Oilmax Energy plans to double capex in FY25 to ramp up production from its fields

Oilmax sees it closing FY24 with a capex of around $5-7 million.

Oilmax Energy Group plans to increase its capital expenditure by two to three times in the financial year 2024-25 (FY25) compared to the current financial year, Chief Financial Officer Sumit Maheshwari told Moneycontrol.

He added that capex plans for the next financial year are subject to the completion of the Indradhanush gas pipeline in the North East and approvals required for drilling wells in the company’s respective fields.

The upstream oil and gas company plans to fund the capex from internal resources. It intends to ramp up production from its fields in the upcoming year. Oilmax sees it closing FY24 with a capex of around $5-7 million.

“We are planning to start production from the Duarmara and Tiphuk fields. We are also planning to increase production from the Amguri field. For Indrora, we are doing the new well campaign and intend to develop the other two fields there. So there will be significantly more (REPHRASED FOR RIGHT COMPARISON) capex (in FY25) than in the current year,” said Maheshwari.

Oilmax owns three blocks in Assam — Amguri, Duarmara, and Tiphuk — and one block in Gujarat — Indrora.

Regarding plans to list Oilmax on the stock exchanges, the CFO said that it was not on the cards for the next couple of years. The company will decide on the matter based on the growth opportunities or if huge funding will be required. The company is currently not planning to raise any funds either, he added.

“We are not looking for any fundraise right now for Oilmax. We are already well capitalised. We have enough capital to take care of our requirements for a couple of years. If we grow much faster than we have anticipated, then we will see what type of capital raises are required.”

Asian Energy growth expectations

Maheshwari said Oilmax’s listed entity, Asian Energy Services Limited (AESL), is expected to report strong performance in the coming months, similar to the quarter ending September 30, on account of increased activity in the seismic business. Oilmax Energy Group had acquired Asian Energy in 2016.

In Q2 FY24, Asian Energy reported a net profit of Rs 68.31 lakh, compared to a loss of Rs 12.42 crore in the same period last year. The company's revenue from operations stood at Rs 45.48 crore in the second quarter, compared to Rs 24.93 crore last year.

“We have a very good order book, and the execution of all the projects that we have in hand has improved. That has led to a turnaround in the performance, and we expect the performance witnessed in Q2 to continue going forward,” Maheshwari said. Currently, the company has an order book of roughly Rs 1,000 crore, which is expected to grow amid new business opportunities coming up in the market, he added.

Regarding the company’s dull performance in the previous quarters, he said that last year was “aberrational” due to low seismic activity across India.

Meanwhile, Asian Energy acquired a 50 percent participating interest in Oilmax’s Indrora block in June 2023 to expand into the exploration and production verticals.

Future plans

In addition to ramping up production from Oilmax’s existing blocks in Assam and Gujarat, the company also plans to acquire more assets in the future, said Maheshwari. In the next two to three years, Oilmax expects to increase its total production by three to four times to 10,000 barrels of oil equivalent per day (boepd).

“We want to increase our reserved space as well. Apart from this, we intend to acquire more blocks in the coming years. Once we grow and become sizable in terms of production, our idea is to keep adding assets every couple of years, do justice to them, and bring them into production. If they are already in production, we would deploy the latest technology and knowledge to increase production and help the nation in terms of reducing import dependency,” he said.

Maheshwari said the company looks forward to the next Discovered Small Fields (DSF) round and would be interested in acquiring more blocks. He expects the fourth DSF round to be announced in the next calendar year.