many things involved in this, but for one field, for a project level, etc. And as we speak, we are very actively looking at a project level. So, collaboration not from dilution of equity, etc., but we are looking at various constructs, commercial constructs in which we ease off the capex pressure and still do the wells. So, we are doing multiple constructs with many agencies, and we have a lot of supporters in that sense.

Great to hear that, sir, and all the best for the future.

Thank you.

Thank you.

Thank you. Thank you. Ladies and gentlemen, we would take that as our last question for today. I now hand the conference back to the management for closing comments. Over to you, sir.

Thank you. I can only say that the shareholders, all the questions that come from them, they help me clarify my own thinking, our company thinking, and we get sharper after every call with you. So thank you very much. And we do look forward to coming back with the good news. There will be always challenges, but we keep our chin up and do our best. So thank you for all the support and wish you a very happy Diwali. And you can now return to buying gold on Dhanteras. Thank you. Bye-bye.

Thank you. Thank you. Wish you a happy Diwali.

Hello, team. Are you still there?

Yes, sir.

Okay, so that's all from my side. If there is any questions, they can always write back to us and we'll be happy to take.

Thank you so much, members of the management. On behalf of Hindustan Oil Exploration Company Limited, that concludes this conference. Thank you, everyone, for joining us today, and you may now disconnect your lines. Thank you. Thank you, all. You have a good evening. Thank you.