Hind oil exploration is this a multibagger bet?


(ajith nayak) #1

Assam field a ‘new growth opportunity’: HOEC

A production profile of 20 million cubic feet of gas per day which is roughly equivalent to
about USD 1,25,000 of gross revenue for the whole joint venture as a whole.

This is a 130 bcf gas reserve. Partners with Indian Oil Corporation (IOC) and Oil India; operators are expecting profile of 20 million cubic feet of gas per day which is roughly
equivalent to about USD 1,25,000 of gross revenue for the whole joint
venture as a whole.

net revenue would be, net of all cost, will be about USD 25,000 per
day which is roughly about USD 10 million per year.

Achieved a total revenue of roughly Rs 48 crore this year.

The most interesting thing is, this is expected to sustain at the pleateu level for 15 years. So, the company will come out of all the issues that it faced in the past with this new scheme of revenue.
Promoter, ENI, has been very generous in writing off a Rs 960 crore loan that they had lend which was their external commercial borrowing that has been written off.

taken from money control .

Stock is in process of strong consolidation may result in accumulation.

Disclosure :- This is not a buy/sell reco. Please do your own due diligence before taking a call


(PATURI BAPAIAH CHOUDARY) #2

Why don’t you elite guys mention the CMP of the stock which you are initiating. Is there any difficulty?


(ajith nayak) #3

@ paturi ,I am sorry for that , will keep this in mind . hindoil cmp :- rs33.30 as on 09/06/2015


(Chintan) #4

Hind Oil Exploration - First gas from Assam in FY17 will play a crucial role in HOEC’s growth: P Elango

Summary:
• The steep decline in gas production from HOEC’s flagship PY-1 field led to erosion in value and management uncertainty. Company reported Net loss of Rs 1220cr in FY15 on account of one time exceptional writeoff of Rs 1163cr related to four fields (PY-1, PY-3, CB-OS 1 and CB-ON 7 fields).
• Current strategy is to focus on onshore assets in Assam and Gujarat, build a strong geo-technical team to revive the offshore assets
o Assam field, which recently got FDP approval, is estimated to hold 130 billion cubic feet (bcf) of recoverable gas reserves and can sustain a daily gas production rate of 20 mmscfd for 15 years. Total investment required is Rs 500cr to lay gas processing and pipelines and expect project to get completed within 12-18months and targets first gas by the end of FY17. Fund will be put up by JV partners (Oil India) on proportionate basis and is highly profitable project with IRR in excess of 50%.
o In Gujarat, company operates three marginal fields—Asjol, North Balol & CB-ON-7. Together, these fields contribute about 150 boepd. Operating margins are high due to super-efficient and low-cost operations and company has initiated environment approval process to acquire new 3D seismic data over these matured oilfields
• Balance Sheet strength: HOEC is debt free company currently, after ENI (one of the promoter) wrote off its Rs 1000cr loan, and now is capable to meet operating expenses with operating revenue and is capable of generating operating cash surplus to add to cash-on-hand.
• In FY15, Company had average daily production rate of 650 boepd. The next big jump will occur once company delivers the first gas from Assam, which has the potential to double the operating revenue of HOEC. Company expect to deliver a double-digit CAGR growth over the next five years.
• Key Management Change: P Elango Ex-MD of Cairn India joined to turnaround HOEC in late 2014, SV Nair ex-Cairn India Project Director of Mangala Oilfields is now Project Head of Assam Project.

Background: P Elango, who spearheaded Cairn India and made it touch a peak output of 2,00,000 barrels per day (bpd) at India’s biggest onshore block—Barmer in Rajasthan—left the Vedanta Group company in late 2014. In February this year, the 54-year-old took up a challenging assignment to turn around Hindustan Oil Exploration Company (HOEC). Incorporated in 1983 and backed by Rome-based ENI, the firm has stakes in both onshore and offshore assets. Until now a small player in the hydrocarbons sector, Elango—as the managing director—and his team are drawing a new beginning for the firm.

Vision by the new management: The vision is not to grow big overnight, but to grow steadily, by taking prudent steps in this volatile price environment, which not only protects the interests of our shareholders but also creates value.

At CMP of Rs 33, Mcap Rs 430cr and Ev Rs 395cr. Stock trades at PBV of 1.53x.

Detail Transcript can be find on the following link:

looks interesting post management change…20mmscmd gas for 20 years/or 130bcf


(Chintan) #5

Does any one have production, oil/gas reserve data and other operational data of the company for past 10-15 years??


(mailkrishna87) #6

I am betting on the management . The CEO was leading Cairn energy and the CFO from Aban. Also I like their approach of being conservative and focus only on revenue generating assets. The original promoter ENI has waived off the loan which it had given to the tune of Rs.1000 crores.

Given the management pedigree and the overall investment of $500 million already invested , I feel that good times may be just ahead.


(mailkrishna87) #7

ENI has divested a part of its stake to the tune of 24.5% and has been bought by Alok goel of Essel.


(GreyCells) #8

What does it means? Is there any hidden deal behind this?


(mailkrishna87) #9

no there is no hidden deal. The promoters stake has changed hand partially. I am very postive on the company for its focus on developing only viable reserves and focussing on cash flows.

Regards

KP


(Pravin Choudhari) #10

I vaguely remember it was mentioned in 2015 AR that , ENI applied for changing its status to non-promoter which was rejected by SEBI. I am thinking this transaction might enable them to do the same?

Also this is bit puzzling if thew written off loan why they reduced stake by whopping 24.5%…

Disc: Holds 0 shares, haven’t hold any in past.


(mailkrishna87) #11

The chance was recovering that loan was low for ENI. I presume that the new management would have negotiated for waiver as the company will not be able to work on any revival plan with the loan as liability as it will erode its networth completely.Also on a prudent basis the management wrote off all investments made for exploration activities to the tune of Rs.1000 crores.


(bsahni) #12

Any new findings or Updates from any fellow boarders of late.
Just came across this company a couple of days back & am planning to dig more further in to it.

Management Change & Waiver of Loans (Liability) & exit of ENI, all seem to work in favor of HOEC.
Latest Presentation also seems to be encouraging, as far as future growth aspects are concerned.

Views invited from fellow Boarders.

Regards,
Bharat


(Aksh) #13

Could you please provide correct code (BSE/NSE) or name of the script? I didn’t find anything named “Hind Oil Exploration” or with code “HOEC”.

May be it is: HINDUSTAN OIL EXPLORATION CO.LTD (HINDOILEXP)?


(bsahni) #14

Yes it is.

BSE: 500186 | NSE: HINDOILEXP |

SECTOR: OIL DRILLING AND EXPLORATION


(Aksh) #15

Thanks @bsahni

In that case, could you @ajit001 please be careful in providing correct full name of the co. in title while initiating thread and providing BSE/NSE code in the initiating post to avoid confusion? Thanks.


(avneesh) #16

You already know about the potential future triggers in the company. You can include one more point. This government wants to make India independent for oil and gas requirements. This has been stated by oil minister in recent past. This is a great positive for sector as a whole.

Risk :
Element of surprise. If you read the whole thread of selan exploration, it was the most promising candidate in this sector. But it failed a lot of times in respect to expectations. As far as I understood, there is inbuilt risk with the exploration process. You start drilling and you don’t find your expected amount of resources. Obviously, technology can help mitigate this problem but to an extent. The surprise can also be in a positive way. You might get non linear earnings.
I went through this company 6 months back. I might be wrong with some information.


#17

Why did promoter ENI offload their stake to new investors at a huge discount? Two friends bought 24.5 stake from ENI at a discount to avoid open offer. Does not sound transparent and minority share holder friendly.


(kermitz) #18

Hi,
Have been following this counter since the start of the year. I have one question .
There has been too much tussle going around with the OPEC nations and this is affecting the price of oil, which is going down, and it seems will keep going down in the medium term (6 months). Will this also drag the HOEC down? Do the global oil supplies affect this company in any way or its stock price ?
Would love to hear from fellow boarders on this matter in details .

Thanks
NG


(avneesh) #19

A promising development for the company. They have won two fields in Discovered Small fields bid round. Both of the fields are in consortium with other partners.

http://www.dghindia.org/index.php/story_details?story=47&heading=Award%20of%20DSF%20Blocks&page=notice_heading

Disclosure : Invested


(avneesh) #20

HOEC is pleased to announce the award of two contract areas to the company in consortia
with Oil India Limited, Prize Petroleum Limited and other private company by the Government
of India in the recently concluded bidding for Discovered Small Field Bids Round (DSF 2016).

One of the contract area is offshore field B-80, located in the Mumbai Offshore about 56
square kilometer discovered by ONGC in 1997. This discovered field produced about 3,737
barrels of oil and 7.5 million cubic feet of gas per day during the testing with in place reserves
of about 13.20 million barrels of oil and gas in place of 10.50 billion cubic feet.
The other contract area is onshore field Kherem located in Arunachal Pradesh, discovered by
Oil India Limited in 1994 with the area of 16.45 square kilo meter, with initial oil in place of
about 3 million barrels and gas in place of about 17 billion cubic feet.
HOEC has 50% participating interest in the offshore field B-80 and 40% in the onshore field
Kherem. HOEC is the Operator for both the fields.

Managing Director of HOEC, Mr. P. Elango is delighted to state that both the blocks have a
strategic fit with the existing offshore and onshore portfolio of HOEC. With innovative and
cost effective development, these fields can be put on production at the earliest. These blocks
have substantial upside to unlock reasonable value to all stakeholders including the
Government of India.
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/39F505B7_9D40_4FBE_9B32_155DE6BE8919_095410.pdf