Hindustan Oil Expects Production, Revenue Boost After Block Cleanup
The company expects a 50% uptick in production in fiscal 2025, according to Managing Director Ramasamy Jeevanandam.
Hindustan Oil Exploration Co. is producing an additional 1,000 barrels of oil equivalent per day, according to Managing Director Ramasamy Jeevanandam. This is after the cleanup of its block B-80 offshore oil field resolved blockages, with the two wells in the block now lined up for production.
While multiple delays, especially in the above-the-ground facilities, led to inconsistent production, the clean up is not only expected to increase production but also the revenue potential of the block.
About The Block
The company won the block in the Discovered Small Field Round- 1 held by the Directorate General of Hydrocarbons. The field is a joint venture between the company and Adbhoot Estates Pvt., with the oil exploratory having 60% participating interest.
The block has the potential to produce over 8,000 barrels of oil equivalent per day, according to HDFC Securities Ltd. The first offtake of oil and gas was said to be 5,000 barrels of oil and 15 million metric standard cubic meters of gas per day.
Higher Production
The company expects a 50% uptick in production in fiscal 2025, according to Jeevanandam.
With both wells—D1 and D2—now cleaned up, Hindustan Oil Exploration has reported significantly higher production levels at the block currently, an exchange filing said on Monday.
The field's current oil production stands at 1,300 barrels per day. This is a 42.23% increase from the B-80 block's oil production level in the fourth quarter of fiscal 2024.
The block's gas production stands 34.83% higher than last quarter at 6 million metric standard cubic meter of gas per day.
The block's total production stands at 2,400 barrels of oil equivalent per day, Jeevanandam said.
The D1 well is currently producing 3 million metric standard cubic meter of gas per day, while the D2 well is currently producing 900 barrels of oil and 4 million metric standard cubic meter of gas per day, he said.
Revenue Potential
Block B-80 contributed 61.7% to Hindustan Oil Exploration's revenue in the fourth quarter of fiscal 2024 and 42.7% to the revenues in fiscal 2024.
The company expects $80 per barrel selling price of oil, the MD said. Gas realisations would be around the $10-11 level going forward.
Capex Plan
The company is currently in process of monetising its proven reserves. It is set to embark on a Rs 1,000 crore capex program for the next three years, Jeevanandam said.
It plans to ramp up its current 1,000 barrels of oil equivalent gross production to 25,000 barrels of oil equivalent in the next three years, he said.
Hindustan Oil Exploration aims to double its operating Ebitda to around Rs 600 crore by fiscal 2026-2027, the top executive said.
Shares of the company rose 6.71% intraday, before paring gains to trade 3.07% higher at Rs 198.41 196.81 per share at 12:41 p.m. This compares to 0.28% rise in the Nifty 50.
The stock has fallen 4.3% in the last year, but gained over 17% in the last six months.
