HOEC FY26 Annual Report Corrigendum and Financial Performance
Hindustan Oil Exploration Company Limited (HOEC) issued a corrigendum to its FY 2025-26 Annual Report to correct inadvertent typographical errors and page rearrangements in the PDF version submitted to exchanges. The company confirmed these discrepancies were non-material with no impact on financial statements, statutory auditors' report, or AGM resolutions.
Financial Performance Highlights
HOEC reported significantly weaker financial results for FY26. Consolidated revenue from operations declined 37% to ₹26,315.45 lakhs from ₹42,086.99 lakhs in FY25, while consolidated net profit dropped 55% to ₹6,274.53 lakhs from ₹14,720.77 lakhs. On a standalone basis, revenue decreased 18% to ₹24,986 lakhs and profit after tax fell 26% to ₹10,961 lakhs.
The revenue decline was primarily attributed to:
- Unsold oil inventory from Block B-80
- Revenue reversal of ₹25,878.15 lakhs from a crude oil sale dispute with HPCL involving quality concerns, leading to mutual cancellation of the arrangement and recognition of inventory worth ₹27,262.85 lakhs at estimated net realizable value
- Decrease in other income due to adjustment of interest income receivable against B-80 participating interest acquisition cost
Operational Performance and Asset Development
Production metrics showed mixed results:
- Gas production: 2.94 BCF (PY: 3.78 BCF) on standalone basis
- Oil production: 0.26 million barrels (PY: 0.35 million barrels) on standalone basis
- Consolidated aggregate production: 1.92 MMBOE with crude oil at 0.52 million barrels and gas at 7.26 BCF
Average realized prices declined: Crude oil at US$66.06/bbl (PY: US$75.97/bbl) and natural gas at US$8.08/mmbtu (PY: US$9.80/mmbtu)
Major asset developments included:
- Dirok: Revised FDP approved by MoPNG securing block till 2035, land acquisition for three development wells in progress
- B-80: Participating interest increased to 100% after acquiring 40% from Adbhoot Estates, recognizing provisional fair value gain of ₹3,251.87 lakhs
- PY-1: PSC extended to October 5, 2030, three prospective well locations identified
- Kharsang: 9 development wells successfully drilled, oil production increased from 340 bopd to peak of 940 bopd
Corporate Governance and Leadership Changes
The company underwent significant board changes with three director resignations (including Chairman Vivek Rae and MD Ramasamy Jeevanandam) and four new appointments. Baroruchi Mishra was appointed as Managing Director & CEO effective April 1, 2026. The Board comprised 7 Directors with 6 Non-Executive Directors (3 Independent) as of March 31, 2026.
Regulatory and Compliance Matters
Auditors issued qualified opinions on internal financial controls citing material weaknesses:
1. Lack of appropriate system for periodic confirmation and reconciliation of trade payable balances including joint operation partners
2. Ineffective controls over year-end financial statement closure process including payroll cost review, profit petroleum computation, and depletion expense
The company delayed Board approval of financial statements beyond SEBI's May 30, 2026 deadline, notifying the regulator on May 27, 2026, with authorization finally occurring on June 11, 2026.
Financial Position and Outlook
Key financial position indicators showed:
- Cash and cash equivalents: ₹1,457.42 lakhs (PY: ₹763.65 lakhs) on standalone basis
- Total assets: ₹199,454.30 lakhs (PY: ₹162,176.67 lakhs)
- Net worth: ₹126,967.50 lakhs (PY: ₹115,938.60 lakhs)
- Debt-equity ratio: 0.02 times (PY: 0.04 times)
No dividend was recommended for FY26 as the company requires financial resources for growth opportunities. The company plans to focus on converting resources into production faster, maximizing recovery from producing assets, and maintaining capital discipline, with growth opportunities in Western Offshore, PY-1 rejuvenation, and North-East business expansion.