Oil India Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Production inches up, PAT swings on one-offs: Crude output rose +1.4% QoQ and gas was marginally higher, but Q3 PAT fell sharply YoY because NRL's GRM collapsed from \$12.72/bbl to \$2.10/bbl and dividend income dropped by ~INR400 crores.
• The NRL GRM headline masks the real margin: Excluding inventory adjustments, the ideal GRM was \$5.10/bbl, and with excise duty benefits the realized number is roughly \$24/bbl, a level management says no peer beats.
• A 30-year exploration bet finally pays off: OIL established a working petroleum system on the north bank of the Brahmaputra for the first time, a discovery that could reshape the reserve base if follow-up seismic and drilling confirm it.
• Flaring is being engineered away, not just promised: Flaring halved to 4% and 11 new compressors are coming; management expects zero normal flare within a year and ~1.5% after all units are installed.
• What to watch next quarter: Whether the north bank discovery yields a commercial development plan, the pace of NRL's step-by-step commissioning, and any concrete timeline for the IGGL pipeline authorization that would unlock gas scale-up.

Production & the 4 MMT Ambition

• Oil: slow grind upward: Crude production improved 1.4% in Q3 and 4.1% in 9M, driven by continued improvement efforts across depleting fields. FY25 is now expected around 3.5 MMT, slightly below the original 3.6 MMT target, though management has not written off reaching it.
• Gas: marginal Q3 lift, bigger FY26 jump: Gas production was marginally higher by 0.85% in Q3. FY26 is expected close to 3.8–4.0 BCM, with the 5 BCM target pushed to FY27–28.
• The 4 MMT oil target is close but undated: Management says "we are almost at 3.6, so it won't take us much to reach that level" and points to "next fiscal year or next to next fiscal year," a range that avoids pinning the milestone to a single year.
• Two new focus areas added: Barekuri and Sesabil have been added to the mission 4 MMT drilling program, with FY26 production expected to benefit from high-potential areas like Barekuri.
• New well gas is the growth wedge: DGH has vetted quantities qualifying for premium pricing, and management expects new well gas to multiply and become a large portfolio of total gas production within the next 2 years.

Manral: "The oil and gas, it lies in the minds of the geologists, geophysicists and the reservoir engineers, so think about it. So perceptions, opinions can bring about new insights."

NRL: The GRM Reset & Expansion Timeline

• Headline GRM collapsed on inventory and duty effects: NRL's reported GRM fell from \$12.72/bbl to \$2.10/bbl in Q3, driven by a pan-India GRM decline, inventory adjustments, and excise duty benefits. Excluding inventory adjustments, the ideal GRM was \$5.10/bbl, and including the excise duty benefit of \$18/bbl plus the \$6/bbl GRM value, the realized GRM is roughly \$24/bbl.
• Management claims peer-leading performance: Management asserts that no other Indian refiner is ahead of NRL on GRM, a claim made in direct response to an analyst question.
• Refinery expansion: mechanical completion by December 2025: The 3-to-9 MMTPA capacity expansion has reached 73% physical completion with INR23,000 crores capex incurred. Commissioning will be step-by-step, with ramp-up at 50–60% in the first year, 75% in the second, and 75–100% in the third.
• Petrochemical project: December 2028 target: INR7,200 crores capex project with INR950–990 crores spent so far, expected completion within the next 3 years.
• Pipeline infrastructure racing to match: The Numaligarh-Siliguri product pipeline is ~90% complete and expected by April 2025, ahead of the Paradip-Numaligarh crude oil pipeline. The crude pipeline is expected to complete along with refinery expansion by December 2025.

Majumder: "According to my understanding, except for NRL, none of the other companies are ahead of NRL so far as GRM is concerned."

Exploration: The North Bank Breakthrough

• A 30-year persistence pays off: After three decades of perseverance, OIL tested crude oil and established a working petroleum system on the north bank of the Brahmaputra for the first time. The company is now planning extensive supplementary seismic and geophysical investigation to monetize the discovery.
• Deepest onshore well drilled: OIL built the deepest onshore oil well in India at 5,779 meters depth on the south bank of the Brahmaputra, demonstrating technical capability in complex geology.
• Andaman exploration underway: Drilling operations are ongoing at one well in Andaman shallow offshore blocks, targeting Oligocene reservoirs.
• Acreage expanding beyond the Northeast: After the ninth OALP round, acreage will exceed 1 lakh sq km, with management targeting areas outside the Northeast and considering skipping seismic to go directly to drilling in high-prospective areas.
• International expertise brought in: OIL signed a technical service agreement with TotalEnergies France for exploration and development in deep and ultra-deep offshore waters, aiming to leverage their expertise.

Manral: "After 3 decades of perseverance in the north bank of river Brahmaputra, it is for the first time that we have tested crude oil, in the sense that we have established a working petroleum system over there."

Gas Infrastructure & the Demand Unlock

• Flaring halved, zero normal flare within sight: Flaring reduced from 8% to 4% over 9M periods (FY23 vs FY25). Eleven new compressor facilities are planned at remote sites to put low-pressure gas into the distribution network, with the first compressor to be installed in March 2025. Management expects to reach zero normal flare in the course of the next year, then further down to ~1.5% after all 11 compressors are installed.
• IGGL pipeline: the big unlock, still waiting on authorization: Once the IGGL pipeline is commissioned, OIL expects to scale up gas production significantly, with plenty of gas available. Authorization from PNGRB is "expected any time soon," with an 18-month project duration from authorization, but management declined to confirm a 1–2 month timeline when pressed.
• Pipeline network expanding on multiple fronts: The Kumchai pipeline (81 km, Arunachal) is completed, reducing flaring and increasing production. The DNPL pipeline capacity augmentation from 1 MMSCMD to 2.5 MMSCMD is already underway. The Arunachal-to-Duliajan pipeline is operational and commissioned.
• New demand centers being cultivated: A new fertilizer plant has been planned in Namrup, which may become a source of gas consumption (current ~1.1 MMSCMD potentially rising to 2.3 MMSCMD). CGD blocks are awarded and companies are doing back-end work, with integration expected to help send gas to all parts of the country and Assam. Discussions are ongoing to supply gas to tea gardens in middle and lower Assam.
• Underground gas storage initiated: At Naharkatia-257, gas injection into storage has started to avoid losing associated liquids when gas wells are shut due to seasonal fluctuation or demand-supply issues.

Borgohain: "After implementation of all the 11 compressors we are bringing, I think it will further go down, maybe close to 1.5."

Financials: The PAT Swing Deconstructed

• Revenue up modestly on volumes: Turnover increased 1.38% in 9M, mainly due to higher crude oil and natural gas sales volumes.
• EBITDA margin improved: EBITDA margin increased to 42.76% in Q3 FY25 from 41.34% in Q3 FY24.
• PAT decline is a dividend and GRM story, not an operating one: Q3 PAT fell to INR1,221.80 crores from INR1,584.28 crores YoY. The two drivers: NRL's GRM collapse and a sharp fall in dividend income because last year included INR400 crores from the Singapore subsidiary and INR164 crores from NRL, neither of which recurred this year. For 9M, PAT still grew 28.38% to INR4,522.71 crores.
• Interim dividend declared: Board recommended an interim dividend of INR7 per fully paid equity share, bringing the total interim dividend declared till Q3 to INR10 per equity share.

Guidance & Commitments

Key Metrics