Vedanta Oil and Gas Ltd (VOGL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Vedanta Oil and Gas Limited's second quarter and half year FY '26 '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone.
Moderator: and phone. Please note that this conference is being recorded. From the management side, we have Mr. Charanjit Singh, Group Head - Investor Relations; Mr. Jim Gadd, CEO, VOGL; and Mr. Arpit Mundra, CFO, VOGL. I now hand the conference over to Mr. Jim Gadd for his opening remarks. Thank you, and over to you.
Jim Gadd (Vedanta Oil and Gas Ltd): A very good evening, everybody. First of all, am I audible?
Moderator: Yes, you are. Please go ahead.
Jim Gadd (Vedanta Oil and Gas Ltd): Very good. So thank you for joining us for our Q2 and H1 full year '27 earnings call. The investor presentation has been uploaded, but only very recently. So in case you haven't seen it, you can download it. And we'll also take you through the presentation as we as we present. So this is our second call after listing in June and it's our first full quarter as a listed entity, which is fantastic. Very proud on behalf of the entire organization and also of our CEO CFO. So, let me briefly lay out our strategy and our value creation process highlighting our business priorities. We have a large and diverse resource base as you know. Please go to the next slide. And the resource base is anchored by our producing assets in Rajasthan, in the in the North the Northwest alongside our offshore, which is basically Ravva on the East Coast, but also the West Coast which are emerging assets across OALP and Discovered Small Field portfolio, including also the Northeast. Our ambition is to grow production safely and sustainably, as you know, by improving recovery and efficiency from our existing assets, progressing resources through exploration and development, and deploying capital only selectively into opportunities that can support our future production aspirations. The operating cycle from resources to reserves, production and cash flow, and then reinvestment back into portfolio remains very central to how we actually manage our business. As you will see in the entire presentation, our strategy is being progressed across both exploration and development. On exploration, we have a portfolio of blocks across India, very diverse, with activity planned for them. Our development portfolio stands on four key themes, enhanced oil recovery, an example of that is ASP, focusing on our gas opportunities, tight oil development across Rajasthan, and satellite and infill well programs across our operating and also our upcoming assets. Human resources and safety are the foundation on which every business is built. Safe and reliable operations remain fundamental to our delivery. We recorded zero fatalities in our first half of this financial year with TRIFR at 1.31 and our LTIFR at 0.28. We continue to focus on critical risk management, operating discipline, and frontline engagements across all our assets to improve our safety performance. We also continue to engage community outreach programs across themes of education, skills training, health, and nutrition touching touching lives across India over the last quarter. And here are some examples. And I love that picture, by the way. Turning to the operating performance, our gross operated production averaged 72.2, as you can see on the left, 72.2 thousand barrels of oil equivalent per day during the second quarter, comport compared with 77.7 in Q1. For the first half, production averaged 74.9 thousand barrels of oil equivalent per day. The production profile continues to reflect natural decline across our mature fields, together with asset-specific movements during the period. Our focus is on managing this natural decline through targeted interventions, improving recovery from existing asset base, managing assets reliability, and progressing development opportunities that can contribute to our future production. We witnessed green shots or green shoots, you should say, from these efforts with our focused production optimization leading to the decline arrest in Q2 with positive reversal trends in our Ravva asset. So, let me also cover the principal blocks and our assets. This is Rajasthan. Rajasthan remains the core of our production portfolio.
Jim Gadd (Vedanta Oil and Gas Ltd): with only, over 80% of our production and also our resource base. The gross opera- operated production averaged 59.9 thousand barrels of oil equivalent per day in the second quarter, compared to 63.1 in Q1. Across Rajasthan, our work is focused on managing the production base through a combination of infill activities and OpEx-led well interventions, artificial lift optimization, wellbore restorations and other targeted interventions. We will continue to sequence these activities based on subsurface understanding, which we're enhancing on a daily basis, and execution readiness, but also on a value be- with a value lens. At Ravva, which is on the East Coast, the gross operated production improved to 8.1 thousand barrels of oil equivalent per day in the second quarter, up from 7000 in Q1. The sequential improvement was supported by continued delivery from partial shift to low pressure operations that we talked about last quarter, if you may recall. Our immediate focus, at the moment, is on holding this performance and target to maintain flattish performance across Ravva. The OALP and the Discovered Small Field portfolio contributed 3.1 thousand barrels of oil equivalent per day during the second quarter, in line with Q1. Jaya and Hazarigaon are the two operating fields and continue to do well. Alongside the work of our producing assets, we continue to progress the exploration and development activities across the portfolio. Next slide. We have opportunities across Rajasthan, deep gas, enhanced oil recovery, tight oil, infill and satellite fields. Next slide please. As well as our shallow water and deepwater acreage. These opportunities are at different stages of technical and commercial maturity. Our approach is to progress them systematically with capital deployment tied to technical understanding, very key, project readiness and value. And I'm not sure, but I'm not seeing the exploration and development slide. So maybe somebody can tell me if it's if it's my system or whether there's a glitch in the sharing, please.
Charanjit Singh (Vedanta Oil and Gas Ltd): Dim, it's it's fine. Everyone is seeing. We will be in this so that we can. Yeah. Okay.
Jim Gadd (Vedanta Oil and Gas Ltd): Right. So, we'll just, we'll just continue. So allow me to talk a little bit about exploration. The exploration campaign delivered encouraging results with three discoveries notified in the Rajasthan Block during the first half of the year and these will start adding production soon. These comprise deep gas and shallow oil discoveries in previously unexplored reservoir intervals across the Kameshwari, Saraswati and Bhagyam fields. The hydrocarbon potential and commercial viability of these discoveries still remains under evaluation. But as we move through the second-half of this financial year, our priorities remain consistent: first, to operate safely and reliability; second, to deliver the intervention and decline management program across the producing assets; third, to progress the exploration and development portfolio through defined technical, regulatory and investment milestones; and finally, obviously, to maintain discipline around costs and capital allocation. We have a really substantial resource base and an established producing portfolio. Our focus is to work through that opportunity set systematically, manage the existing production base and convert the right opportunities into future production and value. And with that, I'll hand over to Arpit, our CFO, to take you through the financial performance for the quarter and the first-half.
Arpit Mundra (Vedanta Oil and Gas Ltd): Thank you, Jim. Good evening, everyone. And I would like to extend my gratitude to all of you for joining us for the Q2 and H1 FY '27 earnings call. Let me take you through our financial performance for the second quarter and the first-half of FY '27. For Q2, the revenue for Vedanta Oil and Gas Limited stands at, to be
Arpit Mundra (Vedanta Oil and Gas Ltd): 486 crores, against a Q1 revenue of 2,507 crores, whereas in the corresponding quarter last year, it was 2,330 crores. In essence, the revenue across this periods have remained flattish despite the fall in production that was just explained by Jim, which was largely underpinned by the Brent pricing. The EBITDA for the quarter was ₹1,393 crores, representing an EBITDA margin of 56%. For the first half, revenue stood at 4,993 crores, with EBITDA of 2,625 crores and EBITDA margin of 53%. Let me explain the principal movements in EBITDA. On an year-on-year basis, there is a 34% increase in the EBITDA, which is primarily driven by higher price realization and partially offset by lower production. On a sequential basis, year on, on a sequential basis, the EBITDA moved from ₹1,232 crores in the first quarter to ₹1,393 crores, which is ₹1,393 crores in Q2. This was again primarily driven by higher sales and partially offset by lower price realization and lower production. Turning to the operating cost, as we call OPEX, 7% fall in production led to corresponding increase in OPEX per barrel for the quarter two from to $18.4 per barrel from the previous quarter number of $17.4 per barrel. Overall H1 OPEX stands at $17.9 per barrel. At overall dollar OPEX million level, we continue to maintain the discipline around operating cost while ensuring appropriate spend on well interventions, asset reliability, and the activities required to manage the production base. Moving on from EBITDA, exploration costs written off during the quarter two is ₹26 crores compared to ₹426 crores in quarter two. Exceptional items net of tax for the H1 is ₹346 crores, consisting of provision for the impairment on one of the assets and demerger expenses, which were one-time expenses booked in the Q1. Profit after tax from continuing operations is ₹746 crores for Q2, whereas it was ₹594 crores for entire H1. This was largely contributed because of a negative, a negative number in the quarter one. The first half reported numbers also include ₹1,097 crores of amount contributed from the discontinued operations recognized in Q1, which was led, which was led by the disposal of one of the non-oil and gas business that was done as a prior to the demerger transaction. There was no contribution from discontinued operations in Q2. Accordingly, the PAT including discounted discontinued operations stand at ₹1,691 crores for H1. Moving on to the capital expenditure in the balance sheet, we have deployed ₹504 crores during quarter two for CAPEX, taking total CAPEX payout for the first half of to ₹1,220 crores. As Jim outlined, this capital is being deployed across the producing portfolio of the existing assets and the exploration and development opportunities that we have been undertaking over the period of time. From a financial perspective, our approach remains focused on allocating capital wisely and while maintaining the balance sheet discipline and the rigor as desired. As at September 20 2026, the liquid investments that we carry, including the cash and cash equivalents, stands at a healthy ₹2,639 crores and the net debt remained almost zero as of 30th September 2026. The return on capital employed stood at 9% based on the current financial highlights that we have just shared with you. The company also maintained its AA+/Stable rating by various rating agencies, even during the quarter, which was first time received during the previous quarter, as we had shared with you in our previous earnings call. The financial position provides us with the flexibility to continue continue to invest in the portfolio, explore and taste the opportunity that Jim has just explained, while continued to maintain discipline around capital allocation and have a healthy and robust cash flows and FCF from the business that we continue to undertake. For FY '27, our market guidance for volume is expected to be range-bound between 73 kbo-
Arpit Mundra (Vedanta Oil and Gas Ltd): to 77 kboepd with the corresponding OpEx in the range of $19.5 to $20 per barrel and CapEx expected to be in the range of $320 to $340 million. Our financial priorities for second half remain focused on continued operating efficiencies, robust funds management, continue to build the rigor around the balance sheet and supporting the CapEx program outlined by Tim in his in his talk that he has just shared with us. With that, I will hand back to the moderator for the Q&A session.
55 more turns of this transcript: log in to Stocksigma to read the full call.