Oil India Limited (OIL) Q2 FY23 Earnings Concall Transcript

Oil India Limited (NSE:OIL) Q2 FY23 Earnings Concall dated Nov. 11, 2022

Corporate Participants:

Pankaj Kumar Goswami — Director Operations

Sanjay Choudhuri — Executive Director, Finance and Accounts

Harish Madhav — Director Finance

Analysts:

Somaiah V — Spark Capital — Analyst

Unidentified Speaker —

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Probal Sen — ICICI Securities — Analyst

Vishnu Kumar — Spark Capital — Analyst

Kishan Mundhra — Antique Stock Broking Ltd — Analyst

Vikas Jain — CLSA — Analyst

Hardik — ICICI Securities — Analyst

Sabri Hazarika — Emkay Global Financial Services — Analyst

Presentation:

Operator

Ladies and gentlemen, welcome to the Q2 FY’23 Results Conference Call of Oil India Limited hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sabri Hazarika from Emkay Global Financial Services. Thank you, and over to you.

Sabri Hazarika — Emkay Global Financial Services — Analyst

Yeah. Good morning, everyone. On behalf of Emkay Global, I welcome you all to the Q2 FY’23 post earnings conference call of Oil India Limited. We are pleased to have the senior management of Oil India led by Mr. Harish Madhav, Director Finance; Mr. Pankaj Kumar Goswami, Director Operations; and Dr. Manas Kumar Sharma, Director Exploration and Development. So at the onset, the management will brief on the results and this will be followed by the question-and-answer. So, now I request the Oil India management for the opening remarks. Over to you, sir.

Sanjay Choudhuri — Executive Director, Finance and Accounts

Good morning, dear friends. At the outset, I would like to thank M/s Emkay Global Financial Services for organizing today’s investors conference. I’m Sanjay Choudhuri, ED, Finance and Accounts. The company’s financial results for Q2 FY’23 were published yesterday and I will briefly give indications about the performance of the company both in physical and financial terms.

The consolidated turnover of Oil for Q2 FY’23 is INR10,463 crores over INR7,420 crores last year in the same quarter. The consolidated turnover for the period ended 30th December 2022 [Phonetic] is INR20,000 crores versus INR13,696 crores for the period ended 30th September 2021. The consolidated profit after tax for Q2 FY’23 is INR2,661 crores vis-a-vis INR1,826 crores for the same quarter last year. The consolidated profit before tax for the period ended 30th September 2022 is INR6,995 crores vis-a-vis INR3,534 crores for the period ended 30th September 2021. The profit after tax at the Group level of the company for the current quarter FY’23 is INR2,115 crores vis-a-vis INR1,454 crores for Q2 FY’22. The consolidated profit after tax for the period ended 30th September 2022 is INR5,326 crores vis-a-vis INR2,668 crores for the period ended 30th September 2021.

Now coming to the standalone results. We begin on the production front. The crude oil production for Q2 FY’23 is 0.79 mmt, which is increased by 4% over the same period last year. The gas production has also increased by over 2% over the same period last year.

On the financial side, we are happy to share that the highest-ever quarterly profit after tax in Q2 FY’23 on strength of better pricing and higher crude oil and natural gas prices. The average crude oil price realization for Q2 FY’23 has been $100.59 versus around $71 per barrel for the same period last year, which is an increase of around 40%. The crude oil price realization for half year ended 30th September 2022 was $106.53 per barrel vis-a-vis $69.28 per barrel for the half year ended 30th September 2021, which is increase of about 54%.

The company has paid special additional excise duty [indecipherable] tax at $24 per barrel for the second quarter of FY’23. The average natural gas price for the half year ended 30th September 2022 is $6.10 per mmbtu vis-a-vis $1.79 per mmbtu for the half year ended 30th September 2021, which has increased by $4.31 per mmbtu. The natural gas production like earlier shared for the quarter is higher and for the half year has increased by around 9%.

The Board has declared an interim divided of INR4.5 per share having face value of INR10 each. Now coming to the performance of Numaligarh Refinery Limited, the profit after tax of NRL for Q2 FY’23 is INR728 crores, which is against profit of INR957 crores in the same quarter last year. NRL’S gross refining margin has remained flat [indecipherable] around $13 per barrel. The EPS for Q2 for NRL has been iNR 9.89 per share against INR13 per share in the same quarter last year.

With this, my opening remarks on performance is over and we are now open to the question-and-answer session.

Questions and Answers:

 

Operator

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Probal Sen from ICICI Securities. Please go ahead.

Probal Sen — ICICI Securities — Analyst

Thank you for the opportunity, sir. Congratulations on a good set of numbers. I had a couple of questions. One was, is it possible to share what was the comparable Q1 GRM of NRL, I presume this $13 per barrel is net of any excise benefit. Correct?

Harish Madhav — Director Finance

Yes, GRM numbers reported are net of excise duty benefit.

Probal Sen — ICICI Securities — Analyst

So, sir, can I get the Q1 number as well, if you may?

Harish Madhav — Director Finance

Q1 NRL was about $6 I think. One sec —

Probal Sen — ICICI Securities — Analyst

Sure sir.

Harish Madhav — Director Finance

Q1 NRL was —

Probal Sen — ICICI Securities — Analyst

Hello?

Harish Madhav — Director Finance

We’ll give you that another number, in the meantime, we can continue with the other questions.

Probal Sen — ICICI Securities — Analyst

Sure sir the other [indecipherable] was we can get some details of the other income, how much was the dividend income, because other income number has gone up quite sharply.

Harish Madhav — Director Finance

Other income, sir, basically we have received dividends from Numaligarh and the IOCL in the second quarter. So last year, Numaligarh had not declared any dividends in the firsthalf, we have not received rather. So that iNR 500 crore incremental is mainly on account of the dividends received from NRL in the second quarter.

Probal Sen — ICICI Securities — Analyst

Okay, Okay and, sir. In terms of production you mentioned that national gas production has gone u quite well in H1, any guidance we can get for what we are targeting for natural gas production for this year and next year on an overall basis for ’23 and ’24 and for oil also if you can share.

Harish Madhav — Director Finance

Yeah in fact you may be knowing Oil India is going some enhancement in production both in oil and gas, so we have taken in [indecipherable] four-plus, so in this respect, as per the plan, the oil production is also going up and the natural gas production is also going up. So end of the year, we are expecting oil production of around 3.2 MMB and gas production is also around 3.5 to 3.6 mmb [indecipherable].

Probal Sen — ICICI Securities — Analyst

This is 3.5 bcm — billion cubic meter?

Harish Madhav — Director Finance

Bcm, yes.

Probal Sen — ICICI Securities — Analyst

And this is for FY’23 sir or FY’24?

Harish Madhav — Director Finance

No, for this year, FY’23.

Probal Sen — ICICI Securities — Analyst

Any sense you can give for FY’24 as well? Any targets that you have?

Harish Madhav — Director Finance

’22, as of now the target is going up to 4 in gas.

Probal Sen — ICICI Securities — Analyst

What about oil sir?

Harish Madhav — Director Finance

Oil 3.6.

Probal Sen — ICICI Securities — Analyst

3.6.

Harish Madhav — Director Finance

Yes.

Probal Sen — ICICI Securities — Analyst

Okay, I’ll come back sir. I have no questions, but I’ll come back. Thank you so much for your time.

Operator

Thank you. We have the next question from the line of Somaiah V from Spark Capital. Please go ahead.

Somaiah V — Spark Capital — Analyst

Thanks for the opportunity sir. My first question is on the capex front, so what is the plan for FY ’23-’24 in terms of our standalone capex, and also from NRL Margin standpoint, in terms of the expansion project, what has been deployed so far and what is the outlook for the next couple of years and also the equity contribution if any, I mean in the next one or two years that we expect from our side?

Sanjay Choudhuri — Executive Director, Finance and Accounts

See, our capex for the next two years that is [indecipherable] close to around INR4,500 crore. Though the firm plants have not been [indecipherable[ but it will directionally around INR4,500 crores. [indecipherable] as per the plan of the refinery project execution, next year, there will be total expenditure of around INR8,000 crore for the NRL [indecipherable] total group about INR13,000 to INR14,000 crores capital expenditure built Oil and NRL put together.

Somaiah V — Spark Capital — Analyst

So this INR8,000 crores, can we get kind of a profile of capex in terms of years, next couple of years, how we are looking at NRL, and also on these INR8,000 crores —

Sanjay Choudhuri — Executive Director, Finance and Accounts

Another project, in fact, INR29,000 crores project which we complete by end of ’24-’25. So in next two years that is current year ’23-’24, ’24-25 and [indecipherable] hopefully we will get invested capex for the NRL expansion project and as far as Oil India is concerned. our capex remains around iNR 4,000 crores to INR5,000 crore region year-on-year.

Somaiah V — Spark Capital — Analyst

Understood, sir. So of this 70-30 the funding, anything from our side as an equity infusion that needs to be done for this quarter —

Harish Madhav — Director Finance

Yeah, of the total INR28,000 crore, 70-30 our equity contribution for 70% is INR3,000 crores, which will be invested, maybe currently it is unlikely, next two years we may have to contribute towards that.

Somaiah V — Spark Capital — Analyst

Understood sir. Helpful. Second question is on the debt front. So, still NRL continues to be with minimal debt, is that a right understanding, and also, what is the quantum of debt at the upstream, and also, if you can give an update on the upstream projects where we are?

Sanjay Choudhuri — Executive Director, Finance and Accounts

Projects part I will come later. Debt part, let me give you the specifics as first question was about the NRL debt. NRL has started drawing a total debt we have tied up about INR18,000 crores. They have started drawing already out of that funding arrangements, but not significant drawdown so far because the refining margins and the cash flows have been fairly good as of now, so whatever investments are largely happening from their internal resources. But going forward, next year, our equity contribution, loan drawdown all will increase possibly in the next year or maybe later part of this year.

On Oil India’s debt profile, I think debt remains more or less same expect there is a change in the valuation whatever we are looking only on account of the exchange rate variation which as rupee has depreciated so dollar loans revalued at higher value. That is only — otherwise in dollar terms, there is no change. And the rupee loans that we have taken for NRL acquisition, almost 90%, 95% of the debt we have already repaid. Remaining also, we will try to liquidate by December. And the projects, upstream projects, I’ll request [indecipherable].

Unidentified Speaker —

So far, infrastructure projects are concerned, so we have been doing some oil and gas installation construction work in our main producing area, that is in Assam area, so around total project value will be around INR3,500 crores and it consists of four, five projects, so one mega project is going on that is around INR600 crores that is for construction of two installations in [indecipherable] area, and there are other projects, some water injection installations are going on, then new production pipelines are going on, so all these projects [indecipherable] will be around INR3,000 crores plus.

Somaiah V — Spark Capital — Analyst

Understood sir. One last question if I may, so on the dividend front, so what is the kind of payout ratio that you’d be looking for and given especially 1H has been quite strong, your EPS of around INR30 and interim dividend is going to be INR4.5. So what should we kind of expect going forward? Thank you.

Sanjay Choudhuri — Executive Director, Finance and Accounts

You see the — On the back of higher prices that we received [indecipherable] they are in the windfall tax which has come and accordingly the dividend has to be moderated to that extent. Now with [indecipherable] prices in the next six months, it was difficult to take absolute call regarding the dividends. However, conservatively speaking, we have been [indecipherable] maybe but then we are likely to make up for that in the third quarter, if the prices hold good.

Harish Madhav — Director Finance

See, for the full year we have been paying around 40% on an average of the payout except for 2021 payout was about 30% only. Otherwise, in general, we have been 40% or more, as per the government guidelines, it is minimum 30% or 5% of the networth. So all we can say at this point because it’s still six months to go and everybody knows that how the prices behave, it’s anybody’s prediction. So at least 30% as per the government guidelines we will certainly do and if the profitability looks good, even 30% should be at par with the previous year in absolute terms or maybe slightly better and if things are good, we can improve upon. But that final call will be taken only after the annual results.

Somaiah V — Spark Capital — Analyst

Understood sir. Very helpful. I’ll join back the queue. Thank you.

Sanjay Choudhuri — Executive Director, Finance and Accounts

[indecipherable]

Unidentified Speaker —

Hello.

Somaiah V — Spark Capital — Analyst

Yes sir.

Unidentified Speaker —

So as you are aware, we are having around say [indecipherable] and build up by around [indecipherable] So our activities [indecipherable] started and we have already deal with three locations in [indecipherable] and other locations or two locations in — one location in Northeast. So Mahanadi also we are now planning to start by for last quarter of this year. So this is the exploration [indecipherable]. The contribution from the [indecipherable] up in [indecipherable] but then we are showing in as per plan on extensive exploration plan. They are also planning to drill [indecipherable] so the initial planning is in progress.

Operator

Thank you. [Operator Instructions] We have the next question from the line of V. Sivasankaran from Antique Limited. Please go ahead.

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Thanks for the opportunity. One is that in terms of NRL capex cost, is there any chance that the cost would actually go up [indecipherable].

Harish Madhav — Director Finance

As of now, there is no indication of cost escalation.

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Right. On the overseas operations if you can provide some update on the — we have production where do we stand?

Harish Madhav — Director Finance

[indecipherable] almost almost entirely comes from the Russian assets to the [indecipherable], those assets are performing, last year, our total production was around 2.5 million tons of crude oil from these two assets. And [indecipherable] but we can say it is almost 99% of this.

V. Sivasankaran — Antique Stock Broking Limited — Analyst

So the current [indecipherable] are largely matching that.

Harish Madhav — Director Finance

Yes. The current year performance is almost in line with earlier years,

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Great.

Harish Madhav — Director Finance

As update to the other project, initially there are some issues, so we are hopefully that we are hoping that this execution of the project starts quickly.

V. Sivasankaran — Antique Stock Broking Limited — Analyst

The last time around, I think [indecipherable] people are talking about a six-month kind of timeframe, so does it mean that three or four months we are likely to see some kind of an action?

Harish Madhav — Director Finance

We are hoping for that [indecipherable].

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Sure. Last question is on our oil production. You guided for 3.6 million tons next year, this 2Q itself you’re broadly there in terms of run rate. So we’re not expecting any kind of improve from those levels over the next five, six quarters? So does that mean in three or four months we are likely to see some kind of action?

Harish Madhav — Director Finance

We are hoping for that, Moazambique as quickly as project activity resume.

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Sure, last question is on oil production, you guided for 3.6 million tonne next year this 2Q itself you are broadly there in terms of run rate so we are not expecting any kind of improves from those level over the next five to six quarters.

Harish Madhav — Director Finance

Increase beyond 3.6?

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Yes, 2Q itself we had 0.790 so which means we were broadly there in terms of the run rate, so should we expect some increase on that as well or we should stick to that number?

Pankaj Kumar Goswami — Director Operations

As of now in this year we are targeting 3.2 and next year we are targeting 3.6, so that will be from the existing assets that we have, but if we get something from OALP that is very unlikely that we will be getting OALP in the next financial year immediately, so we are not expecting anything from OALP as of now but if we get from OALP then there may be some possibility of increase in production.

V. Sivasankaran — Antique Stock Broking Limited — Analyst

Fair enough, thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Vishnu Kumar from Spark Capital. Please go ahead.

Vishnu Kumar — Spark Capital — Analyst

Good morning and thanks. On the NRL capex again you mentioned INR29,000 to INR30,000 Crores total, how much have we spent till date?

Harish Madhav — Director Finance

Total commitment was about INR8,000 Crores.

Vishnu Kumar — Spark Capital — Analyst

INR8,000 Crores commitment as in cash flows have gone out or?

Harish Madhav — Director Finance

Not cash flows, last year actual was — INR6,500 Crores is the actual capex as of now.

Vishnu Kumar — Spark Capital — Analyst

Understood, so basically another INR25,000 odd Crores for the next three years.

Harish Madhav — Director Finance

Another 75% yes it is.

Vishnu Kumar — Spark Capital — Analyst

Understood sir. At our current run rate of NRL I know that GRMs are a bit volatile, how much cash flows do you think that the asset can on its own generate to pay off for capex.

Harish Madhav — Director Finance

See second quarter NRL has made it GRM of $13. I am not very sure of the cost structure of NRL, but if we take out the cost at least $6 to $7 cash net margins certainly the refinery must be making, so the cash flow if the refineries are good and basically a sense can be taken from this because out of the total loan of INR18,000 only a small volume out of INR1,500 to INR1,600 crores so far has been gone. There is a likelihood that we may not draw the whole loan or draw the loan only towards the end of the project, so currently the refinery is able to fund the project activities mostly out of the internal accrual, so cash flow of the refinery are good.

Vishnu Kumar — Spark Capital — Analyst

For the incremental capacity also you will get the excise duty benefit, just to confirm.

Harish Madhav — Director Finance

Yes, yes.

Vishnu Kumar — Spark Capital — Analyst

That is good, thank you. This is helpful. Thanks.

Operator

Thank you. We have the next question from the line of Probal Sen from ICICI Securities. Please go ahead.

Probal Sen — ICICI Securities — Analyst

Thank you very much for giving me another opportunity. Sir, if I come back to my question, is it possible to get that last quarter numbers, for which I have for NRL if you get a comparison for Q1.

Harish Madhav — Director Finance

NRL’s FY23-Q1 GRM was $32 and FY23-Q2 GRM is about $14.

Probal Sen — ICICI Securities — Analyst

Probal Sen: It has fallen so sharply primarily because of inventory impact, is it correct or generally because bench marks are falling?

Harish Madhav — Director Finance

It is combined play of so many things; one is it about the overall diesel margins have fallen plus from 1st July, windfall tax or export duties, which have been levied on diesel, ATF and petrol also.

Probal Sen — ICICI Securities — Analyst

Right and one more thing was what is the LPG output, I could not see in it in the detail forgive me if I am missed it. LPG output for this quarter.

Harish Madhav — Director Finance

LPG production pattern remains more or less same about 30,000 to 32,000 tonnes annually we produce so quarter-on-quarter volumes remain around 7,000 to 7,500 except that in some quarter there a shutdown of the plant or something happens the volumes get affected, but on an average it is around 30,000 to 32,000 tonnes LPG production is there.

Probal Sen — ICICI Securities — Analyst

Got it, sir. You mentioned about the Area 1 Project which is obviously seen delayed. Can we get a little bit more comment on what you are hearing from the operator is the conflicts now a bit under control has the force majeure has been lifted and where and what kind of capital commitment can actually be seen assuming that the project restarts let us say in FY ’24.

Sanjay Choudhuri — Executive Director, Finance and Accounts

There have been efforts from the operator as well as G2G efforts have been made on this call and there has been some improvements at the ground level. There is some breakthrough at the ground level, but then some sporadic events have also occurred, so we cannot say for sure that everything has come to a standstill per se and everything is sorted out totally that is why Director Finance has already mentioned that may be around three to four to five months time we hope that the things would really settle down and we can go ahead force majeure should to be withdrawal.

Probal Sen — ICICI Securities — Analyst

Assuming that happens in FY ’24 what kind of investment commitment will be required from us to get the first two claims of the ground.

Harish Madhav — Director Finance

See the moment the project activities kick off; the funding of the project will start out of the borrowing that has been arranged so the moment if it starts immediately the funds from borrowing will start flowing in and at that point of time our equity contribution or our investment in that project will come down or will remain at what level we are doing as of now.

Probal Sen — ICICI Securities — Analyst

Got it, sir; it will mostly be in terms of the financing that has already been arranged.

Harish Madhav — Director Finance

Currently, we are funding because the bank finances or the loan finances are not available because the project is not moving. When the project will start moving that finance will be available and our resources will either continue at the same level or may come down.

Probal Sen — ICICI Securities — Analyst

And the operator and the assessment of the available reserves and the potential remains as before right sir. There has been no change on that part.

Harish Madhav — Director Finance

Yes, yes.

Probal Sen — ICICI Securities — Analyst

Okay, thank you for such a detailed answer thank you so much.

Operator

Thank you. We have the next question from the line of Somaiya V from Spark Capital. Please go ahead.

Somaiah V — Spark Capital — Analyst

Sir, with respect to this realizations on oil and the royalty & cess, the royalty & cess that we pay is it net of this special additional duty or it is at a gross level?

Sanjay Choudhuri — Executive Director, Finance and Accounts

Sanjay Choudhuri: The royalty that we paid is in the gross amount, however, the cess we pay is net of SAED.

Somaiah V — Spark Capital — Analyst

Understood sir, second question, post NRL expansion would there be change in the product mix where we are today post expansion?

Sanjay Choudhuri — Executive Director, Finance and Accounts

Unlikely, though because HSD has been the main product produced Middle Distillates haven been the 80% of the production and it is unlikely that in the foreseeable there will be change however depending on the market conditions because large quantities are going to be exported that might change depending on the market conditions.

Somaiah V — Spark Capital — Analyst

Okay, on the international assets any equity contribution that is required from our side over the next couple of years or any capex outlook that you see at the international asset level for the next two to three years.

Harish Madhav — Director Finance

Equity contributions if at all it happens it will happen only in case of Mozambique it is happening little bit as of now also and it will continue in Mozambique total about $500 million dollars equity we have to contribute so remaining equity $400 to $450 million may be around that will go over the project life. As I just explained to the previous question that once the loan funds start flowing in our contribution will slowdown in Mozambique other than Mozambique as of now there is no equity contribution or any investment lined up in any of the overseas projects.

Somaiah V — Spark Capital — Analyst

Understood thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Kishan Mundhra from Antique Stock Broking Ltd. Please go ahead.

Kishan Mundhra — Antique Stock Broking Ltd — Analyst

[Technical Issues] For the debt that you have taken from Numaligarh for the expansion program in the books of NRL, is it possible for you to let us know the terms of the loan. I presume it is a dollar-denominated loan but, what is the interest rate if it is possible.

Harish Madhav — Director Finance

I do not think that would be possible for us to give. It is not in dollar-denominated loan it is all Rupee loan availed from an Indian bank and I think the terms of the loan that is little bit confidential, bank also may not like us to share that information with the public.

Kishan Mundhra — Antique Stock Broking Ltd — Analyst

Okay, but definitely [Technical Issues].

Harish Madhav — Director Finance

I am sorry Kishan, your voice is breaking up again.

Operator

Your audio is breaking up again, please speak slowly and louder.

Kishan Mundhra — Antique Stock Broking Ltd — Analyst

Perhaps I will come back in the line again.

Operator

Thank you. We have the next question from the line of Vikas Jain from CLSA. Please go ahead.

Vikas Jain — CLSA — Analyst

Hi, thanks for taking my questions. I have a couple of them; firstly on seismic, can you give me what might the seismic cost for this particular quarter?

Sanjay Choudhuri — Executive Director, Finance and Accounts

Sanjay Choudhuri: The seismic cost as of this year up to now has been around Rs.350 Crores odd.

Vikas Jain — CLSA — Analyst

Vikas Jain: Sorry, how much?

Sanjay Choudhuri — Executive Director, Finance and Accounts

INR350 Crores odd.

Vikas Jain — CLSA — Analyst

And for this particular quarter.

Sanjay Choudhuri — Executive Director, Finance and Accounts

This particular quarter this would be about 60% of that… INR100 Crores for this quarter.

Vikas Jain — CLSA — Analyst

INR100 Crores for this quarter and first half is Rs.350 Crores.

Sanjay Choudhuri — Executive Director, Finance and Accounts

INR325 Crores.

Vikas Jain — CLSA — Analyst

INR325 Crores, okay. Any other reason why OPEX has jumped up, what is the element of forex in here or is there any other big one off or any provisions which are there respectively?

Sanjay Choudhuri — Executive Director, Finance and Accounts

Majorly because of the exchange rate, excise duty SAED those are the two major elements lately.

Vikas Jain — CLSA — Analyst

What is the second one, what is exchange rate can you share that?

Sanjay Choudhuri — Executive Director, Finance and Accounts

And second is special additional excise duty, that is windfall tax.

Vikas Jain — CLSA — Analyst

But that will not come under OpEx would it?

Sanjay Choudhuri — Executive Director, Finance and Accounts

Yes, it would as it’s the cost to us.

Vikas Jain — CLSA — Analyst

Okay fine so anyway X of that also if I adjust for that also then it seems to have gone up and that is what I wanted to check.

Sanjay Choudhuri — Executive Director, Finance and Accounts

To some extent contract cost have gone up because the guided labour rate cost have gone up, which is accounted for about INR60 to INR70 odd crores to that extent and we have had additional expenditure OALP because we are on extensive seismic survey programme. Over and about that there have been production enhancement contracts also, which have also cost us around INR30 Crores odd so all this put together there has been additional OPEX of around INR100 to 110 Crores that is sure and rest of it is on SAED and foreign exchange.

Vikas Jain — CLSA — Analyst

Foreign exchange, what is the amount?

Harish Madhav — Director Finance

Foreign exchange is about INR500 Crores.

Vikas Jain — CLSA — Analyst

Okay, last quarter it was INR200 Crores right? So this INR500 for the quarter or for the first half.

Harish Madhav — Director Finance

INR500 is for this quarter.

Vikas Jain — CLSA — Analyst

Sure and depletion has kind of varied a lot over the last few quarters have we kind…

Sanjay Choudhuri — Executive Director, Finance and Accounts

Depletion has not varied over the last few quarters it has varied over last year in fact depletion numbers have come down this year over the last year because the PR rate has been lowering this year than last year.

Vikas Jain — CLSA — Analyst

Okay, so now unless we see a big revision in results or something which happens to only typically towards the end of the year, is it fair to say that this kind of number is what we look at about INR300 Crores a quarter or so.

Sanjay Choudhuri — Executive Director, Finance and Accounts

Yes, yes, this is more or less is going to be flat for the rest of the year.

Vikas Jain — CLSA — Analyst

Yes, so I think then the plus that clarification on forex would be useful.

Harish Madhav — Director Finance

[Technical Issues] For the second quarter, forex loss is INR290 Crores.

Vikas Jain — CLSA — Analyst

Okay and first remaining INR210 Crores or something. Okay, thank you so much.

Operator

Thank you, I now invite Hardik from ICICI Securities. Please go ahead.

Hardik — ICICI Securities — Analyst

Hi sir, is it possible for you to share what part of diesel production will be exported in NRL in terms of percentage that would be fine?

Sanjay Choudhuri — Executive Director, Finance and Accounts

We do not have that detail because everything has to be firmed up before we give any comment on this, because the contracts is not firmed on this.

Harish Madhav — Director Finance

You are intending for the current volume of exports or… [Speech Overlap]

Hardik — ICICI Securities — Analyst

Yeah, yeah, current quarter volume.

Harish Madhav — Director Finance

Harish Madhav: Currently, how much diesel is getting exported from NRL? This is what you are looking for.

Hardik — ICICI Securities — Analyst

Right, right.

Harish Madhav — Director Finance

I would suggest you send us an email, we will respond to that. Okay

Hardik — ICICI Securities — Analyst

Sure sir.

Operator

Thank you that was the last question. I would now like to hand it over to the management for closing comments.

Harish Madhav — Director Finance

Thank you, all the Analysts’ and the Investors’ who have participated in the call. I think we have been able to provide whatever information except the last one about diesel exports that we will separately provide to the person who had asked for, and thank you very much all of you once again and company’s performance all I will say has been very good since the beginning of the current financial year and the last year also and if production output, physical numbers are going to improve from now onwards further and financially the pricing support also apparently if it remains, the company will be in a very, very good financial position and balance sheet of the company is also very strong. The borrowings are limited only for the specific project-wise borrowing and for the regular capex everything continues to be invested out of internal resources, which we will continue to do. NRL is doing very well. The refinery configuration of the existing refinery entitles or enables it to make very good GRM and the excise duty benefit of course it is available, so the project is on schedule. Our target production of 4.2 BCM to 5 BCM of gas by ’24-’25. We are also progressing on that almost as per the schedule what we have targeted, so the future of the company looks good. We will keep on interacting in future also every quarterly and otherwise also as and when anybody wishes to interact with us, we will be happy to do that. Thank you Mr. Sabri Hazarika for arranging this call. From our entire management our Director Operations, our Director Exploration, ED finance, we are once again thankful to everyone for participating. Thank you.

Operator

[Operator Closing Remarks]