On 16 July, Tuesday, 2024, Hindustan Oil Exploration Co. announced its discovery of a gas well in Dirok Field which is known as Sand-9. It is located in the Dirok -1 well. The initial test results of the well reveal that the well has a flow rate of more than 6 million standard cubic feet daily, which the company announced in its exchange filing. Now, Hindustan Oil is carrying out further tests to see the potential output of the well.
Current production at Dirok
The current gas production in the Dirok field is around 35 million metric standard cubic feet daily. This exceeds 15% of the total natural gas production in Assam as per Hindustan Oil. As per the management of the company, if they implement consecutive workovers on wells 2 and 4, then the total gas production can double as well. Hindustan Oil did announce its plans for testing sand layers 9 and 10 in Dirok-1 well in its investor’s presentation for the Q4FY24. After commencing the tests, the gas flow of 6 million metric standard cubic feet was discovered in a well in the Dirok field.
The current price at which the company sells its gas supplies is $8.2 per million metric British thermal units. This price is higher than the set maximum price of $6.5 million metric British thermal units by Oil India and ONGC for nominated gas blocks.
Hindustan Oil’s Past Performance
The oil and gas giant had a revenue of ₹ 76781.27 lakhs in FY24 compared to ₹ 56771.08 lakhs in FY23. Coming to the profit generated by the company, in FY24, it was 22642.98 lakhs while in FY23 it stood at ₹ 19404.82 lakhs. The earnings per share of Hindustan Oil was ₹ 17.12 per share in FY24 up from its FY23 earnings per share of ₹ 14.67.
Prospects & Challenges
While new oil gas discoveries can help the company grow the demand is limited due to lower prices offered by Oil India and ONGC. The government undertakings and other primary customers go for the lower price while Hindustan Oil’s higher price of its natural gas blocks remains the main challenge. However, the scenario is expected to change over time if there is a common gas carrier starts operation in the state of Assam, which can help in the establishment of grid connectivity through the state. Duliajan-Numaligarh gas pipeline is in progress as announced by the company. This is a 180-km long gas pipeline which can help in solving the challenges for the company.
Share price performance of Hindustan Oil
The share price of Hindustan oil is trading around Rs. 243.60 apiece at 1.10 p.m. today. In the past one year, the share price gained around 14.47% and since the beginning of 2024, it gained around 34.32%.
Source: https://www.ndtvprofit.com
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