Hindustan Oil Exploration Company Limited (NSE: HINDOILEXP) Q2 2025 Earnings Call dated Nov. 18, 2024
Corporate Participants:
Ramasamy Jeevanandam — Managing Director
N. S. Senthilnathan — Chief Financial Officer
Analysts:
Riddhesh Gandhi — Analyst
Vaibhav Badjatya — Analyst
Rishikesh Oza — Analyst
Kunal Tokas — Analyst
Jitendra Pethkar — Analyst
Rushabh — Analyst
Manan Patel — Analyst
Shiva — Analyst
Aksha Maheshwari — Analyst
Rikesh Parikh — Analyst
Ravi — Analyst
Manpreet Arora — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the HOEC Limited Q2 and H1 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to the management. Thank you, and over to you.
Ramasamy Jeevanandam — Managing Director
Thank you, Anuj. Good morning. Hope everyone has received the updated earnings presentation. It is in our website for your reference. I have with me Krishnan Raghavan, Chief Technical Officer; Senthilnathan, Chief Financial Officer; and Daisy, our Company Secretary.
I would like to start with updates on the Northeastern region. Dirok workover has been completed and it achieved its purpose of increase in production from both the wells 1 and 2. In Dirok-4, the extension of the hydrocarbon-bearing sands in Sands 22A and 23 is hoped to be in the deeper flanks of the structure while Dirok-4 is shut-in and is planned to perform asset jobs with partners’ approval before we put the well on production.
Dirok gas sales for the last quarter is 22.65 million standard cubic feet per day, but the offtake in the current quarter reduced to 15.03 million standard cubic feet per day. Therefore, the sales volume of the current quarter is 0.37 Bcf compared to 0.55 Bcf in the previous quarter for our share. Condensate is 5,858 barrels compared to 10,578 barrels in the previous quarter. Though this field can produce about 50 million standard cubic feet of gas per day, we have to restrict the production due to lack of demand. This quarter was affected by the low demand due to flood in Assam and shutdown of many plants thereby affecting the offtake.
You are aware that OIL and ONGC are selling the gas at the price applicable for nominated blocks with the ceiling of $6.5 per MMBtu and the Dirok JV has to sell the gas at PPAC price, which is about $8.2 per MMBtu. Therefore, the gas from the nominated field is sold first and the balance demand is met by us at a PPAC price.
We are clearly watching the progress of the Northeastern gas grid. Once the concept of common carrier is accepted and the gas grid connectivity is established, this situation would get reversed. It is difficult to predict the timelines, but we believe that it should be operational in all form by ’25-’26. We have received approval from Assam Pollution Control Board for our ND-1 well that is in North Dirok, and we plan to drill this well up to Barail formation. We are ready to meet the potential increase in demand once the demand constraint is eased out by the connecting the Northeast gas grid to the national gas grid.
And GeoEnpro, an wholly-owned subsidiary, is operated to the block Kharsang and the group has 35% participating interest in the block. Continuous workover is being carried out in the producing wells to maintain the current production. Our program to build the development wells and exploration wells in the block is delayed due to issue of environmental clearance. Public hearing is mandated before the issuance of the environmental clearance, which is scheduled on 26th November 2024. On obtaining EC, we will drill one exploration well to the depth of about 4,000 meters, which would unlock substantial value in the block. Our plan to drill 18 wells for Upper Girujan would increase the fuel production at the earliest. We believe substantial upside exists in Lower Girujan, Tipam and Barail formation, and with the connectivity of the Northeastern gas grid to national grid, monetization of the gas and development would be faster with a better price.
Block 19 adjacent to Dirok called as the Greater Dirok is analogue to Dirok structure. The extension has been granted up to 1st February 2025 and we have requested MOPNG for additional one year — one more year extension to start and complete the committed work program. As rainy season is over, after harvest, we will start the construction of approach road and drill pad to move the rig for drilling. We are hopeful that our application for extension to the additional period will be considered by MOPNG. In Northeastern region, our capital outlay for the next two financial year continues to be at INR250 crores.
Cambay blocks. In Cambay, we have secured the environmental clearance after four years for North Balol and Asjol. We are in the process of securing the rig and tangibles to commence the drilling of two wells in North Balol followed by Asjol. After the initial drilling, we continue with the drilling additional development wells to enhance the production. We believe good potential exists in all three blocks to enhance production. We are expecting the final clearance of the ring-fenced R2 PSC for signature, which would add additional value to the Cambay blocks.
Now I move on to offshore blocks. We are happy to inform that we participated in the DSF special bid round 2024, wherein we bid for Block B-15 in Mumbai Offshore, a discovered small field with an area of about 332.4 square kilometers. We were declared as the sole bidder. Under an award of the block by Government of India, we will embark on the development of this field. Water depth of the field is about 40 feet.
With regard to B-80, we are back on production from both the wells. However, during this quarter, the wells were sat in for more than 35 days for repair and replacement of ourselves. Production in the current quarter is 58,906 barrels of oil and 0.38 Bcf of gas, while it was 67,351 barrels of oil and about 0.4 Bcf above gas in the last quarter. During this quarter, the average gas price realized is 9.89 MMBtu compared to 10.34 MMBtu in the previous quarter.
Now the gas price in the Western region is moving back into imported LNG price. In PY-1 offshore, though the facilities for processing and transportation of the gas is in existence, subsurface study is yet to be fully evaluated before the commencement of drilling. We are planning to engage experts in basement reserves from Vietnam to review the study and reserve estimations of our in-house team, G&G team, and the third-party expert.
Before we commence the drilling, we would like to review the uncertainty of the gas water conduct in the north and south of the fields. These studies will give more confidence on our plan for three development wells. And if everything goes as per plan, drilling of the first well will commence in April to June 2025. We are confident about the underlying value of oil and gas reserves and resources in our existing blocks and are continuously adding the resource with the new conducts wherever possible. However, our ability to monetize quickly is hampered due to demand constraint in Northeast and issues faced with the facilities in B-80.
For this quarter, our consolidated turnover is INR100 crores compared to INR143 crores in the previous quarter and our profit before-tax of this quarter is INR13 crores compared to INR49 crores in the previous quarter. This volatility in our quarterly results are due to factors such as low offtake in Assam and impact of monsoon in Western region compounded by reduction in oil and gas prices. You would appreciate that these factors are beyond our control. However, we are doing our best to bring the fields on production and monetize to unlock the value potential.
And now I’ll request Senthil, our CFO, will update the financial results. Over to Senthil.
N. S. Senthilnathan — Chief Financial Officer
Thanks, Mr. Jeeva. Good morning all. Standalone revenue for this quarter is INR51.85 crores compared to INR71.79 crores in the previous quarter. The reduction in revenue is mainly on account of lower offtakes in Dirok field due to shutdown of major consumer plants in that area. B-80 revenue for the current quarter is INR16.96 crores for gas sales compared to INR18 crores in the previous quarter. Oil in-stock is adjusted in the operating cost. The current quarter revenue reduction in B-80 is mainly due to a reduction in gas price from $10.34 per MMBtu in the previous quarter to $9.89 per MMBtu in the current quarter.
In the case of Dirok, revenue for the current quarter is INR32.33 crores compared to INR50.58 crores in the previous quarter. During this quarter, 369 MMscf of gas was sold compared to 550 MMscf of gas sold in the previous quarter. Similarly, 5,858 barrel of oil was sold in this quarter compared to 10,578 barrel of oil sold in the previous quarter. During the quarter, offtake of Dirok gas by Oil India Limited was reduced due to the shutdown of its major consumer plants.
Field operating expenses for this quarter in the standalone account is INR49 crores compared to INR65.81 crores in the previous quarter. Other costs, including DDA, finance costs and others, is INR10.34 crores for this quarter compared to INR13.06 crores in the previous quarter. Out of the total operating cost in the current quarter, credit adjustment for oil stock is INR13.6 crores, whereas it was INR23.43 crores in the previous quarter due to decrease in the net realizable value of crude prices.
Standalone EBITDA for the current quarter is INR9.73 crores compared to INR20.97 crores in the previous quarter. Profit after tax for the current quarter is INR1.11 crores compared to INR7.39 crores in the previous quarter. The major reason for reduction in profit is due to reduction in offtake of gas in Dirok field and reduction in the NRV of closing stock of crude from $82.55 per barrel to $73.69 per barrel.
In consolidated accounts, the revenue from operations for the quarter reached INR100 crores compared to INR143.41 crores in the previous quarter. Total expenses in the consolidated accounts for the current quarter reached INR86.17 crores compared to INR98.25 crores in the previous quarter. The main reason for this difference is movement in the crude stock price in B-80 block.
In consolidated accounts, EBITDA for this quarter is INR36.47 crores compared to INR72.98 crores in the previous quarter. Consolidated operating profit before tax is INR13.41 crores against INR48.5 crores in the previous quarter. Profit after tax, including exceptional, in the previous quarter is INR41.92 crores and in the current quarter, it is INR10.81 crores.
As on date, the term loan outstanding is about INR103 crores. India Ratings has reaffirmed the rating IND A and revised the outlook from stable to positive for INR500 crores bank loan. With the current cash position and with the continued production, we will meet all our obligations, including the planned capital program for the coming three years.
Thanks. Thanks, and back to Mr. Jeeva.
Ramasamy Jeevanandam — Managing Director
I think we can open the forum for questions now.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Riddhesh Gandhi from Discovery Capital. Please go ahead.
Riddhesh Gandhi
Yeah. Hi, sir. Typically, we have a slowdown in offtake in Dirok within — in the first quarter. Just wanted to understand the reasons behind the slow offtake in Q2 and if we are going to continue to see this slower offtake going into Q3.
Ramasamy Jeevanandam
Thanks, Riddhesh. And you know that the second quarter is normally having a rainy season there in Assam. This time there was a flood about seven to eight — 10 days continuous flood was there that affected the offtake. And then you look at Numaligarh refinery was shut in for about 19 days and the Brahmaputra Fertilizer Corporation was about 28 days. A national thermal — sorry Namrup Thermal Power Station was 24 days and ANIIDCO [Phonetic] that was a major consumer for about 61 days. This all compounded the whole issue of a lower offtake. That’s why from 22 million it has come down to 13 million standard cubic feet per day.
I think this situation would reverse a little better in the third quarter and if some progress we made, we have been in discussion with the Oil India, then fourth quarter would be much better than the third quarter. That’s what we believe.
Riddhesh Gandhi
Got it, sir. And the other question is that now that B-80 is up and running, are there any slowdown occasionally happening or any issues happening actually with the extraction of the oil at all or it’s all smooth?
Ramasamy Jeevanandam
It’s because of the — there is no weather issues at the moment and the things are moving okay. There should not be any obstruction. That’s what we believe.
Riddhesh Gandhi
Okay, sir. And the other question is, is there any actually a light you can throw on the new block which we have recently actually bid for in terms of the kind of reserves we expect, the kind of return expectations we expect or anything on those lines?
Ramasamy Jeevanandam
See, normally as you are aware that we don’t get onto any project which gives less than 21% post-tax return to us and that’s what our internal estimate of it. So based on that we bid for the block and that block is closer to NQ plate — process platform from 22 kilometers from there. It has two discoveries. So we believe that should add good value to us. But still the government has to — yet to announce and we have to get an award.
Riddhesh Gandhi
Got it. Sir, and the last question is with regards to actually how much actually inventory are we holding in a B-80 of the oil? Because I know at around 350, 400 is when we can have the auctions. So right now how much is the kind of inventory we’re holding?
Ramasamy Jeevanandam
250,000 barrels about, plus/minus.
Riddhesh Gandhi
Got it. Got it. All right, sir. Thanks. That’s all for me for now. Thank you.
Ramasamy Jeevanandam
Thanks, Riddhesh. Thank you.
Operator
Thank you. The next question is from the line of Vaibhav from Honesty and Integrity Investments. Please go ahead.
Vaibhav Badjatya
Yeah. Hi, sir. Thanks for providing the opportunity. Sir, from Northeast, you briefly updated on the pipeline status, which will enable gas connected to your national grid. But there are three phases. So I just wanted to understand whether Phase 1 would be sufficient to provide national grid connectivity or Phase 2 or we have to wait till Phase 3 to get connected to the national grid and the full custodial demand will be delivered only after Phase 3, is it the case?
Ramasamy Jeevanandam
No, it’s not. What will happen is that the GAIL connection up to Guwahati is expected by December. Then the DNPL connections is expected by all means by March 25. And the major connectivity of separate line by IGGL to Numaligarh to — so Numaligarh to Duliajan would be expected here later. So for us, our volume per se as such, once the Duliajan line get connected, we will be much better off. That would be expected by this year-end.
Vaibhav Badjatya
Okay. Okay. But as per the recent interview given by one of the officials, Phase 1 will be completed by March and then — actually by December. You’re right. I think — yeah, I think that’s clear. That’s it from my side, sir. Thank you. Thanks a lot. Yeah. That’s it from my…
Ramasamy Jeevanandam
Thanks. Thanks, Vaibhav.
Vaibhav Badjatya
Yeah.
Operator
Thank you. The next question is from the line of Rishikesh from RoboCapital. Please go ahead.
Rishikesh Oza
Hello. Am I audible?
Operator
Yes, please go ahead.
Rishikesh Oza
Yeah. Hi. Thank you for the opportunity. Sir, my first question is with respect to the B-80. Sir, we had given a reference production of around 2,500 boepd in B-80. So would like to know where are we currently? And what is our plan? By when and how are we planning to go to a production level of, say, around 3500 boepd?
Ramasamy Jeevanandam
Okay. Right. So, currently we are in the plus/minus of 5% of the 2,500 barrel. That is the reference as such, and ’26-’27, we are planning to drill three additional wells. So that should ramp up the expected level of more than 3,500 barrel [Indecipherable].
Rishikesh Oza
So basically the 3,500 will come only by drilling additional wells, right? Not from the current well that we have.
Ramasamy Jeevanandam
That’s for sure.
Rishikesh Oza
Okay. So how much capex would that entail?
Ramasamy Jeevanandam
That’s we are expecting that the three well would be somewhere around $50 million to $60 million. And that’s what we are planning for it.
Rishikesh Oza
Okay. Okay. And also would like to know currently — currently our revenue run rate is less, but I think with Dirok would be reviving Q3, Q4 later. Going ahead, what is our target of revenues? Say, by when can we do around INR1,000 crores of revenue and what EBITDA margins, if you could share that please?
Ramasamy Jeevanandam
It’s an answer depending on many caveats. But our endeavor is ’25-’26, we should be able to comfortably reach that number and our margin remains the same what we are doing now, it’s little better than that because some of the fixed cost can be leveraged and in a manner we’d be meeting the same number, little more better than the previous number and that will increase in proportion to the turnover assets.
Rishikesh Oza
Okay. Got it. Got it. Thank you very much.
Operator
Thank you. The next question is from the line of Shiva, who is an investor. Please go ahead. Mr. Shiva, your line has been unmuted. Please go ahead with your question. As there is no response from the line of Mr. Shiva, we move to the next participant. Before — the next question is from the line of Kunal Tokas with Fair Value Capital. Please go ahead.
Kunal Tokas
Hello. Am I Audible?
Operator
Yes, sir. May I request you to use your handset please?
Kunal Tokas
Now?
Operator
Yes, sir. Better. Thank you.
Kunal Tokas
Okay, thank you. So, sir, my first question is related to your operational cost for the Dirok field and the B-80 fields. I think I remember reading something that your operational cost per MMBtu was $0.5 for Dirok field. Is that correct?
Ramasamy Jeevanandam
It’s not $5. It is $5 when you are reaching to a full volume of production, because these operating costs are not linear. This is more or less at the fixed cost. So if our volume of — if you are — see, gas cannot be stored, it has to be sold. So whatever we produce, if lesser the volume we produce, that your operating cost is more, that’s about $1 per MMBtu. Now you increase the volume, even you double the volume, then the operating costs come down to $0.5. So being the low offtake, then our cost is more at the moment.
Kunal Tokas
So, at 40 MMscf to 45 MMscf that you expect after the grid gets connected, your operational costs would come down to $0.5?
Ramasamy Jeevanandam
Yeah. It should be somewhere around $0.5 to $0.6.
Kunal Tokas
Okay. And what would those be for the B-80 field? I’m just trying to see — I’m just — I’m trying to understand what level of oil prices you can sustain without — with still being breakeven.
Ramasamy Jeevanandam
See, B-80 you have three issues which comes out. One about the government share. The government share, irrespective of the price, you have to share with the government. That is the first fact. The second thing, your operating facilities, if you are looking at this, all operating facilities, majority of them are owned by us that through our subsidiaries, that is floating production offshore and mobile offshore processing platform is all owned by us. If you take the net cost of all those things, we can sustain even at an oil price of $50.
Kunal Tokas
$50?
Ramasamy Jeevanandam
$50.
Kunal Tokas
Okay. And sir, about the production sharing contracts, those have a high point and a low point between which the share is linearly interpolated. So from the basic that I understand is that the more you produce, the more you have to share with the government and that actually hinders people from — it incentivizes people from producing more. Is that a correct understanding and how do you plan to tackle it?
Ramasamy Jeevanandam
See, it’s basically a revenue-sharing contract, not a production-sharing contract. In a revenue-sharing contract, the costs are immaterial, only the revenue is getting shared with the government. That goes with the LRP, that is 12%, that is a fixed one. The balance one is proportion to what you have quoted for it. So more you produce, you’ll have to pay more to the government and that’s a fact.
So in our case, it is about 12% is the minimum we have to pay for whatever our revenue we realized and the maximum goes up to 55%, that is a linear. So essentially, we produce about — your revenue share to the government should be around, say, 15% — 17% to 18%. And then your royalty is about 10%, total 25% to 30% will go to the government on your revenues. Balance is getting used for your cost and you are making your profit.
Kunal Tokas
Okay. Okay. Does it decentivize producers from producing more or does it still make economic sense for — at a higher sharing levels?
Ramasamy Jeevanandam
We can work it out an optimum level for you and you cannot put the wells on close mode and at the same time, you can’t block the wells. So it depends on the bidding and depends on the contract signed by the — per respective parties.
Kunal Tokas
Okay, sir. Got it. Thank you very much.
Ramasamy Jeevanandam
Thanks.
Operator
Thank you. [Operator Instructions] The next question is from the line of Jitendra Pethkar, who is an investor. Please go ahead.
Jitendra Pethkar
Thank you for the opportunity. My question is to Mr. Jeeva. Is there any stake sale by the management or the previous management from the Company in the recent past?
Ramasamy Jeevanandam
No, see, I can’t say about what the shareholders will do, but I don’t think so. If anything is, they definitely will inform you.
Jitendra Pethkar
Okay. Because there are rumors like that and it appears since there is no identifiable promoter of this Company, the disclosure may not be mandatory, I believe, but it does affect the normal investors.
Ramasamy Jeevanandam
I just want to tell you, first, you said it is a rumor. That is a fact. And the second thing you are saying actually it should be a mandatory disclosures, yes. And anybody who’s holding more than 5% has to discuss to the exchange. So, both are an event. If any event on that, it will get informed to us and we will in turn inform to the exchange immediately.
Jitendra Pethkar
Okay. Thank you.
Ramasamy Jeevanandam
Thank you.
Operator
Thank you. The next question is from the line of Rushabh [Phonetic], who is an investor. Please go ahead. Mr. Rushabh, may we request you to unmute your line and go ahead with your question, please.
Rushabh
Hello.
Operator
Yes, sir. May we request you to use your handset please?
Rushabh
Just one second. [Foreign Speech]
Operator
Yes, sir. Please go ahead.
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
See second quarter [Foreign Speech], always we have some problem and now [Foreign Speech]. ONGC…
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
So grid connectivity [Foreign Speech]. So grid connectivity [Foreign Speech]
Rushabh
Grid connectivity [Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Operator
Thank you, sir. Mr. Rushabh, may we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn, sir. Thank you.
Rushabh
Hello?
Operator
Yes, sir. May we request that you return to the question queue, sir? Thank you. The next question is from the line of from Vaibhav from Honesty and Integrity Investments. Please go ahead.
Vaibhav Badjatya
Yeah. Hi, sir. Thanks for providing the follow-up. Just continuing in the last thing. So I think Phase 2 as per the interviews publicly given by the officials of this pipeline is Phase 2 is going to be completed in March ’26 and what you are saying is March ’25 for Phase 2 of the pipeline. So I’m just confused whether it’s — whether it’s ’25 or ’26.
Ramasamy Jeevanandam
Vaibhav, I tell you, honestly, I don’t know which phases you are talking about. Perhaps that one phase is about connecting up to GAIL connection up to Guwahati. So the second connection is from Guwahati to Numaligarh. And from to Numaligarh to Duliajan, right, through a DNPL line. So this is what’s practically making our increase in volume. We are expecting the DNPL line will get connected in March ’25. So with that, we will be able to increase our offtake. That’s what we believe, okay?
Vaibhav Badjatya
So, that will ensure national grid connectivity for us?
Ramasamy Jeevanandam
Yeah, that will be — because this gas go to the — up to Barauni, Central India. So then obviously somewhere — there would be a volume uptick and there is an establishment of grid connectivity. Further augmenting the grid would be through a separate line IGGL from Numaligarh to Duliajan.
Vaibhav Badjatya
Okay. Okay. Okay, got it. Understand. That’s it from my side, sir. Thank you.
Operator
Thank you. The next question is from the line of Manan Patel [Phonetic], who is an investor. Please go ahead.
Manan Patel
Hello. Am I audible?
Ramasamy Jeevanandam
Yeah. Yes, Manan.
Manan Patel
Thank you for the opportunity, sir…
Operator
Sir, may we request that you use your handset, sir?
Manan Patel
Is it better now?
Operator
Yes, sir, it’s better now. Please go ahead.
Manan Patel
Yeah. Thank you for the opportunity. And sir, congratulations for B-18 [Phonetic]. So just wanted to understand with this like being declared the sole bidder, so when can we expect further details on the block and from your side?
Ramasamy Jeevanandam
See, we are — as at the moment, we are just a bidder, right? So we have to wait for the government’s — the formal communication to it and then we will be going for signing the block. So that will take at least — I do not know the exact timeline. We are expecting within a month’s time. Once it is done, then we will update the block because our evaluation what we have done, how we have come to — come out — value in the block, we will let you know.
Manan Patel
Understood. And sir, just wanted to know how does this change our capex projections of INR1,000 crores over next two to three years? Does it change materially or how do we think about this?
Ramasamy Jeevanandam
Yeah, I think it will change our capital plan because what happened, we are looking at — there is a — after signing of the PSC, we have got four years’ time. Within the four years’ time, we should be able to have enough capital from our side to go for it. And we are looking at a model by which we’ll be able to optimize the cost and put it on production in a quicker mode. That’s what we are looking at. So if any additional borrowings required, at that point in time, we look at that.
Manan Patel
Understood. That’s it from my side. Thank you, sir, and wish you all the best.
Ramasamy Jeevanandam
Thanks, Manan.
Operator
Thank you. The next question is from the line of Kunal Tokas, who is from Fair Value Capital. Please go ahead. Mr. Kunal, may we request that you unmute your line and go ahead with your question, please? Mr. Kunal, may we request that you unmute your line, please? As there is no response, we will move to the next participant. The next question is from the line of Shiva, who is an investor. Please go ahead.
Shiva
Hi.
Ramasamy Jeevanandam
Hi.
Operator
Yes, sir. Please go ahead with your question.
Shiva
With reference to the B-15, the current bid that has been done, I’m sure you guys would have seen why the Company should under bid. Being an offshore block, the experience has not been so good in the past four, five years and the kind of investments that we’ve made are phenomenal in B-80 with not getting proper output, like wells getting off and on and off again and spending a lot of money, time, energy, everything. So what are the logics to bid for another offshore block? Why did our Company do that? What is it that you guys found very interesting in this? That is my first question related to this B-15.
The second question here is B-80, currently oil production is not that great. So sometimes when there is a leakage in my house, the water comes down when the guy will sweep the floor, but then that water is not there in my house anymore, it goes to the neighbor’s house. So can a similar phenomenon also happen with B-80 like the oil is not there anymore in our area but have gone to the neighbor’s — like a different land altogether? So the second question is from Mr. Krishnan Raghavan, the technical question. The first one is for Mr. Jeevanandam. Thank you.
Ramasamy Jeevanandam
I’ll answer both the questions. I don’t know about the leak in your house. But the fact remains we are an offshore operator. We are the only company producing from Mumbai high other than ONGC. So we are very proud of it. We can — we are comfortable doing a good job and we will be able to do it. We’ll head on to get on to many offshore blocks when it comes to it. We know how to create a value to our shareholders. We’ll continue to do that, okay? That’s your first question.
Second question, there is nothing about a leak or anything on it. Every oil and gas block has a certain volume. This volume has to be a proper plumbing job to come to the surface. It will come when it comes, right? We are on the job of doing the work. We are continuously on production at the moment. We will unlock the value by drilling additional wells. That’s all it from my side. Thank you.
Shiva
Okay. Thank you for the reply. Then what…
Ramasamy Jeevanandam
Nothing more from you…
Shiva
Are we planning…
Operator
Sir, sorry to interrupt you. May we request that you return to the question queue your follow-up questions, please? Thank you. The next question is from the line of Aksha Maheshwari [Phonetic], who is an investor. Please go ahead.
Aksha Maheshwari
Hello?
Operator
Yes, sir.
Aksha Maheshwari
Am I audible now?
Operator
Yes, sir, you’re audible. Please go ahead.
Aksha Maheshwari
Yeah. Sir, so my question was basically regarding one of the interviews which was given to Mihika Barve on nearby 16th of June. So Mr. Jeeva, you said that the Company expects 50% offtake in production in fiscal ’25. So where are we right now over there?
Ramasamy Jeevanandam
So we are on target actually. And see, somebody — what happens in oil and gas sales, you can’t continuously look at quarter-to-quarter, right? Three factors, because the demand is not in our hand, that will get sorted out by the connectivities established on the Northeastern side. And the B-80, there is a weather impacted about 35 days that we are on the — we have already rectified it and we’ll continue to do it. And the third one, our job is more towards creating a value below the ground, which is — which we have already been on the process of getting new acreage. And with this, we will be able to meet your targets. It may be a couple of months they said and that’s it, but we are on target of getting the things done.
Aksha Maheshwari
Okay. But the coming — like the interview was very recent one. So accordingly, the numbers which came are supposed not in line with the interview which was said over there. So just…
Ramasamy Jeevanandam
The line of — the number of this quarter, right?
Aksha Maheshwari
Yeah.
Ramasamy Jeevanandam
Yeah, right, but this is what I explained the reasons was the offtake in this quarter, right?
Aksha Maheshwari
Pardon me. Sorry, I couldn’t hear you properly.
Ramasamy Jeevanandam
So this quarter, the low-volume offtake was already explained to you. This has not affected our productivity of the wells, our capability of increasing the production. This has only affected our offtake, right, because there was lack of demand in the region.
Aksha Maheshwari
All right, sir. Thank you.
Operator
Thank you. The next question is from the line of Rushabh, who is an investor. Please go ahead.
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech] Same question that [Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
We should improve at least 50% more than this.
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech] We are expecting at least 25 plus [Foreign Speech].
Rushabh
[Foreign Speech]
Ramasamy Jeevanandam
[Foreign Speech]
Rushabh
[Foreign Speech]
Operator
Thank you, sir. May we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn? Thank you. The next question is from the line of Rikesh Parikh from Motilal Oswal Financial Services. Please go ahead. Mr. Rikesh Parikh, may we request you to unmute your line and go ahead with your question?
Rikesh Parikh
Yeah. Thanks for the opportunity. Sir, just want to understand B-80, what is the current level of production right now in terms of oil and gas?
Ramasamy Jeevanandam
See, oil about 1,000 barrels and gas is about 8 million standard cubic feet of gas per day.
Rikesh Parikh
Okay. So it’s back to the normal what we expect or may we see some more improvement in the field as such in terms of production, do we expect?
Ramasamy Jeevanandam
For reference, this is the one. And if any improvements, we will know by the next quarter.
Rikesh Parikh
Okay. And sir, this — just want to understand this B-15 block. So probably it will be like take two years to get it operationalized, means in terms of taking the approval and studies and all is the right understanding?
Ramasamy Jeevanandam
So basically being at offshore, we don’t require a lot of — lot many approvals. But it is more looking at a more comprehensive development and the cost-effective development, both are looked at by the team, then we have to engage the right contractor to work with the — with the model with mitigating the risk. And our target is to put it on production in less than 30 months.
Rikesh Parikh
Okay. Thank you. That’s it from my side.
Operator
Thank you. The next question is from the line of Ravi, who is an investor. Please go ahead.
Ravi
Hello. Thanks for the opportunity. Can you hear me, sir?
Ramasamy Jeevanandam
Yeah, I can hear you.
Ravi
Yeah. Sir, my question is, last time, I think the 400,000 barrels we sold in December, if I’m not wrong. So when is — what is the current storage of oil from B-80?
Ramasamy Jeevanandam
So the current stock, I told you, is about 250,000 barrels, and then 2,000 barrel is our current production. So you’d be knowing by first quarter of the next year, we’ll be able to make an offtake.
Ravi
Okay. So first quarter. Okay. Thank you, sir.
Ramasamy Jeevanandam
Thank you.
Operator
Thank you. The next question is from the line of Manpreet Arora from Aurora Wealth Advisors. Please go ahead.
Manpreet Arora
Hello.
Operator
Yes, sir. May we request you to use your handset and go ahead with your questions?
Manpreet Arora
Yeah, can you hear me now?
Ramasamy Jeevanandam
Yeah, we can hear you.
Manpreet Arora
Yeah. Thank you for the opportunity. Sir, on the B-80 gas, if we look a couple of years back, we had flows of 12 point some million and then it gradually decreased to 5 million and now 4 million. I understand that it was a gas stop well and — so the earlier years will probably be higher than later in the year. Is that a correct understanding?
Ramasamy Jeevanandam
Yeah. Your understanding is correct.
Manpreet Arora
And now you mentioned that we are now flowing 8 mm [Phonetic] — so — and so that has increased now?
Ramasamy Jeevanandam
I think it is better take the same reference about the 8 million barrel — 8 million standard cubic feet per day.
Manpreet Arora
Okay. And so how should we model this over the next few years, sir? I mean, will this decrease, sometime the oil will increase or this is…
Ramasamy Jeevanandam
See, any oil and gas field on a continuous production will have some decline. And it will not decline too much as we are producing very minimal from that field. And by drilling additional wells, we will be able to come back to the normalcy in the block to use its facilities to its optimum potential. That’s why we plan for three wells in ’26-’27.
Manpreet Arora
All right. Thanks. And sir, on the pricing side, we were at 22% of Brent and then we have again come down from $16 to now $9. So how should — how do you see the pricing playing out? It is more related to the Brent price, how it behaves?
Ramasamy Jeevanandam
So we were looking at actually the Brent price is the best model. So we went out 22%. Subsequently, it has been brought down to 12%, 12.2%. Now we are looking at more from an exchange where we are — that is price is moving up into LNG price. So partly we are selling at exchange and partly we are selling at the Brent price. Wherever the committed conduct we are selling at the Brent price and the balance more than 50% we are selling at the exchange, which the price is akin to LNG price, a little discount to the LNG price. But the price is much better in the exchange rather than with the — going with the percentage on the Brent at the moment.
Manpreet Arora
Thank you very much. Thanks a lot for answering.
Operator
Thank you. The next question is from the line of Jitendra Pethkar, who is an investor. Please go ahead.
Jitendra Pethkar
Okay. Thank you for the opportunity again. I have two questions. One is a little bit follow-up on the grid connectivity on the East. I would like to know unambiguously, when will be the final connection will be made and there will be no constraints as to the transportation of gas on the East side, when is that date in ’25, June, July, ’26, which exactly, where all connections should be completed, unambiguous?
Ramasamy Jeevanandam
See, Jitendra, as what you are looking at the similar way, we are looking at them. So when we discussed with the team, they are expecting that one set of connection should get over by March. So therefore, we are expecting by ’25-’26, there should not be any constraint to us. And to enhance the production from…
Jitendra Pethkar
’25-’26, meaning — shall I put it as by second half of ’25?
Ramasamy Jeevanandam
That’s right — no, no, first half of — we are expecting them to get the first layer of connections of — connecting to the national grid should get done by 31st March 2025. So essentially you get a better offtake from ’25-’26. And further augment of the offtake depending on the production from others as well as the demand and then the connectivity of IGGL laying their own line from Numaligarh to Duliajan. So that we will total in such a manner that we drill additional wells and ready to ramp-up the production after 70 million cubic feet of gas per day.
Jitendra Pethkar
I understand. So which means after 31st March ’25, things are progressively going to increase only and most of the, let’s say, constraints will be removed by 31st March 2025. Am I right?
Ramasamy Jeevanandam
Yeah, you’re right. And that’s what the assumptions we are also working.
Jitendra Pethkar
Understood. My second question is about the quality of crude that we get from B-80. It gives the same crack as the other that is domestically found or do you — can you give any idea from refiners point of view?
Ramasamy Jeevanandam
It is actually a Brent. We are — we got the Brent price based on the analysis. Crude assay what they have done, it is equivalent to Brent, so it will continue to be that.
Jitendra Pethkar
Okay, fine. Thank you.
Ramasamy Jeevanandam
Thanks.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments.
Ramasamy Jeevanandam
Thank you. Our focus remains on achieving the optimum production from B-80 and to increase the offtake from Dirok. We believe the drilling of wells in Kharsang, PY-1 and Western region will add substantial volume of resources to reserves as well increase in production. Our committed in-house team with the support of external experts will ensure our growth targets. We once again thank you all for joining us today. Thank you all.
Operator
[Operator Closing Remarks]