Antelopus Selan Energy Limited posts 71% Q2 EBITDA margin

Antelopus Selan Energy Limited reported a 71% earnings before interest, tax, depreciation and amortisation (EBITDA) margin in Q2, or about 69% excluding a Rs 6.5 crore refund. Antelopus said 70% to 75% of its cost base is fixed, enabling costs to be spread over higher output, although a KG Basin expansion would initially add establishment costs.

Why did Antelopus report a 71% EBITDA margin in Q2?

Antelopus reported Rs 90 crore of EBITDA on total income of Rs 127.2 crore in Q2, producing a margin of about 71%. Revenue from operations was about Rs 121.7 crore, while management said EBITDA was almost three times the level reported in Q2 last year. The reported result included a one-off Rs 6.5 crore refund recorded in other income and received in cash during the quarter.

Excluding that refund, Antelopus said EBITDA would have been about Rs 83 crore and the margin about 69%. Net profit was Rs 57.3 crore, nearly five times the Rs 11.8 crore reported in Q2 last year, while depreciation rose to Rs 13.2 crore as new Bakrol wells entered production. The 69% figure therefore reflects the margin management calculated without the non-recurring refund.

How did lower oil and gas prices affect Antelopus in Q2?

Lower oil and gas realizations reduced revenue per unit, but Antelopus said broadly flat volumes and its cost structure limited the effect on margins. Average realized oil price declined to US$88.2 a barrel in Q2 from US$95.3 in Q1, a quarter-on-quarter fall of about 7% to 8% according to management. Gas realization also fell to US$8.84 per million British thermal units from US$10.33 in Q1.

The Q2 average reflected significant monthly movement: Antelopus realized about US$76 a barrel in July, US$84 in August and more than US$100 in September. Royalty and cess remained around 16% of revenue, or about Rs 20.5 crore, and move with commodity prices, management said. Those charges decline alongside revenue when oil prices fall, providing a partial offset to lower realizations.

Why can Antelopus limit cost growth as Cambay production rises?

Antelopus said about 70% to 75% of its cost base is fixed, so additional production reduces the fixed cost allocated to each barrel. Operating expenditure, or OPEX, and handling costs were Rs 6.1 crore in Q2, down from Rs 7.5 crore in Q1. Management said the company had built its organisation and operating capability for a larger production base.

In the Cambay Basin, Antelopus sends its oil through Oil and Natural Gas Corporation's system before onward sale to Indian Oil Corporation. Management said the incremental variable handling cost is about US$1 to US$1.5 a barrel, while the handling arrangement also contains fixed costs. It added that OPEX, handling and processing charges, and other operating expenses had remained around Rs 35 crore to Rs 40 crore over the past couple of years.

Karjisan could also affect the statutory-charge mix because its fiscal terms differ from Bakrol and Cambay. Management said statutory levies in Bakrol or Cambay are around 30% of topline, compared with less than 5% in Karjisan because of concessional cess and royalty rates during its primary production-sharing-contract term. As Karjisan contributes more output, Antelopus said portfolio statutory levies have averaged around 15% to 16% of topline.

Can Antelopus keep margins above 65% through the year?

Antelopus did not provide formal guidance for a margin above 65%, but management said its endeavour was to maintain current levels and keep the numbers in line. The response followed an analyst's question on whether margins above 65% could continue for the full year. Management distinguished controllable costs from oil prices, which it said are outside the company's control.

The production plan supports the fixed-cost rationale but does not remove commodity-price risk. Antelopus said October production was about 1,950 barrels of oil equivalent per day, or BOEPD, and it remained on track for a 2,500-barrel-of-oil-equivalent exit rate this year. Bakrol averaged more than 950 BOEPD in October after completion and fracking of a 10-well campaign, while seven planned Karjisan wells are intended to lift output through the rest of the fiscal year.

What could change Antelopus's margin outlook beyond Cambay?

A KG Basin expansion could temporarily raise costs because it would create a new operating front, management said. Antelopus has added seven new discoveries in KG and now has about nine fields there, although only Mukkamala is producing. Management said KG wells are expected to cost substantially more than Cambay wells, estimating about US$10 million or more per KG well against about US$1.5 million per Cambay well.

Antelopus plans to begin KG development with one rig and a limited number of wells rather than an immediate broad drilling campaign. Management said establishment costs would arise initially, but could subsequently be absorbed by a larger production base if KG ramps successfully. It has not committed to a funding route for the wider KG programme, saying the choice among internal accruals, debt, balance-sheet funding or new capital would depend on ramp-up plans and reservoir understanding.

Conclusion

Antelopus's Q2 margin was supported by Rs 90 crore of reported EBITDA, including a Rs 6.5 crore one-off refund, and a cost structure weighted towards fixed expenses. The 69% margin calculated without the refund indicates that lower OPEX and handling costs, alongside statutory levies that move with oil prices, limited the effect of lower average oil and gas realizations.

The next measures to watch are delivery of the 2,500 BOEPD exit target and the cost of opening KG. Management expects to complete the seven-well Karjisan campaign in the current fiscal year and is building towards a 5,000-barrel business by FY29. KG resource estimates, field development plans and funding decisions remain unresolved, and their timing will determine the scale and duration of establishment costs.