💰 Financial Performance

Revenue Growth by Segment

Standalone revenue for Q2 FY26 reached INR 311.21 Cr, a 306% increase from INR 76.60 Cr in Q1 FY26, primarily driven by crude oil sales from the B-80 field which contributed INR 281.72 Cr. Dirok segment revenue declined 28% to INR 26.57 Cr from INR 36.98 Cr QoQ due to lower gas off-take.

Geographic Revenue Split

100% of revenue is derived from domestic operations in India, specifically from offshore assets like B-80 and PY-1, and onshore assets in the Cambay basin and Assam (Dirok).

Profitability Margins

Operating profit margin improved to 34% in FY25 from 19% in FY24. Standalone Net Profit for Q2 FY26 was INR 19.04 Cr (6.1% margin), while Consolidated Net Profit was significantly lower at INR 2.83 Cr (0.9% margin) due to losses in subsidiaries Hindage and Geopetrol totaling approximately INR 12 Cr from high operating and depreciation costs.

EBITDA Margin

Standalone EBITDA for Q2 FY26 was INR 28.81 Cr, up 5.7% from INR 27.24 Cr in Q1 FY26. Consolidated EBITDA for Q2 FY26 was INR 25.15 Cr, a 28% decrease from INR 35.02 Cr in Q1 FY26, reflecting the impact of subsidiary operational costs.

Capital Expenditure

The company has secured debt capital of INR 250 Cr to fund a drilling program consisting of 10 offshore wells (3 in PY-1, 3 in B-80, 4 in B-15) and multiple onshore wells in Dirok, Asjol, and Palej.

Credit Rating & Borrowing

The company secured a term loan of INR 250 Cr for CAPEX. Debt-Equity ratio improved from 0.07 in FY24 to 0.04 in FY25, indicating low leverage. Credit ratings are constrained by geological risks and high dependence on the PY-1 field.

⚙️ Operational Drivers

Raw Materials

The company is an E&P player; its primary 'costs' are production expenses (INR 46.51 Cr in Q2 FY26) and statutory levies like Royalty, Cess, and NCCD (INR 10.60 Cr in Q2 FY26), which represent approximately 18% of standalone revenue.

Import Sources

Not applicable as an E&P company; however, specialized equipment like the Mobile Offshore Production Unit (MOPU) and Floating Storage and Offloading (FSO) are utilized in offshore blocks.

Key Suppliers

Key partners in blocks include ONGC (Cambay), Oil India, and IOC. Subsidiaries Hindage and Geopetrol provide critical infrastructure (MOPU and FSO).

Capacity Expansion

Current reserves stand at 47.87 MMBOE (P+P), with an additional 14.37 MMBOE pending government approval for the 40% PI acquisition in Block B-80. Expansion plans include drilling 10 new offshore wells to monetize discovered resources.

Raw Material Costs

Production expenses in FY25 were $26,327.94 lakhs, a decrease from $27,634.75 lakhs in FY24 due to lower plant hire charges. Statutory levies represent a fixed percentage of production value.

Manufacturing Efficiency

B-80 gas production decreased to 229 MMSCF in Q2 FY26 from 370 MMSCF in Q1 FY26, a 38% decline attributed to monsoon-related operational challenges.

Logistics & Distribution

Distribution is handled via FSO (Floating Storage and Offloading) for offshore oil; B-80 crude oil sales in Q2 FY26 totaled INR 258.78 Cr.

📈 Strategic Growth

Expected Growth Rate

21%

Growth Strategy

Growth will be achieved by drilling 10 offshore wells in PY-1, B-80, and B-15 to unlock 'value below the ground.' The company is also expanding onshore production in Greater Dirok and the Cambay basin (Asjol, Palej) using INR 250 Cr in new debt capital.

Products & Services

Crude oil, Natural Gas, and Condensate.

Brand Portfolio

HOEC (Hindustan Oil Exploration Company).

New Products/Services

Monetization of the B-15 offshore field through 4 planned wells is expected to be a new revenue contributor.

Market Expansion

Focusing on increasing the working interest in existing high-potential blocks, such as the 40% PI acquisition in Block B-80 from Adbhoot Estates.

Market Share & Ranking

Small-sized operations relative to industry majors, but a significant private player in the Indian E&P space.

Strategic Alliances

Joint ventures with ONGC, Oil India, and IOC for exploration and production activities.

🌍 External Factors

Industry Trends

The industry is shifting toward gas as a 'transition fuel.' HOEC is positioning itself by linking gas prices to oil and focusing on domestic production to meet India's energy security needs.

Competitive Landscape

Competes with national oil companies (ONGC, OIL) and private players like Vedanta (Cairn) and Reliance for blocks and resources.

Competitive Moat

Moat is based on ownership of discovered reserves (47.87 MMBOE) and established infrastructure (MOPU/FSO) which are difficult and capital-intensive to replicate.

Macro Economic Sensitivity

Highly sensitive to global crude oil prices; however, revenue-sharing contracts provide a fiscal buffer.

Consumer Behavior

Industrial demand for natural gas in the Northeast (Dirok) and Western India (Cambay) drives off-take volumes.

Geopolitical Risks

Geopolitical factors affecting global oil supply and pricing directly impact the company's top-line realization.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Ministry of Petroleum and Natural Gas (MoPNG) and Directorate General of Hydrocarbons (DGH) under Production Sharing Contracts (PSC) and Revenue Sharing Contracts (RSC).

Environmental Compliance

Maintains a Site Restoration Fund with deposits of INR 92.35 Cr as of H1-FY26 to meet decommissioning liabilities.

Taxation Policy Impact

The company is a tax-paying entity; standalone net tax expenses were INR 1.00 Cr in FY25. Revenue sharing formulas in PSCs act as a progressive tax mechanism.

Legal Contingencies

The 40% PI acquisition in Block B-80 is currently pending regulatory approval from the Government of India.

⚠️ Risk Analysis

Key Uncertainties

Geological risks inherent in E&P could lead to dry wells or lower-than-expected recovery. Commodity price volatility remains a primary financial risk with a 3% margin impact per $10 price change.

Geographic Concentration Risk

High concentration in India, with specific dependence on the PY-1 offshore field and the Dirok field in Assam.

Third Party Dependencies

Dependence on ONGC and Oil India as JV partners and infrastructure providers.

Technology Obsolescence Risk

Risk of technical failures in offshore equipment (MOPU/FSO) which can halt production, as seen in the 37-38 day production halt at B-80.

Credit & Counterparty Risk

Trade receivables increased to INR 292.76 Cr in H1-FY26 from INR 25.69 Cr in FY25, indicating a significant buildup of credit exposure following large crude sales.