Oil India Limited Q3 FY26 Earnings Call Summary

Summary

Oil India Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026, 11:00 AM IST

Event Participants

Executives 6 Abhijit Das (CGM F&A), Abhijit Majumder (Director Finance), Ajaya Kumar Sahoo (ED & Company Secretary), Bhaskar Jyoti Phukan (MD, Numaligarh Refinery Limited), Dr. Ranjit Rath (Chairman and Managing Director), Raghunath Mishra (CGM Business Development)

Analysts 10 Bineet Banka (Nomura Wealth), Gaurav Jain (ICICI Prudential AMC), Keshav Soni (Kotak Securities), Moksh Ranka (Aurum Capital), Nitin Tiwari (PhillipCapital), Probal Sen (ICICI Securities), Sabri Hazarika (Emkay Global), Sarthak Tita (DSP Asset Management), Somaiah V (Avendus Spark), Vivekanand S (AMBIT Capital)

Financials & KPIs

Geographic & Segment Commentary

• Assam & Arunachal Pradesh (Northeast): Remains the core producing hub with 38 wells drilled in 9M FY26. Management targets 65 total wells here by year-end, focusing on deeper horizons (5,500m+) and early monetization of near-field discoveries.
• Rajasthan: Emerging as a significant growth driver with production ramping up from 400 to 1,000 barrels per day. Ten wells were drilled in 9M FY26, including a record 23-day completion of a development well.
• Offshore/OALP: Active exploration in Andaman (currently drilling 3rd well), Kerala-Konkan (targeting 6,000m depth), and newly acquired deepwater blocks in Mahanadi and KG basins. Management is utilizing a collaboration with TotalEnergies to de-risk deepwater technical assessments.
• Numaligarh Refinery (NRL): Operating at 100.31% capacity utilization with a focus on a major expansion from 3 MMTPA to 9 MMTPA. The refinery benefits from a high diesel yield (65-70% of product slate), significantly boosting GRMs during periods of high distillate spreads.

Company-Specific & Strategic Commentary

• Drilling Acceleration: Oil India is shifting from a historical run-rate of 35 wells per year to a target of 100 wells in FY27 to arrest mature field decline and boost production.
• Midstream Infrastructure: The Numaligarh-Siliguri product pipeline and Duliajan-Numaligarh (DNPL) gas pipeline expansions have achieved mechanical completion. DNPL expansion to 2.5 MMTPA is expected to commission by April 2026.
• Strategic Diversification: The company has evinced a ~10% interest in BPCL’s planned 12 MMTPA refinery-petrochemical complex in Andhra Pradesh to diversify downstream value capture.
• Gas Flaring Reduction: Implementing gas storage solutions and converting crude lines to gas lines (e.g., Lakwa gaon) to monetize associated gas that was previously flared, thereby enabling higher crude production.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Refining Margins & Expansion

• Question: What led to the exceptionally high $16.27 GRM at NRL? (Bineet Banka)
• Answer: NRL is primarily a diesel refinery (65-70% slate). High global diesel spreads ($24/bbl) combined with 100%+ capacity utilization and 86.8% distillate yield drove the outperformance (Bhaskar Phukan/Ranjit Rath).
• Question: What is the timeline for the 9 MMTPA refinery and Petchem ramp-up? (Vikas Jain)
• Answer: CDU/VDU mother units stabilized by Q4 FY26. 50% daily utilization by Q4 FY27, reaching 100% by Q2 FY28. Petchem to commission by end-FY28 with full ramp-up by Q2 FY29 (Bhaskar Phukan).

Upstream Costs & Write-offs

• Question: Why did contractual costs spike to ₹892 crores this quarter? (Vivekanand S/Nitin Tiwari)
• Answer: It is a function of higher activity (62 wells drilled vs 35 historically), deeper drilling depths which increase complexity, and a higher number of workover operations (Ranjit Rath/Abhijit Majumder).
• Question: Are we seeing a new baseline for seismic and dry-well costs? (Vikas Jain)
• Answer: Q3/Q4 are peak weather windows for Northeast operations, leading to higher optical costs. While current levels are a benchmark for onshore, deepwater drilling next year will introduce higher, though risk-shared, costs (Ranjit Rath).

Gas Monetization

• Question: When will the gas evacuation constraints be resolved? (Probal Sen/Moksh Ranka)
• Answer: The DNPL expansion to 2.5 MMTPA commissions in April 2026. The IGGL feeder line requires government authorization; once received, it takes 18 months to complete, enabling 3.5 MMSCMD of evacuation (Ranjit Rath).

Key Takeaway

Oil India Limited delivered a resilient Q3 FY26, characterized by high operational intensity and strong downstream performance despite a 17% YoY decline in crude price realizations. The company achieved the highest daily crude production in a decade (9,861 MT) and is aggressively expanding its drilling program to 100 wells per year. Strategically, the company is transitioning into an integrated energy major, with the Numaligarh Refinery expansion to 9 MMTPA on track for full utilization by Q2 FY28 and a $16.27 GRM showcasing its current efficiency. Financials were impacted by a structural increase in contractual costs due to deeper drilling and high seismic activity (₹579 Cr in Q3), which management views as necessary investments for production growth. With a clear roadmap to reach 4 MMT of crude and 5 BCM of gas by FY28, the company remains focused on resolving gas evacuation bottlenecks through the DNPL and IGGL pipelines. Management’s outlook remains confident, supported by a healthy dividend payout of ₹10.5 per share for the year and a robust exploration pipeline.