HOEC Q4 FY26: A tough year on reported numbers, but a clear push on execution and evacuation

Hindustan Oil Exploration Company Limited closed FY26 with weaker reported financials, but used the earnings presentation and the Q4 FY26 call to frame the year as a transition period. Consolidated revenue from operations for FY26 came in at INR 301.29 crore versus INR 459.12 crore in FY25. Consolidated PAT was INR 62.75 crore versus INR 147.20 crore.

The headline decline was not positioned as purely operational. Management repeatedly linked the financial hit to the crude offtake dispute with HPCL, where an invoiced sale was reversed. In the call, the CFO stated that if the HPCL sale had gone through, FY26 revenue would have been about INR 559 crore. The company said the matter relates to a single cargo event, and that it is now reselling crude to alternate buyers, with cash realization expected over a period of two to three months.

FY26 financial snapshot and what changed

The consolidated P and L table in the deck shows FY26 total income at INR 278.84 crore, down from INR 496.99 crore in FY25. Expenses remained meaningful across producing block costs, royalties and depletion. The company also disclosed an exceptional item of INR 32.52 crore in FY26.

A notable balance sheet movement was the rise in inventories to INR 393.72 crore in FY26 from INR 210.14 crore in FY25, aligning with the crude sale disruption narrative. On the liabilities side, consolidated other financial liabilities increased to INR 375.80 crore, with management providing a breakup including Abdhoot payable of INR 130 crore and profit petroleum payable of INR 137 crore.

The operational core: B-80, Dirok and Kharsang

The operational narrative is anchored around a few key assets.

B-80 in Mumbai High is now 100 percent owned and remains the company’s most material offshore asset. The presentation notes FY26 production of 1,103 BOEPD and reserves of 35.53 MMBOE as of April 1, 2026. The company emphasized that monetization is still in the early innings relative to stated reserves and highlighted near-term initiatives including compressor line-up modifications to reduce suction pressure, fuel conditioning upgrades, and asset integrity programs to reduce downtime.

Dirok in Assam-Arakan is positioned as a near-term gas upside, but one that is constrained by evacuation. The deck states production continued at about one third of potential due to pipeline unavailability. The company disclosed regulatory progress, including approval of a revised FDP securing the block till 2035, and that PSC extension signing is under final review and likely by July 2026. The pipeline map and management commentary focus heavily on DNPL connectivity and replacement work as the practical unlock.

Kharsang delivered visible execution in FY26. The company drilled nine wells within the year and said oil production ramped up about two times. Importantly, three wells tested gas in the range of 3.4 MMSCFD to 8.6 MMSCFD, but those wells are currently shut-in pending a gas evacuation plan. The plan for FY27 includes an additional nine development wells.

The multi-year plan: redevelopment and staged drilling

Management’s forward plan is a multi-asset program, not a single field bet. The deck provides a staged 2026 to 2029 outline across B-80, Dirok, Kharsang, PY-1, B-15 and Cambay.

For B-80, the investor presentation states workover of two subsea wells in Q3 FY27 followed by drilling of three new wells in Q4 FY27, with FY27 capex estimated at USD 30.5 million. For B-15, which was awarded under Special DSF 2024, HOEC obtained a petroleum lease in March 2026 and indicated drilling is expected to commence in FY28.

In Cauvery, PY-1 is framed as a redevelopment story supported by PetroVietnam’s work. The deck notes coiled tubing intervention planned to increase production by H1 FY27 and a booster compressor targeted for installation in October 2026 to address GAIL line back pressure, with drilling preparations for two wells and drilling expected to commence by Q4 FY27.

The company also reiterated an aggressive production trajectory chart, referencing net BOE per day targets rising from about 1.5K in 2026 to about 11K in 2027, 22.5K in 2028 and 32K in 2029. In the call, management again cited a target of 10,000 to 11,000 BOE per day net by around June 2027, while acknowledging dependencies such as rigs, weather windows and funding.

Key takeaways

FY26 for HOEC was dominated by two realities: a material commercial disruption around crude offtake that pressured reported revenue and delayed capex pacing, and a portfolio that still offers significant operational optionality if evacuation and execution align.

The near-term investor checklist is clear from management’s own emphasis. First, the pace of cash realization from reselling the HPCL-linked crude inventory. Second, tangible progress on Dirok evacuation infrastructure and access to pipeline capacity. Third, delivery of the B-80 workover and drilling plan in FY27 with the stated capex envelope. If these move as outlined, HOEC’s multi-asset roadmap becomes easier to underwrite on operating evidence rather than only on reserve statements.