Hindustan Oil Exploration Company Ltd Q2 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
No
Order
N/A
Capex
Yes
1 of 4 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- Expectation to achieve full production from B-80 and Dirok fields, with plans to drill additional wells in Kharsang western region and PY-1 to tap full potential.
- Production from Dirok to ramp up to 50 million cubic feet per day (mmcfpd) by Q2 of next financial year, with further increase to 70 mmcfpd from FY25-26 after connectivity to National Grid and pipeline expansions.
- Incremental production from new fields (PY-1) expected to be sold at market/PPAC price, providing pricing flexibility.
- Plan to drill three additional producers in B-80 by FY26-27, with possible water injection to enhance recoverable reserves.
- Demand constraints expected to ease significantly with commissioning of pipelines connecting to the National Gas Grid by 2024-25 and 2025-26, facilitating higher offtake.
- Revenue dependence to reduce on B-80 and Dirok with diversified field developments expected post-2026-27.
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Fundraise plans
No- Currently, the company does not anticipate any immediate need for fundraising.
- The capital program is planned to be met through internal accruals.
- If a need arises during ongoing programs, fundraising—either equity or debt—may be considered at that time.
- The company prefers equity fundraising over borrowing if required and will approach investors accordingly.
- In the immediate future, no fundraising is planned as operations are expected to be comfortably carried out with existing resources.
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Capex plans
Yes- Planned capital outlay for the next three years is approximately ₹835 crores (Page 14).
- Work program includes:
- - 1 workover in Dirok this year and 2 more in FY 24-25.
- - 6 development wells and 1 deep well (3,000m) in Kharsang in FY 24-25.
- - 1 development well in PY-1 and 2 wells in North Balol, 2 wells in Asjol, 3 well interventions in Palej in FY 24-25.
- - 1 exploration well in B-19 in FY 24-25.
- - 2 wells in Dirok in FY 25-26.
- - 3 wells in B-80 in FY 26-27.
- Financing expected to be mainly through internal accruals; equity may be considered if needed (Pages 14 & 23).
- Plans to drill wells in Kharsang western region and PY-1 to reduce revenue dependence on B-80 and Dirok (Page 26).
- Additional compressor for low-pressure gas may cost less than $1 million; sourcing in progress but dependent on well activation results (Page 26).
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Margin guidance
Category 3- HOEC plans significant drilling activity over the next three years, including 12 wells in FY24-25, 5 wells in FY25-26, and 3 wells in FY26-27, with a capital outlay of about ₹835 crores.
- Production ramp-up expected mainly from B-80, Dirok, Kharsang western region, and PY-1 blocks, reducing revenue dependence on B-80 and Dirok.
- Once new gas pipeline lines connect to the National Grid by FY24-25 and FY25-26, demand constraints are expected to ease, enabling production ramp-up to 50-70 mmcf per day, improving revenue.
- Activation of D1 well and workovers will aim to increase oil production towards initial expectations of ~5,000 bbl/day at B-80.
- Financially, the company expects to fund growth primarily through internal accruals; equity raise considered only if necessary.
- Management emphasizes sustained production, operational efficiency, and improved off-take to drive future earnings and EPS growth.
Order book
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What Hind.Oil Explor.'s management said in earlier quarters
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