HOEC sold Rs 80 crore B-80 stock, 36,104 tonnes remain

Hindustan Oil Exploration Company Limited realised about Rs 80 crore from prior-year B-80 crude inventory in H1 FY27, helping cash conversion recover, but approximately 36,103.90 metric tonnes remained to be monetised at September 2026. HOEC said further sales, bank funding and internal cash generation are intended to support development spending.

How much B-80 inventory has HOEC monetised?

HOEC monetised close to Rs 80 crore of Hindustan Petroleum Corporation Limited, or HPCL, stock in H1 FY27. The CFO said this included close to Rs 57.79 crore of B-80 HPCL stock sold during Q2 FY27, and described the inventory as stock from the previous year rather than current-period production.

The liquidation contributed to a quarter-on-quarter improvement in operating results. Revenue from operations increased 25% to Rs 147 crore in Q2 FY27 from Rs 117 crore in Q1 FY27, while earnings before interest, tax, depreciation and amortisation, or EBITDA, rose to Rs 46 crore from Rs 21 crore. Management attributed the higher quarterly profit primarily to gas sales and HPCL stock realisation.

Inventory movement declined even as Q2 performance improved. HOEC said lower inventory movement was Rs 18 crore in Q2 FY27, compared with Rs 41 crore in Q1 FY27, a Rs 23 crore reduction. The quarter therefore included both a lower inventory-movement contribution and revenue from the specific HPCL stock sale.

How much B-80 crude does HOEC still need to sell?

HOEC reported approximately 36,103.90 metric tonnes of B-80 crude remaining to be monetised at September 2026. Management also referred to 120,000 to 130,000 barrels held in the floating storage and offloading vessel, or FSO, but it did not provide a rupee value, expected selling price or sales date for the remaining quantity.

The timing depends on vessel availability and FSO maintenance. Management said it would remove the tanker when a replacement tanker becomes available, which would permit dry-docking work, and later indicated that dry-docking could occur between January and March of the following year, possibly earlier. It said small vessels were not available to lift smaller cargoes under then-current tanker conditions.

HOEC said it was testing crude samples regularly and had supplied samples to Indian Oil Corporation Limited, or IOCL, which had not identified an issue in its initial review. Management said it planned third-party testing before any transaction, following the earlier HPCL sales dispute. These measures describe the proposed sale process, not a confirmed sale contract with IOCL or another buyer.

Did B-80 stock sales improve HOEC's operating cash flow?

Yes, according to management, the stock sales were a major factor in the H1 FY27 cash recovery. Management described operational cash surplus of Rs 39 crore in the half year ended September 2026, compared with negative Rs 18 crore in H1 FY26, a Rs 57 crore swing that it said was largely contributed by Rs 80 crore of HPCL stock realisation.

The CFO separately cited H1 FY27 operating cash of Rs 18.23 crore and also said the conversion was primarily generated by the previous-year B-80 inventory sale. The transcript does not explain why Rs 39 crore and Rs 18.23 crore were both used for H1 operating cash, so the figures should not be treated as directly interchangeable.

The half-year revenue comparison was affected by a larger prior-period HPCL transaction. Management said H1 FY27 revenue was Rs 265 crore, versus Rs 405 crore in H1 FY26, while noting that the earlier half included Rs 258 crore of HPCL sales. On its adjusted comparison, management said EBITDA increased 20% to Rs 67 crore from Rs 56 crore and profit increased 46% from adjusted profit of Rs 34.73 crore after excluding a Rs 32.5 crore B-80 investment-restatement adjustment.

How does HOEC plan to fund B-80 development spending?

HOEC plans to combine inventory sales, internal cash generation and external funding for its development programme. Management said liquidation of B-80 fresh crude and HPCL crude could bring around Rs 250 crore of additional funds into its bank accounts, but it did not separately value the 36,103.90 tonnes remaining or specify how much of the Rs 250 crore related to each stock category.

The company said it had raised Rs 179 crore, including credit facilities, and that close to Rs 125 crore would largely be spent on B-80 workover capital expenditure. It was also seeking a higher bank facility of Rs 600 crore to Rs 700 crore, which management said could take total available facilities to around Rs 1,000 crore including funding already obtained.

At September 2026, HOEC reported consolidated cash and cash equivalents of Rs 166 crore, gross debt of Rs 211.11 crore and net debt of Rs 44.90 crore. It reported net debt to EBITDA of 0.71 times. Management said the next three to four months represented the peak development-spending period and cited offshore drilling delays as a reason to maintain cash access.

What B-80 activity does HOEC expect the funding to support?

HOEC said its production plan includes workovers of two B-80 wells and drilling of three new wells. Management targeted roughly 10,000 barrels of oil equivalent per day of net HOEC production by June 2027, while noting that the outcome could range from 8,500 to 11,000 barrels of oil equivalent per day.

Management said drilling needs to finish by 15 May because the rig must be demobilised before monsoon-related tow-insurance limits take effect. It acknowledged a 15-day workover delay but said it still expected to meet the programme. The production target also depends on higher volumes from Assam, Kharsang, Cambay and PY-1, rather than B-80 alone.

B-80 operations continued through the latest monsoon without a complete production shutdown, according to management. HOEC said a single-point mooring, or SPM, hose repair took four days, but production continued from one well using storage on the mobile offshore production unit, or MOPU. Management said the MOPU had two to three days of storage capacity, although the buffer would shrink at higher production rates.

Conclusion

HOEC's Rs 80 crore sale of prior-year B-80 inventory was an important contributor to Q2 FY27 earnings and the improvement from negative H1 FY26 operating cash. However, the company still had 36,103.90 metric tonnes to sell at September 2026, and it did not disclose the value or timing of that remaining inventory.

The next developments to watch are the expected January-to-March FSO dry-docking window, any confirmed sale of the remaining B-80 crude, and execution of the two-well workover and three-well drilling programme before 15 May. Management is also pursuing Rs 600 crore to Rs 700 crore of additional bank facilities as it enters the stated three-to-four-month period of peak expenditure.