HOEC Scales Dirok to 70 MMSCFD, Seeks 1,000 Cr Debt
Hindustan Oil Exploration targets 70 MMSCFD capacity at Dirok and plans four new offshore wells, backed by a proposed 1,000 crore borrowing limit.
Key points
- Hindustan Oil Exploration plans to expand Dirok gas plant capacity to 70 MMSCFD to match regional pipeline restorations by December 2026.
- The company proposes drilling four new wells in the PY-1 offshore block, targeting a fractured granitic basement reservoir for gas production.
- HOEC seeks a 1,000 crore borrowing limit increase at its September 2026 AGM to fund these capital projects and support operational scale-up.
Hindustan Oil Exploration Company Limited is executing a dual-track operational strategy to expand domestic gas output. The firm plans to raise the gross processing capacity of its onshore Dirok plant in Assam to 70 MMSCFD while initiating a development drilling program in its PY-1 offshore block.
These capital-intensive moves are supported by a shareholder proposal to increase the company's borrowing limit to 1,000 crore. According to Sahi, this funding headroom is critical for securing the necessary infrastructure upgrades and drilling operations required to scale production volumes.
Dirok expansion targets pipeline recovery
The Dirok plant expansion is directly linked to the restoration of regional pipeline capacity. Assam Gas Company Limited aims to restore evacuation capacity to 2.5 MMSCMD via hot tapping by December 2026. HOEC’s increase to 70 MMSCFD aligns with this infrastructure timeline, allowing the company to capture higher evacuable volumes once local bottlenecks are alleviated.
This capacity expansion shifts the company’s focus from asset preservation to active monetization. By matching plant output with restored pipeline infrastructure, HOEC positions itself to leverage its competitive production costs for improved operating margins and cash generation.
PY-1 drilling targets basement reservoir
Concurrently, the company is preparing to drill four additional development wells within its 100%-operated PY-1 offshore block. These wells will target a unique gas-bearing fractured granitic basement reservoir, a geological formation distinct from conventional sandstone plays in the region.
Sahi notes that deferring these capital-heavy offshore operations until formal take-or-pay gas agreements are secured represents a disciplined approach to capital allocation. This strategy mitigates execution risk by ensuring that new production has committed offtakers before significant drilling expenditures are incurred.
Revenue rebounds amid debt hike
Financial performance in the first quarter of fiscal 2027 showed a sharp recovery. Standalone revenue from operations rebounded to 117.5 crore, reversing the negative standalone net sales of 194 crore recorded in the preceding quarter. This improvement reflects the initial steps in the company’s operational roadmap.
To fund the upcoming Dirok expansion and PY-1 drilling, HOEC will seek approval for the 1,000 crore borrowing limit at its 42nd Annual General Meeting on September 25, 2026. This increase in debt capacity provides the financial flexibility needed to execute multi-asset development programs without over-leveraging the balance sheet.
