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Hindustan Oil Exploration Company LtdQ1 FY25

Hindustan Oil Exploration Company Ltd Q1 FY25 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: 160P/E: 30.1Market Cap: ₹2.2K CrSector: Oil

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3
  • Focus on completing drilling of wells both onshore and offshore to increase production and reserve base.
  • Expected stepwise increase in revenue from Kharsang wells, with each well connected to production adding ~200 barrels every 30 days.
  • PY-1 production depends on well drilling and testing; targeting 5 to 6 million cubic feet per day per well, timeline clearer by end of June after Petro Vietnam report.
  • Dirok field expects increased volumes (up to 35-40 mmscfd) once pipeline DNPL connectivity to National Grid is established, anticipated from Q3.
  • B-80 and B-15 production ramp-up contingent on drilling and workovers; B-15 expected to commence production in ~30 months.
  • Oil inventory currently held to await better prices (~$75/bbl benchmark), with storage capacity up to ~900,000 barrels.
  • Management refrains from providing exact volume or revenue guidance until well testing and connectivity are confirmed.

Margin guidance

Category 3
  • The company aims to increase production and reserves by completing drilling of wells both onshore and offshore.
  • Growth targets depend on successful drilling, testing, and hooking up new wells, especially in blocks B-80 and B-15.
  • No specific earnings or EPS guidance is provided due to uncertainties like fluctuating oil prices and drilling outcomes.
  • Management refrains from giving production or revenue guidance, citing unpredictable market prices and operational risks.
  • Capex plans are ongoing; however, debt levels are expected to stay below 10% of market cap, with possible INR 200-250 crores debt if internal accruals are insufficient.
  • Revenue growth is linked to the timing of oil sales since current inventory is held awaiting better prices (~$75/barrel benchmark).
  • The company expects positive EBITDA margins if oil prices improve, but recent quarters were impacted by lower sales and prices.
  • Overall, growth depends on operational success, market conditions, and pipeline connectivity facilitating gas sales.

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Fundraise plans

Yes
- The company plans to keep its debt below 10% of its market capitalization. - Expected debt level by the end of the year is around INR 200-250 crores if internal generation is insufficient. - Capital expenditure (capex) programs are mostly on deferred payment terms, helping manage cash flow. - Management indicated potential raising of debt for offshore operations as and when required. - They are in discussions with bankers to obtain financing at lower interest rates. - No explicit mention of new equity fundraising in the provided transcript. In summary, Hindustan Oil Exploration Company Limited is likely to raise some debt within a controlled limit to fund growth, particularly offshore activities, but no current plans for equity funding were disclosed.

Order book

The provided transcript from the Hindustan Oil Exploration Company Limited conference call does not explicitly mention any details about the current or expected order book or pending orders. The discussion primarily revolves around production volumes, pipeline connectivity, oil inventory management, drilling plans, and financial outlooks. There are no specific references to orders received, order book status, or pending orders in the provided content.

Capex plans

Yes
  • Drilling additional wells is planned to increase production from 40 to 70 units (Page 22).
  • Capex timeline includes PY-1 post June 1, B-80 post-monsoon, and Dirok in Q4 (Page 21).
  • North Dirok drilling to start, followed by other development wells to augment production once pipeline connection is established (Page 21, 9).
  • For B-15, capital investment is ongoing with expected production mode in 2 to 2.5 years; plans to drill 4 wells (Page 11, 12).
  • Offshore drilling wells: contract for 9 wells in Kharsang followed by 9 more, totaling 18 wells (Page 9).
  • Capital work in progress includes drilling stores, spares, and construction of a ship for PY-1 (Page 14).
  • Potential debt raising of INR 200-250 crores if internal generation is insufficient (Page 16).

How does Hindustan Oil Exploration Company Ltd rank vs peers in Oil?

Pro feature
1Hindustan Oil Exploration Company Ltd
Rev 3Mar 3

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