HOEC expects production to go up to 25,000 barrels oil equivalent in 5 yrs

The Assam facility has seen a total investment of around Rs 3.5 bn

Hindustan Oil Exploration Company (HOEC) is expecting its production to go up from 500 barrels of oil equivalent during 2015 to around 8,000 barrels during the current fiscal year, backed by the growing production in its Assam facility. The company, which has been facing crisis after shutting down one of its facility in 2011, is expecting its three ongoing projects to take up the production to 25,000 barrels in three to five years, said P Elango, MD of the company.

In 2015, the company's production was of 500 barrels of oil equivalent, including for its partner firms. Of this, around 400 barrels were for the company. The overall production will go up to around 8,000 barrels by end of the fiscal, of which around 3,500 barrels will be of the company while the rest will go to its partners.

The growth is driven by the production in Dirok field in Assam, in partnership with Indian Oil Corporation and Oil India Ltd where HOEC holds around 27 per cent stake in the facility. The first phase of the project is completed and the second phase is expected to be ready by March 31, 2017, which would bring in around 1 million cubic meter (which is 36 million cubic meter) of gas and around 1,000 barrels of condensates, which is the liquid similar to crude oil coming out while taking out the gas, from April 1, 2018. This will bring in around Rs 1 billion of revenue for the company.

The Assam facility has seen a total investment of around Rs 3.5 billion, of which around 27 per cent is from the company. While it was expecting a capacity of around 20 million cubic feet a day from four wells here, there is a potential to have two more wells to increase the production to 36 million cubic feet a day for the same 15 year period.

It is also reviving the offshore field PY1 in Bay of Bengal, to increase the production from the current 2.5 million cubic feet to 10 million cubic feet by July, this year. It has also won a field B-80 in Bombay High, which has a capacity of around 5,000 barrels of oil equivalent per day. This will bring in around 15 million cubic feet of production by April, 2020.

"Our target is to achieve a 25,000 barrels of oil equivalent from the existing nine field in next 5 years. We are also planning to bid for the new fields in future," said Elango. 

It is looking at projects in Assam and Gujarat, and has focus on offshore projects. Once its production reaches 25,000 barrels of oil equivalent, the company's net production out of this would be around 15,000 barrels. It would be looking at adding capacity of 25,000 barrels of oil equivalent, over a period of time.

The company, which had a 2,000 barrel oil equivalent production, a Rs 2 billion revenue and Rs 7.5 billion market cap five years back, has seen a decline to 500 barrels production, Rs 250 million top line and Rs 4 billion market cap, owing to the shut down of one of the oil fields. With the Assam facility started production mostly in the second half of the fiscal, the market cap has gone up to Rs 18 billion at present.

Elango, who joined the company in 2015, has ensured the Assam facility coming up in a short period, by roping in a US-based company for faster setting up of the facility. HOEC has been a debt free company and it believes in generating revenue and reinvesting it into future expansion and at present it has no plan to raise funds for the investment, he added.