MIRA
INFORM REPORT
|
Report Date : |
15.05.2012 |
IDENTIFICATION DETAILS
|
Name : |
HINDUSTAN OIL EXPLORATION COMPANY LIMITED |
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|
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Registered
Office : |
"HOEC House", |
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Country : |
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Financials (as
on) : |
31.03.2011 |
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Date of
Incorporation : |
11.06.1996 |
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|
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Com. Reg. No.: |
04-029880 |
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Capital
Investment / Paid-up Capital : |
Rs.1305.093 Millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L11100GJ1996PLC029880 |
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|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
BRDH00508E / BRDH00220D / BRDH00219C / BRDH00218B / BRDH00163C |
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|
|
|
PAN No.: [Permanent Account No.] |
AAACH1407P |
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Legal Form : |
A Public Limited Liability Company. The Company’s Share are Listed on
the Stock Exchange. |
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Line of Business
: |
The Company is engaged in the business of Oil and Gas exploration, development and production |
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No. of Employees
: |
No Available |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba (54) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Maximum Credit Limit : |
USD 46000000 |
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|
|
|
Status : |
Good |
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|
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and a reputed company having fine track.
Financial position of the company appears to be good. Trade relations are
reported as fair. Business is active. Payments are reported to be regular and
as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – September 30, 2011
|
Country Name |
Previous Rating (30.06.2011) |
Current Rating (30.09.2011) |
|
|
A1 |
A1 |
|
Risk Category |
ECGC Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
LOCATIONS
|
Registered Office : |
"HOEC House", |
|
Tel. No.: |
91-265-2330766 / 2333568 |
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Fax No.: |
91-265-2333567 / 2333918 |
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E-Mail : |
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Website : |
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Chennai Office : |
‘Lakshmi Chambers’, 192, St. Mary’s Road, Alwarpet,
Chennai – 600 018, Tamil Nadu, |
|
Tel. No.: |
91 - 44 - 66229000 |
|
Fax No.: |
91 - 44 - 66229011 / 66229012 |
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|
|
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Mumbai Office : |
Anand House, |
|
Tel. No.: |
91 - 22 - 26045377 |
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|
|
|
PY-1 Offshore
Production Facility : |
SUN Platform Offshore |
|
|
|
|
PY-1 Gas Processing
Plant : |
Pillaiperumalnallur, Thirukadaiyur-609 311, Nagapattinam
District Tamil |
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Palej Production
Facilities (PPF) : |
Block CB-ON-7, Near Palej, Village Makan-392 220, Vadodara
District |
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|
Block North Balol, Near Village Palaj-384 410, Mehsana
District |
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Asjol Early
Production System (EPS) : |
Block Asjol, Village Katosan-384 430, Mehsana District |
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Tahara Floating Production
Unit : |
Offshore |
DIRECTORS
As on 31.03.2011
|
Name : |
Mr. R. Vasudevan |
|
Designation : |
Non-Executive Independent Director/Chairman |
|
Date of Birth/Age : |
74 Years |
|
Qualification : |
B.A. (Hons.) (Economics) degree from the University of Madras, a M.A. (Economic Statistics) degree from the University of Delhi and a M.P.A. (Development Economics) from Harvard University, Boston, U.S.A. |
|
|
|
|
Name : |
Mr. Deepak S. Parekh |
|
Designation : |
Non-Executive Director |
|
Date of Birth/Age : |
67 years |
|
Qualification : |
Institute of Chartered Accountants ( Companies, Mr. Parekh is the Non-Executive Chairman of the board of several leading companies across diverse sectors. |
|
|
|
|
Name : |
Mr. Sunil Behari Mathur |
|
Designation : |
Non-Executive Independent Director |
|
Date of Birth/Age : |
67 years |
|
Qualification : |
Chartered Accountant |
|
Experience : |
He has more than 40 years of experience in the fields of insurance and housing finance. |
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|
|
Name : |
Mr. Paolo Carmosino |
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Designation : |
Non-Executive Director |
|
Date of Birth/Age : |
57 years |
|
Qualification : |
degree in law from the University "La Sapienza"
of |
|
Experience : |
Pursued a career within the Eni Group spanning 33 years in finance and planning control areas. He is Eni's Senior Vice President for Finance, Chairman of Eni Coordination Center and Banque Eni SA and he is also a Director of EniADFin (formerly Sofid SpA). |
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|
|
|
Name : |
Mr. Marcello Simoncelli |
|
Designation : |
Non-Executive Director |
|
Date of Birth/Age : |
56 Years |
|
Qualification : |
Liceo Scientifico Statale Cavour and Graduate degree in
Geology cum Laude from |
|
Experience : |
He has more than 30 years of technical, operational and managerial experience in E and P industry |
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|
|
|
Name : |
Mr. Sergio Adriano Laura |
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Designation : |
Non-Executive Director |
|
Date of Birth/Age : |
53 years |
|
Qualification : |
degree in Geological Sciences from the |
|
Experience : |
Various senior managerial positions while working with Eni
Exploration and Production in several countries: |
|
|
|
|
Name : |
Mr. Luigi Ciarrocchi |
|
Designation : |
Managing Director |
|
Date of Birth/Age : |
50 years |
|
Qualification : |
degree in Petroleum Engineering |
|
Experience : |
Spanning 24 years in hydrocarbon E and P sector, in
Europe, Africa and |
|
|
|
|
Name : |
Mr. Mukesh Butani |
|
Designation : |
Non-Executive Independent Director |
|
Date of Birth/Age : |
47 years |
|
Qualification : |
lawyer and Chartered Accountant |
|
Experience : |
He is a member of ICC, Paris Taxation Commission and served as Chairman of the Tax and Tariff Committee of the American Chamber of Commerce. |
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|
|
|
Name : |
Mr. Manish Maheshwari |
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Designation : |
Joint Managing Director |
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Date of Birth/Age : |
43 years |
|
Qualification : |
Bachelor (Hons.) degree in Chemical Engineering and
Masters in Business Administration from |
|
Experience : |
23 years |
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Date of Appointment : |
01.10.2003 |
KEY EXECUTIVES
|
Name : |
Mr. Sanjay Tiwari |
|
Designation : |
Company Secretary and Chief Legal Counsel |
|
Address : |
‘Lakshmi Chambers’ 192, St. Mary’s Road, Alwarpet Chennai
– 600 018, Tamil Nadu |
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Tel. No.: |
91-(044) 66229000, Extn.: 104 |
|
Fax No.: |
91-(044) 66229011/12 |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 31.03.2012
|
Category of Shareholders |
No. of Shares |
Percentage of
Holding |
|
|
|
|
|
(1) Indian |
|
|
|
(2) Foreign |
|
|
|
Bodies Corporate |
61,569,134 |
47.18 |
|
Sub Total |
61,569,134 |
47.18 |
|
|
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
61,569,134 |
47.18 |
|
|
|
|
|
|
|
|
|
Mutual Funds / UTI |
185,100 |
0.14 |
|
Financial Institutions / Banks |
33,419 |
0.03 |
|
|
1,750,537 |
1.34 |
|
|
9,418,295 |
7.22 |
|
Any
Others (Specify) |
3,000 |
- |
|
Foreign Mutual Fund |
3,000 |
-- |
|
Sub Total |
11,390,351 |
8.73 |
|
(2)
Non-Institutions |
|
|
|
|
22,567,786 |
17.29 |
|
|
|
|
|
Individual shareholders holding nominal
share capital up to Rs.0.100 Million |
20,261,680 |
15.53 |
|
Individual shareholders holding nominal share capital in excess of
Rs.0.100 Million |
12,156,726 |
9.32 |
|
|
2,547,612 |
1.95 |
|
Non Resident Indians |
1,282,224 |
0.98 |
|
Trusts |
40,352 |
0.03 |
|
|
56,320 |
0.04 |
|
Market Maker |
1,168,716 |
0.90 |
|
|
57,533,804 |
44.09 |
|
|
68,924,155 |
52.82 |
|
Total (A)+(B) |
130,493,289 |
100.00 |
|
(C) Shares held
by Custodians and against which Depository Receipts have been issued |
|
|
|
|
-- |
-- |
|
|
-- |
-- |
|
Sub Total |
-- |
-- |
|
Total
(A)+(B)+(C) |
130,493,289 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
The Company is engaged in the business of Oil and Gas
exploration, development and production |
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Products : |
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GENERAL INFORMATION
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No. of Employees : |
Not Available |
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Bankers : |
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Lenders : |
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Facilities : |
(Rs.
In Millions)
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Banking
Relations : |
-- |
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Auditors : |
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|
Name : |
S.R. Batliboi and Associates Chartered Accountants |
|
|
|
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Audit Partner : |
Mr. Subramanian Suresh |
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Internal Auditors : |
Protiviti |
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Advocates and Solicitors : |
Amarchand and Mangaldas and Suresh A. Shroff and Company |
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Subsidiaries : |
HOEC Bardahl India Limited |
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Promoter Group: |
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Other Group Entities: |
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Unincorporated Joint Ventures: |
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Note:
All the Unincorporated Joint Ventures are for the blocks
awarded within the territorial limits of
* Mafatlal Industries Limited has defaulted in Cash Call Payment for the Unincorporated Joint Venture and there is an arbitration proceeding in this matter, which is pending as at March 31, 2011.
** Jindal Petroleum Limited has not submitted Bank Guarantee and Performance Guarantee as required under the Production Sharing Contract (PSC) and thus has been declared as “Defaulting Party” by Management Committee as per the provisions of the PSC.
CAPITAL STRUCTURE
As on 31.03.2011
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
200000000 |
Equity Shares |
Rs.10/- each |
Rs.2000.000 Millions |
|
|
|
|
|
Issued
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
130563363 |
Equity Shares |
Rs.10/- each |
Rs.1305.633
Millions |
|
|
|
|
|
Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
130493289 |
Equity Shares |
Rs.10/- each |
Rs.1304.933
Millions |
|
|
Amount Paid-up on Shares Forfeited |
|
Rs.0.160
Millions |
|
|
Total |
|
Rs.1305.093 Millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
1305.093 |
1305.093 |
1305.093 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
10437.390 |
9711.476 |
9295.551 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
11742.483 |
11016.569 |
10600.644 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
586.817 |
827.177 |
1304.841 |
|
|
2] Unsecured Loans |
5307.475 |
5697.500 |
0.000 |
|
|
TOTAL BORROWING |
5894.292 |
6524.677 |
1304.841 |
|
|
DEFERRED TAX LIABILITIES |
323.852 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
17960.627 |
17541.246 |
11905.485 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
14897.188 |
16047.473 |
1035.871 |
|
|
Capital work-in-progress |
1010.869 |
654.302 |
10255.489 |
|
|
|
|
|
|
|
|
INVESTMENT |
1102.907 |
29.131 |
115.186 |
|
|
FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE
ACCOUNT |
0.000 |
2.502 |
17.179 |
|
|
DEFERREX TAX ASSETS |
0.000 |
53.148 |
284.148 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
440.428
|
432.485 |
662.914 |
|
|
Sundry Debtors |
473.981
|
412.326 |
209.914 |
|
|
Cash & Bank Balances |
469.290
|
799.782 |
2762.717 |
|
|
Other Current Assets |
1.900
|
2.182 |
3.596 |
|
|
Loans & Advances |
906.158
|
592.278 |
591.775 |
|
Total
Current Assets |
2291.757
|
2239.053 |
4230.916 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
492.743
|
590.460 |
3519.983 |
|
|
Other Current Liabilities |
47.707
|
85.734 |
173.230 |
|
|
Provisions |
801.644
|
808.169 |
340.091 |
|
Total
Current Liabilities |
1342.094
|
1484.363 |
4033.304 |
|
|
Net Current Assets |
949.663
|
754.690 |
197.612 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
17960.627 |
17541.246 |
11905.485 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
3298.495 |
1400.550 |
851.784 |
|
|
|
Other Income |
88.149 |
138.631 |
462.366 |
|
|
|
TOTAL (A) |
3386.644 |
1539.181 |
1314.150 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Office Expenses |
13.895 |
(49.718) |
22.437 |
|
|
|
Administrative Expenses |
846.892 |
385.761 |
435.442 |
|
|
|
TOTAL (B) |
860.787 |
336.043 |
457.879 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
2525.857 |
1203.138 |
856.271 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
123.880 |
80.427 |
103.772 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
2401.977 |
1122.711 |
752.499 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
1222.880 |
471.950 |
118.185 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
1179.097 |
650.761 |
634.314 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
377.100 |
234.836 |
98.650 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
801.997 |
415.925 |
535.664 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
1869.955 |
1454.030 |
918.366 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Dividend |
65.247 |
0.000 |
0.000 |
|
|
|
Tax on Dividend |
10.837 |
0.000 |
0.000 |
|
|
BALANCE CARRIED
TO THE B/S |
2595.868 |
1869.955 |
1454.030 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Interest |
0.615 |
2.872 |
0.000 |
|
|
TOTAL EARNINGS |
0.615 |
2.872 |
0.000 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Capital Goods |
21.475 |
186.072 |
1862.135 |
|
|
|
Components and spare |
3.798 |
0.000 |
0.176 |
|
|
TOTAL IMPORTS |
25.273 |
186.072 |
1862.311 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
6.15 |
3.19 |
4.10 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2011 |
30.09.2011 |
31.12.2011 |
|
|
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Net Sales |
617.370 |
309.810 |
327.000 |
|
Total Expenditure |
170.980 |
225.280 |
107.500 |
|
PBIDT (Excl OI) |
446.390 |
84.530 |
219.500 |
|
Other Income |
31.470 |
64.250 |
31.280 |
|
Operating Profit |
477.860 |
148.780 |
250.780 |
|
Interest |
26.050 |
26.200 |
26.940 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
451.810 |
122.580 |
223.840 |
|
Depreciation |
207.610 |
69.460 |
178.72 |
|
Profit Before Tax |
244.200 |
53.120 |
45.12 |
|
Tax |
74.050 |
12.000 |
(3.000) |
|
Provisions and contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
170.150 |
41.120 |
48.120 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
0.000 |
|
Net Profit |
170.150 |
41.120 |
48.120 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
PAT / Total Income |
(%) |
23.68
|
27.02 |
40.76 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
35.75
|
46.46 |
74.47 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
6.86
|
3.56 |
12.04 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.10
|
0.06 |
0.06 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
0.62
|
0.73 |
0.50 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.71
|
1.51 |
1.05 |
LOCAL AGENCY FURTHER INFORMATION
|
Check List by Info Agents |
Available in Report (Yes / No) |
|
1) Year of Establishment |
Yes |
|
2) Locality of the firm |
Yes |
|
3) Constitutions of the firm |
Yes |
|
4) Premises details |
No |
|
5) Type of Business |
Yes |
|
6) Line of Business |
Yes |
|
7) Promoter’s background |
Yes |
|
8) No. of employees |
No |
|
9) Name of person contacted |
No |
|
10) Designation of contact person |
No |
|
11) Turnover of firm for last three years |
Yes |
|
12) Profitability for last three years |
Yes |
|
13) Reasons for variation <> 20% |
-- |
|
14) Estimation for coming financial year |
No |
|
15) Capital in the business |
Yes |
|
16) Details of sister concerns |
Yes |
|
17) Major suppliers |
No |
|
18) Major customers |
No |
|
19) Payments terms |
No |
|
20) Export / Import details (if applicable) |
No |
|
21) Market information |
-- |
|
22) Litigations that the firm / promoter |
-- |
|
23) Banking Details |
Yes |
|
24) Banking facility details |
Yes |
|
25) Conduct of the banking account |
-- |
|
26) Buyer visit details |
-- |
|
27) Financials, if provided |
Yes |
|
28) Incorporation details, if applicable |
Yes |
|
29) Last accounts filed at ROC |
Yes |
|
30) Major Shareholders, if available |
No |
FINANCIAL HIGHLIGHTS
During the year, the Company produced 2.7 mmboe of crude oil and gas (previous year 1.0 mmboe), the increase being on account of full year production from PY-1 and PY-3 Fields. This has resulted in a turnover of Rs.3285.000 millions, an increase of 2.26 times over the previous year. The Profit-Before-Tax was Rs.1179.097 millions, an increase of 81% over the previous year. Provision for tax was higher because of higher taxable income in the current year. During the year, the Company had a Profit-After-Tax of Rs.801.997 millions, an increase of 93% over the previous year.
COMPLETION OF
DRILLING OF APPRAISAL WELL IN
The Company, as Operator of AAP-ON-94/1 consortium, has successfully drilled and tested first appraisal well in Block AAP-ON-94/1 during the year. The drill stem test has resulted in initial flow rate of approximately 6.50 million standard cubic feet per day (mmscfd) of natural gas and 140 barrels per day of condensate through a 32/64” choke. The Company has a 40.323% participating interest during exploration/appraisal period in the said Block.
GN-ON-90/3 BLOCK
(PRANHITA
Arbitral Tribunal, in the matter of arbitration between Company, as one of the claimants, and ONGC and Government, as respondents, has given its award in favour of the Company (claimant). The Award has upheld the Company’s claims and ordered respondents to pay to the claimants the entire amount of encashed Bank Guarantee along with interest and cost of arbitration.
HOEC BARDAHL INDIA
LIMITED (HBIL), SUBSIDIARY OF HOEC
During the year, net income of HBIL, HOEC’s wholly owned subsidiary, was RS. 170 million being marginally higher as against previous year of Rs.169.000 millions. The net profit was Rs.13.400 millions during the year as against Rs.24.000 millions in the previous year. The decrease in the net profit was mainly on account of higher inputs costs and competitive pricing policy to maintain the market share of HBIL products.
The Consolidated Financial Statements presented by the Company include financial information of HBIL prepared in compliance with applicable accounting standards. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/12/2007-CL-III dated February 8, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the company, provided certain conditions are fulfilled. Accordingly, annual accounts of HBIL and the related detailed information will be made available to the shareholders of the Company seeking such information at any time during the office hours. The annual accounts of HBIL are available for inspection by any shareholder at the Company’s Registered Office and at the Registered Office of HBIL, at Vadodara.
MANAGEMENT DISCUSSION
AND ANALYSIS REPORT
1. INDUSTRY
STRUCTURE, DEVELOPMENT AND OPPORTUNITIES
Exploration and production of oil and gas is critical for
Oil price for the year 2010-2011 averaged USD 87 per barrel, about 24% above 2009-10’s average of USD 70 per barrel. Prices traded in a relatively narrow band of USD 70-80 per barrel for first two quarters of the year before rising in the third and fourth quarter. Prices exceeded USD 115 per barrel in March 2011, the highest level since October 2008.
While the world economy continued to recover in 2010-2011, they expect slower global growth in 2012, led by emerging economies, with developed countries lagging behind because of the need to deal with their internal imbalances. Energy demand, and in particular oil demand, follows this overall economic pattern, recovering strongly in 2010-2011 but facing more challenging conditions as they move into 2011-2012. Concerns about the volatility of commodity and financial markets, combined with renewed focus on strategy and climate change have led to an increased focus on a global basis on the appropriate role for markets, government oversight and other policy measures relating to the supply and consumption of energy. Meeting growing energy demand in a safe and environmentally responsible way is a key challenge and keeping pace with growth in energy demand will require unprecedented levels of investment and pursuit of alternate economic energy sources.
HOEC operates in the Oil and Gas Exploration and Production
(E and P) Industry, with its current portfolio of assets located in
2. COMPANY’S BUSINESS
AND STRATEGY
The Company’s core business is to explore, develop and produce hydrocarbons. The Company seeks out opportunities which have the potential to continue to generate shareholder value by transforming there business through the application of proven technology and management focus. HOEC’s strategy is to grow Company’s core business over both medium and the long term with improving profitability through enhanced operational efficiency, capital efficiency and cost efficiency. They focus there attention on decisions that benefit decades, not just near term results. They want to achieve there strategic objectives and goals through exploration-led growth. They fundamentally believe everything is about teamwork and people and they want to be recognised as a low cost yet high performance driven E and P Company.
HOEC believes that good environmental, social, health and
safety performance is an integral part of there business success. There
commitment to these principles is demonstrated by the fact that they have had
no lost-time accidents or environmental incidents during the year. They conduct
there business with respect and care for there employees, contractors,
communities, and the environments in which they operate. There vision is zero
harm to people and the environment while creating value for there shareholders
as well as for
HOEC conducts its business with high regard for safety in operations and in compliance with the law. They strive to run there business within the discipline of a transparent financial framework. They intend to focus on the application of technology and developing relationships based on a commitment to long-term partnerships and mutual advantage.
There priority is to ensure safe, reliable and regulatory compliant operations. There strategy is to invest in long-term value growth by continuing to build a portfolio of development and producing properties. There strategy is enabled by:
- Operate and hold material working interests for control;
- Maintain a balanced asset portfolio with effective exploration inventory;
- Continuously reduce operating risk;
- Strong relationships built on mutual advantage;
- Deep knowledge of the basins in which they operate, and apply technology;
- Operate in low cost business environment and focus on operational control and cost efficiency; and
- Build capability along the value chain across Exploration, Development, Production and Enhanced Recovery Phases of E and P Projects.
There intention is to generate and sustain business momentum and growth through a rigorous process of continuous improvement in existing projects and an ongoing focus on safety, people and performance. They expect to organically replace reserves and grow long-term production by developing opportunities available through there existing assets. To recapitulate, the key elements of there Company’s strategy continue as follows:
- To increase there production by development of discoveries in existing assets;
- To increase there reserve base by exploring and establishing upside potential in there existing assets;
- To constrain there exposure to exploration risk within prudent limits;
- Greater use of advance technology in operations;
- Improvement of production indicators and efficient control over lifting costs;
- To seek new investment opportunities wherein HOEC can leverage its position as a cost efficient operator; and
- To monetise assets with a view to value realization or risk sharing.
In executing this strategy, Company intends to preserve a robust capital structure targeting an optimal mix of borrowings and shareholders’ equity. The results achieved by the Company against the objectives set for the FY 2010-2011 are summarized below:
- They have successfully updated G and G and Reservoir Model of PY-1 Field using an integrated approach across geophysical,
- petrophysical, and reservoir engineering and identified drilling location of new infill well(s); • There Company has successfully drilled Appraisal Well Dirok-2 to delineate the “Dirok” Discovery;
- Reservoir studies for PY-3 Field have been completed and accordingly Geological and Reservoir Model has been updated;
- Facilitated the Operator to develop alternate development approach for CB-OS-1 Gulf “A” Field by addressing the environmental issues relating to management of Coastal Regulation Zone (CRZ) in Gulf of Khambhat; and
- Contract for acquisition of 3D seismic data has been awarded to establish exploration objectives for HOEC operated acreage in Rajasthan.
Building up on the outcome of the objectives set for last year, they have defined the following objectives for the FY 2011-2012:
- Based on the results of the G and G and Reservoir Modeling of PY-1 Field, drilling of additional infill well(s) has been planned to increase the gas production;
- Drilling of Appraisal Well Dirok-4 and prepare a Commercial Discovery Report (CDR) to monetise the Discovery;
- Continue to facilitate development initiative of Gulf “A” Discovery in Block CB-OS-1 operated by ONGC and assist during the development phase to address the reservoir risk, if any, and expedite monetization of the reservoir;
- Assist HEPI, the Operator, in execution of Phase III of Field Development Plan in PY-3 Field;
- Acquire, process and interpret 3D seismic data in RJ-ONN- 2005/1 acreage for defining exploration objectives; and
- Continue to seek new opportunities which provide strategic fit to there existing portfolio/competencies while providing basis of reserve replacement. They shall be reviewing there portfolio for organic growth as also evaluating new growth opportunities commensurating with there risk profile and providing competitive economic returns.
- Financial and Operational Discipline
Oil and gas exploration is a capital intensive industry. There financial strategy is to ensure they have a strong balance sheet and the flexibility to support the Company’s significant explorationled growth strategy.
OPERATIONS REVIEW
- Overview
The Company’s activities relate to exploration and
production (based on exploration success) of hydrocarbons (crude oil and
natural gas), which are natural resources. HOEC assets are geographically
spread across
- Product-wise Performance
HOEC delivered a strong operating performance during the year, establishing a new production record. The Company’s aggregate production during the FY 2010-2011 was 2,702,772 barrels of oil equivalent (boe) (crude oil: 368,936 bbls; gas: 366,955,275 scm) as against 1,058,607 barrels of oil equivalent (boe) (crude oil: 181,127 bbls; gas: 137,968,552 scm) during the previous year. This increase of 155% was primarily contributed by full year production from PY-1 and PY-3 Fields.
- Reserves
As of March 31, 2011, the internal estimates of Proved and Probable (P+P) reserves on working interest basis for the Company were 51.4 mmboe.
3.
- PY-1
Gas Field
The Company commenced commercial production of Natural Gas
and Condensate from PY-1 Field last year. The gas from PY-1 Field is supplied
to GAIL (
- Forward Plan
Based on the results of the reservoir studies, the Company has evaluated possibility of workover operations in two of its existing wells and pursuing with the authorities to drill additional infill well(s) from the existing platform “Sun”.
- PY-3 Field
The average gross production from PY-3 Field increased to 3,393 bopd in FY 2010-2011 from 1,436 bopd in the previous year due to full year availability vis-ŕ-vis only 162 days in the previous year, the shutdown being due to repair of carrier arm of the SBM for the loading hose. Production on working-interest basis to HOEC averaged 713 bopd in FY 2010-2011, as against 301 bopd in FY 2009-2010.
- Forward Plan
Following in-depth G and G studies and updation of Reservoir Model of the PY-3 Field, the Operator envisages drilling new producer wells along with provision for gas lift facilities to improve recovery of crude oil, however the drilling schedule is yet to be finalised. The Operator has also evaluated alternate options relating to Production Facilities and recommended to continue with existing Floating Production Unit, a Floating Storage Vessel and mooring system, all upgraded, to ensure compliance with safety standard and regulatory norms.
4.
- Block CB-ON-7
The gross production from CB-ON-7 Block averaged 250 boepd as compared to 262 boepd in the previous year. Production on working interest basis to HOEC averaged 85 boepd during the year, a nominal decrease of 5% attributable to natural decline.
- Forward Plan
The Joint Venture Partners have requested the Government for retention of certain block area, identified as “R2” Area, in accordance with the Government guidelines for further exploration. The said proposal is under active consideration by the Government and the DGH has circulated a draft PSC for this ring-fenced “R2” area. In the event the Company decides to execute the PSC, they shall acquire 3D seismic data and drill two additional wells in the said area.
- North Balol Gas Field
North Balol Field produced 11,309,574 scm of natural gas during the year with an average production rate of 30,985 scmd, down 21% over the previous year primarily due to closure of one of the producing wells.
- Asjol Field
The field produced at an average rate of 20 bopd during the year with an aggregate production of 7,360 bbls.
- Block CB-OS/1
ONGC, the Operator, is carrying out course correction in the development scheme for Gulf “A” Discovery taking management of CRZ aspects into consideration.
5.
- Block AAP-ON-94/1
The Company, as Operator, has drilled Dirok-2, the second appraisal well in this logistically difficult terrain and carried out well testing to establish definition of Dirok Discovery. The Joint Venture has finalized the location of another appraisal well, namely Dirok-4, for delineation of existing discovery and assessing the potential consistent with the PSC provisions.
- Forward Plan
Subsequent to drilling of Dirok-4, the Company shall prepare a Commercial Discovery Report (CDR) taking into consideration all geological, reservoir parameters and concept selection for development to establish the commercial viability of the Dirok Discovery.
- Block RJ-ONN-2005/1
The Company has awarded the contract for the acquisition of 3D seismic data to establish exploration objectives. The acquisition of the data is expected to commence in August 2011, upon grant of clearance by the Indian Army.
- Block RJ-ONN-2005/2
The Operator, Oil India Limited, has issued the tender for award of the contract for the acquisition of 3D seismic data. Technical evaluation of the bids is being carried out by the Operator and award of the contract is expected in September 2011 with the acquisition of the data scheduled to commence in November 2011.
FINANCIAL REVIEW
Revenue
Turnover for the FY 2010-11 was up by 127% to Rs.3285.000 millions. The increase reflects full year contribution in FY 2010-11 from PY-1 Field and PY-3 Field as PY-1 Field commenced production in November 2009 and PY-3 Field was shut in for seven months for maintenance during previous year. Other Income was lower by 35% to Rs.88.000 millions on account of lower foreign exchange gain in this year. The average sale price of crude oil was USD 87/bbl (2009-2010: USD 67/bbl) and net gas price was USD 3.63 per mmbtu.
Production on working interest basis during the year was 2,702,772 boe, 155% higher than the previous year. The net entitlement volume was 7,190 boepd, 150% higher than the previous year. Sales volume at 2,693,529 boe was 160% higher than in previous year.
Operating Profit
Cost of sales increased from Rs.857.000 millions to Rs.2009.000 millions in FY 2010-11, 134% higher than the previous year, the increase is driven by the fact that PY-1 and PY-3 field were on production for the complete year in this financial year, unlike previous year. Depletion charge for the year was Rs.1218.000 millions as against Rs.466.000 millions in the previous year, the increase primarily being on account of depletion charges relating to PY-1 and PY-3 Field in line with the Company’s accounting policy.
Interest and finance charges were Rs.124.000 millions as compared to Rs.80.000 millions in the previous year due to charging of the full year financial/interest cost to Profit and Loss Account post commercial production. The Operating Profit was Rs.1303.000 millions during FY 2010-11 as compared to Rs.731.000 millions in the previous year.
FINANCIAL POSITION
Liquidity
At the year end, HOEC had cash and cash equivalent of approx Rs.1236.000 millions.
Cash surplus to immediate requirements is placed in debt oriented Liquid Funds and Bank Deposits as approved by the Board. HOEC manages its short term liquidity in order to generate returns by investing its surplus funds while ensuring safety of capital.
During the year, the term debt reduced by Rs.630.000 millions to Rs.5894.000 millions consequent to repayments as per the loan agreements.
ICRA has assigned an LA+ (pronounced L A plus) rating to its
term loan.
OUTLOOK
Based on the forward plan in various assets and more specifically continued development of PY-1 Gas Field and establishing
Commercial Discover Report (CDR) for Dirok Discovery, there outlook remains positive.
Oil and Gas Markets
Looking ahead, the long-term outlook is one of growing
demand for energy, particularly in
Gas prices in
UNAUDITED
STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED ON DECEMBER
31, 2011
(Rs. in millions)
|
Sr. No. |
Particular |
Quarter Ended |
Nine Months
Ended |
|
|
|
|
31.12.2011 (Unaudited) |
30.09.2011 (Unaudited) |
31.12.2011 (Unaudited) |
|
1 |
a) Net Sales / Income from Operations (See Note 2 and 3) |
327.003 |
309.805 |
1254.181 |
|
|
b) Other Operating Income |
- |
- |
- |
|
|
c) (Decrease) / Increase in Stock of Crude Oil, Condensate and Natural Gas |
11.529 |
(104.882) |
(75.694) |
|
|
Total Income |
338.532 |
204.923 |
11784.87 |
|
2 |
Expenditure and Charges |
|
|
|
|
3 |
a) Operating Expenditure |
110.996 |
91.734 |
3831.90 |
|
|
b) Corporate Expenses |
|
|
|
|
|
- Staff Expenses |
23.564 |
23.925 |
71.562 |
|
|
- Net (Gain) / Loss on Foreign Exchange |
8.614 |
15.532 |
24.363 |
|
|
- Other Expenses |
12.421 |
15.578 |
48.845 |
|
|
- Recovery of Expenses |
(36.551) |
(26.374) |
(99.887) |
|
|
c) Depreciation, Depletion and Amortisation (See Note 4) |
178.718 |
69.463 |
455.793 |
|
|
Total |
297.762 |
189.858 |
883.866 |
|
|
Profit from Operations before Other Income, Interest and Exceptional Items ( 2-3 ) |
40.770 |
15.065 |
294.621 |
|
4 |
Other Income (Net) |
31.284 |
64.250 |
127.002 |
|
5 |
Profit from Operations before Interest and Exceptional Items ( 4+5 ) |
72.054 |
79.315 |
421.623 |
|
6 |
Interest and Financing Charges |
26.938 |
26.195 |
79.184 |
|
7 |
Profit from Operations after Interest but before Exceptional Items ( 6-7 ) |
45.116 |
53.120 |
342.439 |
|
8 |
Exceptional Items |
- |
- |
- |
|
9 |
Profit from Ordinary Activities before Tax ( 8-9 ) |
45.116 |
53.120 |
342.439 |
|
10 |
Tax Expenses |
|
|
|
|
11 |
a) Provision for Current Income Tax |
3.000 |
4.000 |
53.000 |
|
|
b) Provision for Deferred Tax |
(3.000) |
12.000 |
83.000 |
|
|
c) Provision for Wealth Tax |
- |
- |
0.050 |
|
|
d) MAT Credit Entitlement (Net) |
(3.000) |
(4.000) |
(53.000) |
|
|
Net Profit from Ordinary Activities after Tax (10-11) |
48.116 |
41.120 |
259.389 |
|
12 |
Extraordinary Items (net of tax expenses) |
- |
- |
- |
|
13 |
Net Profit for the Period (12-13) |
48.116 |
41.120 |
259.389 |
|
14 |
Paid up Equity Share Capital (Face Value of Rs. 10/- each) |
1305.093 |
1305.093 |
1305.093 |
|
15 |
Reserves excluding Revaluation Reserve |
|
|
|
|
16 |
Basic and Diluted EPS (Rs.) - Not Annualised - before and after Extraordinary Items |
0.37 |
0.32 |
1.99 |
|
17 |
Public Shareholding |
|
|
|
|
18 |
Number of Shares |
68,924,155 |
68,924,155 |
68,924,155 |
|
|
Percentage of Shareholding |
52.82% |
52.82% |
52.82% |
|
|
Promoters and Promoter Group Shareholding (See Note 5) a) Pledged / Encumbered |
|
|
|
|
19 |
Number of shares |
- |
- |
- |
|
|
Percentage of shareholding (as a % of the total shareholding of promoter and |
|
|
|
|
|
promoter group) |
- |
- |
- |
|
|
Percentage of shareholding (as a % of the total share capital of the company) |
- |
- |
- |
|
|
b) Non - encumbered |
|
|
|
|
|
Number of shares |
61,569,134 |
61,569,134 |
61,569,134 |
|
|
Percentage of shareholding (as a % of the total shareholding of promoter and |
|
|
|
|
|
promoter group) |
100.00% |
100.00% |
100.00% |
|
|
Percentage of shareholding (as a % of the total share capital of the company) |
47.18% |
47.18% |
47.18% |
|
|
|
|
|
|
Notes:
1 The Company is primarily engaged in a single business
segment of "Hydrocarbons and other incidental services". All the
activities of the Company revolve around the main business. Further, the
Company does not have any separate geographic segments other than
2 During the nine months ended December 31, 2011, the production from PY-1 Field was shut down for a cumulative of 122 days as Gail India Limited, the buyer of PY-1 Gas, was not able to off-take the gas supply due to shut down of downstream user plant.
3 As notified earlier, production from PY-3 Field remains
shut since July 31, 2011. Hardy Exploration and Production (
4 Consequent to intermittent production shut downs in PY-1 Field (refer note 2 above), the Company has charged additional depreciation (over and above the Unit of Production "(UOP)" method) in line with the Companies accounting policy to comply with minimum rates of depreciation under Schedule XIV of the Companies Act, 1956. Depreciation, Depletion and Amortisation includes additional depreciation (over and above "UOP") of Rs.33.793 Millions for the quarter/nine months ended December 31, 2011.
5 The details of Promoters Shareholding is based on their declarations giving the status that no share has been pledged for respective period.
6 Details of Investors' Complaints for the quarter ended on December 31, 2011
Unresolved at the beginning of the quarter Nil
Received during the quarter 9
Replied / Resolved during the quarter 9
Unresolved at the end of the quarter Nil
7 Figures for the previous period / year have been regrouped / reclassified to make them comparable with the current period, wherever necessary.
8 The above results were reviewed by the Audit Committee and approved by the Board of Directors at their respective meetings held on February 07, 2012. The same has also been subjected to a limited review by the Auditors.
Fixed Assets
- Land-Freehold
- Buildings
- Office Equipments
- Computers
- Office Furniture
- Vehicles
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources including
but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist organization
or whom notice had been received that all financial transactions involving
their assets have been blocked or convicted, found guilty or against whom a
judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction registered
against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or investigation
registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.53.71 |
|
|
1 |
Rs.86.34 |
|
Euro |
1 |
Rs.69.23 |
INFORMATION DETAILS
|
Report Prepared
by : |
NTH |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
6 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
54 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.