Oil India Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

7 Abhijit Das, Abhijit Majumder, Ajay Kumar Sahu, Bhaskar Jyoti Phukan, Raghunath Mishra, Saloma Yondo, Trailukya Borgohain

Analysts

11 Amit Murarka, Beneet, Kishan Mundra, Mayank Maheshwari, Nitin Tiwari, Prabal Singh, Sabiri Hazarika, Soumya V Divakaran, Vartarajan Shivashankaran, Vivekanand, Yogesh Patel

Financials & KPIs

Geographic & Segment Commentary

• Northeast Onshore (Crude): Crude production ramping through integrated well intervention, HLW (High Level Workover) and EDPMB portfolio management boards; authorizing systematic changes improved workover results; company targeting ~1 MMT per quarter going forward, with FY27 guidance of 3.9–4.0 MMT.
• Gas Segment (Northeast): Gas output constrained by downstream customer shutdowns (BCPL), NRL's seasonal lower uptake, and lack of evacuation infrastructure. Government of Assam pushing domestic gas supply (CDP) expansion; BCPL consumption currently stable at 1.25–1.35 MMSCMD vs 5.25 MMSCMD historical, returning ~4 MMSCMD unsold (P&L business).
• NRL Refinery (Subsidiary): Exceptional Q1 profitability on strong product spreads (diesel/crude, MS/crude); discounts given to OMCs under SAED calibration (petrol ₹13→₹3 per liter, diesel ₹10→nil) remain month-on-month adjustable; refinery operating at 105% utilization pre-expansion.
• Offshore Exploration (KG, Mahanadi, Andaman): 55% of acreage is offshore; deepwater exploration plan includes first rig mobilizing June–July 2027, second by March 2028; 4,200 line km 2D and 5,300 sq km 3D seismic acquired in Mahanadi/KG within one year of PL award; Total and Petrobras conducting independent data interpretation.

Company-Specific & Strategic Commentary

• Gas Evacuation Infrastructure: 200-meter connectivity line from Numaligarh to IGGL (DNPL common carrier) expected in 2–3 months, enabling flow to national grid independent of NRL offtake. Paradip–Numaligarh pipeline ROU acquired (except 8 km) with mechanical completion by October and commissioning December 2026. IGGL feeder line ~20% complete. Management: once network is in place, gas production can hit 5 BCM from the first day.
• Andaman Exploration Campaign: Three wells drilled (Vijaypuram 1–3); Vijaypuram 3 flowed gas continuously (technical discovery intimated to DGH); Vijaypuram 1 to be re-tested with hydrofrac in August (~₹1,000–1,050 crore spent to date); fourth well (jack-up rig, ~90m water depth) planned December 2026; 600 sq km additional 3D seismic acquired, interpretation by January for appraisal well decisions.
• Drilling Acceleration & Samudra Manthan: FY27 well target of 99 (42 exploratory + 57 development) vs 74 drilled in FY26; 10% annual growth targeted. Government's Samudra Manthan scheme provides ~₹675 crore/well ceiling for deepwater/ultra-deepwater drilling, plus ~₹10,000 crore for common infrastructure hubs; one deepwater well in Mahanadi is ₹800 crore government-sponsored under Stratigraphic Oil campaign.
• NRL Expansion Project: CDU mechanically completed, under statutory inspections (OIL + PESO); DSGT and SRU units to commission by October–November 2026; remaining units by 31 March 2027. Total refinery cost ~₹34,000–35,000 crore (spent ~₹30,000 crore; borrowings ~₹19,000 crore); PPU project adds ~₹7,200–7,300 crore. Ramp-up to 75% of rated 9 MMT capacity by end FY28.
• Regulatory Developments: GST on royalty accrual of ~₹2,500 crore (without interest, provisioned since July 2017) to be settled within court-directed 6 weeks, interest waived. Assam land tax act to be repealed; ~₹1.02 crore shown as contingent liability, no financial impact.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Crude Oil Production Ramp-Up

• Question: Is the 10,921 MT/day peak sustainable in Q2, and what is the current run-rate? (Prabal Singh)
• Answer: Production increased to 11,017 MT/day on 3rd August; improvements driven by integrated well intervention (HLW committee), new well planning (EDPMB board), and workover/optimization. Targeting close to 1 MMT each quarter, with FY27 exit at 3.9–4.0 MMT; FY29 target ~4.2 MMT from main producing areas, using near-field exploration and technologies like radial drilling. No impact from recent Assam floods on OIL's operations. (Trailukya Borgohain, Kishan Mundra)

Gas Monetization and Pipeline Timeline

• Question: When will gas production recover to 0.85–0.86 BCM levels given downstream shutdowns? (Prabal Singh)
• Answer: 60 wells currently shut-in; bottleneck is evacuation, not production. 200-meter connectivity line (DNPL common carrier to IGGL) ready in 2–3 months; GNPL capacity augmentation from 1→2.5 MMSCMD requires a short shutdown — previously blocked by geopolitical fuel concerns but now feasible; NRL to consume 1.5 MMSCMD additional gas by FY28 Q2–Q3; Paradip–Numaligarh pipeline mechanically complete by October, commissioned December 2026; IGGL feeder line ~20% complete. Total 5 BCM capacity achievable "from the very first day" once network is in place; at an incremental 1.5 MMSCMD → +4.5 BCM by CY2027, and further 1.5 BCM by FY29 from pipelines (analyst summation confirmed by management). (Trailukya Borgohain, Abhijit Das)

Drilling Plans and Capital Outlay with Government Support

• Question: How do regulatory changes and Samudra Manthan support shape exploration capex for FY27–FY28? (Vivekanand)
• Answer: FY27 target is 99 wells (42 exploratory + 57 development) vs 74 in FY26; 10% annual stretch thereafter. Samudra Manthan provides ~₹675 crore/well for deepwater/ultra-deepwater drilling and ~₹10,000 crore for infrastructure hubs. Mahanadi deepwater exploration plan: first rig June–July 2027, second by March 2028; one stratigraphic well next year sponsored at ₹800 crore. Total and Petrobras independently validating seismic interpretation — key de-risking strategy. Q1 capex actuals: ₹3,050 crore; FY27 budget ₹8,600 crore (under revision). (Trailukya Borgohain, Sabiri Hazarika)

NRL GRM Normalization

• Question: Can you strip out inventory gains and SAED discounts to arrive at normalized GRM? (Vivekanand)
• Answer: Reported GRM $35.95 includes ~$2/barrel inventory gain; normalized ~$33. Petrol discount to OMCs: ₹13/liter at quarter-start down to ₹3/liter at quarter-end; diesel: ₹10/liter down to zero, calibrated monthly against international spreads. Company typical GRM hovers around $7–8. GRM reported excludes excise duty benefit (which was squeezed this quarter due to retail price calibration). (Management, Bhaskar Jyoti Phukan)

NRL Expansion Commissioning and Pipeline

• Question: Status of expansion commissioning and Paradip–Numaligarh pipeline? (Soumya V Divakaran)
• Answer: CDU mechanically complete, under statutory inspections (OIL + PESO); DSGT ready, SRU nearly complete — both to start in October–November; remaining units commissioned by 31 March 2027. Graded production ramp to ~75% utilization (9 MMT rated capacity) by end FY28. Paradip pipeline ROU acquired except 8 km; mechanical completion October, commissioning December 2026. NRL project spend so far ~₹30,000 crore (debt ~₹19,000 crore); total refinery cost ₹34,000–35,000 crore; PPU adds ₹7,200–7,300 crore. Group debt: ₹37,233 crore (incl. $1.4 billion OIL Mozambique loan and $550 million Singapore bond due May 2027). (Abhijit Majumder)

Andaman Discovery — Next Steps and Reserves Estimation

• Question: Pathway to commercial production and timeline for reserve assessment? (Yogesh Patel)
• Answer: Vijaypuram 3 confirmed technical discovery (continuous gas flow) intimated to DGH; Vijaypuram 1 to be re-tested with hydrofrac contract mobilized (testing completes in ~1 month); fourth well (jack-up rig at ~90m water depth) drilling by December 2026 — rig currently in KG offshore, mobilizing after. 600 sq km of 3D seismic (300 around each of VP-2 and VP-3) being processed by October; interpretation by January; appraisal well count finalized by February–March. Results of hydrofrac testing and fourth well will determine recoverable reserves and production rates. (Trailukya Borgohain)

GST on Royalty and Assam Land Tax

• Question: What is the pending GST/royalty quantum and land tax impact? (Beneet, Nomura)
• Answer: GST on royalty: ~₹2,500 crore without interest, provisioned every quarter since July 2017; court granted 6 weeks to settle, interest component waived. Payment to be made in Q2 FY27 — no P&L impact, only cash outflow with necessary disclosure. Assam land tax: government undertaking to repeal the act; ~₹1.02 crore shown as contingent liability; will be removed from books once repeal is finalized. (Abhijit Majumder, Trailukya Borgohain)

Cost Structure Outlook

• Question: Why have contract costs and other expenses declined sequentially, and how should we model costs going forward? (Nitin Tiwari)
• Answer: Working-standard contract costs of ₹568 crore up ₹146 crore YoY, driven primarily by G&G costs for offshore block operations; other expenses largely flat as per pricing equation. Per-barrel operating cost currently $4.5–5.0, expected to decline to ~$3.5 as new facilities (NRL-related rationalization) absorb overhead and throughput rises. (Trailukya Borgohain)

Key Takeaway

Oil India delivered a record quarter: standalone revenue of ₹7,958 crore, EBITDA of ₹4,605 crore (54% margin vs 34% a year ago), and PAT of ₹2,870 crore — all highest since listing — driven by crude realization of $98.73/barrel (up $26 YoY), 11% YoY production growth to 0.95 MMT (with daily output of 11,017 MT as of 3 August), and a stellar NRL quarter (GRM $33 normalized, PAT ₹1,305 crore). Strategic focus remains on gas evacuation infrastructure (5 BCM ambition "from the first day" once network is ready), the Andaman appraisal campaign (fourth well December, hydrofrac testing August), NRL expansion commissioning (key units Oct–Nov; full by March 2027), and acceleration of the drilling program to 99 wells in FY27. Management guided FY27 crude output of 3.9–4.0 MMT and per-barrel operating cost decline to ~$3.5. Watch items include the ₹2,500 crore GST/royalty cash outflow in Q2 FY27, the unproven commerciality of Andaman (₹1,000+ crore spent), and elevated consolidated debt of ₹37,233 crore amid a ₹8,600 crore FY27 capex program. Production upside across the portfolio — crude at 4.2 MMT by FY29 and gas to 5 BCM by FY29 — is contingent on pipeline commissioning and timely appraisal outcomes.