Oil India hits new high after a 9-year hiatus; rallies 63% so far in 2023

In the last one year, the stock has outperformed the market by zooming 80 per cent, as compared to the 12.3 per cent rise in the S&P BSE Sensex.

Shares of Oil India hit a record high of Rs 339.45, as they gained 2 per cent on the BSE in Wednesday's intra-day trade on improved business outlook. In the past one week, the stock has rallied 8 per cent, as compared to 0.3 per cent decline in the S&P BSE Sensex.

The stock of state-owned oil exploration & production company hit a new high after a gap of over nine years. It surpassed its previous high of Rs 334.98 (adjusted to bonus issues) touched on September 9, 2014.

OIL India on Monday informed the stock exchanges that the board of directors of the company approved for Charter hire of 1 (one) no. Anchor Moored Drillship or Semi-submersible Drilling Unit with associated equipment and services at a total estimated cost of Rs 1,282.55 crore [excluding GST].

The board also approved the extension of completion date for construction of oil collecting Station at Nadua and Gas Gathering Station at East Khagorijan to April 30, 2024. The company further said the board accorded its approval for corporate & portfolio strategy 2040 & implementation roadmap for the company.

Meanwhile, in the past four trading days, the stock price of OIL India jumped 7 per cent after the media report suggested that the company is expected to start drilling in Andamans by the beginning of the upcoming financial year 2024-25.

OIL India, in a news report, said that the company, amongst various energy transition and net zero initiatives, green hydrogen being an important one among them, and is also exploring the options of participating in the proposed green hydrogen valleys /hubs. Another similar green energy option being explored by the Company is harnessing the potential of geothermal energy.

It was outlined that the plans are in nascent stage and engagements are underway to pursue the initiative through collaboration with reputed institutions like IITs to harness their research and development potential, the company said.

Thus far in the calendar year 2023, OIL India has outperformed the market by surging 63 per cent, as compared to 8.4 per cent rise in the S&P BSE Sensex. In the past one year, the stock has outperformed the market by zooming 80 per cent, as compared to the 12.3 per cent rise in the S&P BSE Sensex.

The public sector energy producer is expecting a series of new wells and gas fields to go into production in Assam and Rajasthan soon. This development will enable the company to achieve a crude oil production of 3.8 million tonnes (mt) in the current year, said Chairman and Managing Director (CMD) Ranjit Rath.

This new target represents a 20 per cent increase over the 3.18 mt of oil produced in 2022-23 (FY23).

In terms of drilling, OIL India plans to drill up to 60 new wells in FY24, up from 45 in FY23 and 38 in 2021-22. To support this increased drilling activity, the company has awarded contracts for two additional drilling rigs and extended the engagement tenure for existing rigs.

In its FY23 annual report said, the company said it has undertaken measures for engagement of Production Enhancement Contracts, adaptation of new technologies, maximizing recovery from existing fields, expedite development plans, monetization of Non-Producing PMLs and un-monetized discoveries etc. for enhancing oil and gas production.

According to analysts at ICICI Securities, OIL India's prospects remain strong over FY24E / FY25E driven by steady increase in oil & gas output (4 per cent annual growth), greater monetization opportunities in gas via the imminent Northeast (NE) grid commissioning, resumption of Numaligarh Refinery Limited (NRL) operations from Q2, and steady realizations for both oil & gas.