Hindustan Oil Exploration Company Ltd Management Discussions

OIL AND GAS LANDSCAPE IN INDIA

The Oil and Gas sector is a vital component of Indias economy, ranking among the eight core industries that significantly influence decision-making across various sectors. As there is a direct correlation between Indias economic growth prospects and its energy needs, there has been a steady requirement for oil and gas for decades, with demand growing at a rate of 3-4% each year. As of 2025, India has maintained its status as the third-largest consumer of oil globally1. Notably, the country relies heavily on imports, with over 86% of its crude oil and more than 50% of its natural gas sourced from other countries in the financial year 2024-252.

During the financial year 2024-25, the total import of crude oil reached 248.23 million metric tonnes (MMT), an increase of 3.8% from 234.26 MMT in the previous financial year 2023-24. However, domestic crude oil production experienced a decline, falling to 26.49 MMT from 27.17 MMT in the previous year, primarily due to reduced output from mature fields3.

On the Crude oil - Natural gas front, total net production of Crude oil - Natural gas experienced a slight decline in financial year 2024-25, reaching 35,594 MMSCM (Million Standard Cubic Metres), down from 35,717 MMSCM in the previous financial year. This decline follows three consecutive years of production growth. Conversely, total consumption of Crude oil - Natural gas rose significantly to 71,314 MMSCM, compared to 67,512 MMSCM in FY 2023-24, despite stagnation in production levels.

These statistics underscore a persistent increase in the countrys consumption of petroleum products. To satisfy this growing demand, India is compelled to import substantial quantities of crude oil and natural gas, thereby heightening its dependency on these resources. This trend emphasizes the critical role of the oil and gas sector in Indias economy and the necessity for strategic planning to ensure sustainable growth and energy security.

To address the growing gap between energy supply and demand, the Ministry of Petroleum and Natural Gas (MoP&NG) is dedicated to accelerating Exploration and Production (E&P) activities within the country. This commitment not only aims to enhance energy security but also to foster sustainable economic growth.

The estimated conventional hydrocarbon resources across 26 sedimentary basins in the country amount to approximately 41.87 billion tonnes, which includes both oil and gas equivalents. Of this, 12 billion tonnes are classified as discovered hydrocarbons, while a significant 29.796 billion tonnes remain undiscovered4. This undiscovered segment presents a considerable opportunity for future exploration and development.

1 World Energy Outlook 2024 by International Energy Agency tIEA)

2 Petroleum Planning & Analysis Cell thttps://ppac.gov.in)

3 Petroleum Planning & Analysis Cell (https://ppac.gov.in)

4 Ministry of Petroleum and Natural Gas (https://mopng.gov.in/en/exp-and-prod/conventional-hydrocarbon)

According to the India Hydrocarbon Vision 2025, there is a mandate to appraise 100% of the Indian sedimentary area. Out of which only 79.5% of the basinal areas have undergone appraisal which indicates that Indias sedimentary basins possess high untapped hydrocarbon potential, highlighting the need for continued exploration efforts in this vital sector5.

Most of Indias oil and gas producing fields were discovered several decades ago and are currently on a natural declining trajectory. While producers have implemented technological interventions to mitigate this decline, it is imperative to make significant new discoveries and bring them into production to enhance the overall output. With this overarching objective, the Government of India has introduced several pathbreaking reforms notably over the past decade - including, a landmark shift from a production sharing regime to a revenue sharing regime for awarding contracts; simplified processes and reduced regulatory burden to promote exploration and production; release of previously no go areas for new exploration; deregulation of crude, as well as marketing and pricing freedom for natural gas. As a significant outcome of these reforms, over 76% of Indias active acreage under exploration have been awarded post 2014. Additionally, in March 2025, the Government of India passed the landmark Oilfield (Regulatory and Development) Amendment Bill, 2024 in the Lok Sabha which aims at reforming the legal framework and making the sector more attractive for foreign investment, potentially leading to new discoveries.

Pricing

In the financial year 2024-25, crude oil prices have fallen below $70 per barrel, marking the lowest levels observed in three years. As of March 2025, crude oil prices have experienced a significant decline of over 18% compared to April 2024, this downturn can be attributed to several factors, including OPECs revised demand forecasts, reduced consumption in China, the rising demand for electric vehicles, a global economic slowdown, trade tensions, and expectations of stagnating demand. Additionally, an oversupply in the market and uncertainty in international trade have contributed to this price drop.

The average crude oil price for the financial year 2024-25 has decreased by approximately 4.85%, settling at $78.56 per barrel, down from an average of $82.58 in financial year 2023-24.

Furthermore, the price of domestic natural gas, which is determined by a combination of global market prices, has also seen a reduction. The price of natural gas as notified by the Governments Petroleum Planning & Analysis Cell (PPAC) decreased to $7.80 per MMBTU in March 2025, down from $8.17 per MMBTU in March 2024.

Indias Energy Demand

Indias economic growth is intricately linked to its energy demand, leading to a projected increase in the need for oil and gas. This trend positions the energy sector as a highly attractive area for investment. As the nation continues to develop socially and economically, energy demand is expected to rise correspondingly.

Indias Economic Survey 2024-25 projects its real GDP growth rate to range between 6.3% to 6.8% for the financial year 2025-26. This robust growth trajectory is anticipated to persist throughout the decade, although a gradual moderation is expected as the decade progresses. Consequently, Indias energy demand is forecasted to surpass that of all major global economies over the coming years.

Indias oil demand is expected to increase to 5.74 million barrels per day (bpd) in 2025, rising further to 5.99 million bpd in 2026, representing a growth of 4.28%6.

While recent tariffs imposed by the United States may pose challenges to GDP growth, it is anticipated that fiscal and monetary stimulus measures will effectively mitigate these impacts.

5 DGH Report on Indias Hydrocarbon Outlook 2024-25

6 India Brand Equity Foundation (https://www.ibef/news/)

HOEC BUSINESS - AN OVERVIEW

As one of the pioneer private players in the Indian Exploration and Production (E&P) sector, HOEC boasts a diverse portfolio that includes 10 oil and gas blocks with discovered resources and one exploratory block. These assets are strategically situated across four of the seven producing basins in India.

Recognizing the critical importance of energy security for the nation, HOECs operations are closely aligned with national interests. Our steadfast commitment is centered on the exploration, development, and production of oil and gas resources, with a focus on transforming these resources into valuable assets. Through this endeavour, we aim to create value for all stakeholders while simultaneously enhancing the nations energy landscape. Our approach is grounded in responsible growth, ensuring sustainable practices that will empower the future of our country.

Our vision is to establish and transform resources into assets, thereby generating value for all stakeholders as we Grow Responsibly.

We strive to achieve this vision by way of:

• Exploring for Oil & Gas;

• Actively seeking new opportunities to expand our resource base;

• Execution to transform resources to reserves;

• Implementing effective strategies to convert reserves to revenues; and

• Enhancing value thereby maximizing returns for all stakeholders.

Core Values

At HOEC, we are dedicated to driving progress in the energy sector while upholding our commitment to sustainability and responsible development.

Honesty	We maintain the highest standards of honesty and integrity in all aspects of our business operations.
Ownership	As a cohesive team, we take full responsibility for our decisions, behaviours, mindsets, and outcomes.
Entrepreneurship	We foster a spirit of entrepreneurship, continuously exploring new means to unlock value and create a positive impact for all stakeholders.
Care	We demonstrate genuine care and concern for the environment in which we operate, our communities, and for each other.

The Company recognizes the critical importance of obtaining and maintaining the social license to operate by excelling in environmental, social, health, and safety practices. This commitment is integral to our overall business success. Our objective is to be a responsible corporate citizen in India, prioritizing the use of local talent, services, and equipment to support sustainable development.

STRENGTHS

The Company holds a well-balanced asset portfolio comprising oil and gas blocks, each of which contains discoveries that are either currently producing or ready for development. Our geographical footprint is diverse, with operations in four of Indias seven producing basins. A significant advantage of our portfolio is the exploration upside potential, bolstered by infrastructure that facilitates rapid monetization of our assets. We hold operatorship in the majority of our blocks, enabling us to drive value creation and make informed strategic decisions.

Our leadership team consists of seasoned professionals with extensive industry experience, complemented by a competent technical talent. We have established a track record of delivering fast-track development and cost-effective operations, both onshore and offshore, with a steadfast commitment to health, safety, and environmental performance. This focus ensures that our operations are not only efficient but also sustainable.

In summary, the strengths of our Company lie in our diverse portfolio of high-quality assets, our experienced management team, and our unwavering commitment to safe and sustainable operational practices.

STRATEGIC DIRECTION

With oven four decades of experience in the E&P sector, HOEC is strategically positioned to drive sustainable growth and create long-term value for all stakeholders while enhancing profitability by:

• Accelerating Resource Development: We prioritize the development of discovered resources to expedite project timelines and monetize resources at a faster pace.

• Optimizing Asset Management: Our asset model emphasizes core operations and resource management, complemented by strategic outsourcing to leverage expertise and optimize performance.

• Maximizing Operational Efficiency: By leveraging existing infrastructure and fostering synergies with local contents, we aim to enhance operational efficiency.

• Adopting a Low-Cost Operating Model: We aim to emerge as self-funding company that generates sustainable cash flow from our producing assets, ensuring fiscal stability and growth.

• Fostering Long-Term Stakeholder Value: We are dedicated to creating long-term value for our stakeholders by conducting our business with respect and consideration for the communities we serve and the environment in which we operate.

• Ensuring Reserve Replacement: We actively pursue both organic and inorganic exploration and development opportunities to ensure continuous reserve replacement and growth.

OPERATIONAL HIGHLIGHTS

In accordance with our business objectives, the Company conducts thorough evaluations of all projects to assess their technical and economic viability. By leveraging our in-house geoscience expertise as well as collaborating with independent third-party specialists, we identify, assess, and prioritize opportunities for growth.

Throughout the financial year 2024-25, our primary focus has been on maintaining safe and efficient operations in our producing fields while adeptly navigating the various operational challenges.

KEY OPERATIONAL HIGHLIGHTS OF FY 2024-25 Production-wise performance:

The Companys aggregate production on consolidated basis during FY 2024-25 was 1.08 million barrels of oil equivalent (MMBOE) (Crude oil: 0.36 million barrels; Gas: 3.80 BCF) as against 0.99 million barrels of oil equivalent (MMBOE) (Crude oil: 0.29 million barrels; Gas: 3.73 BCF) during the previous year.

Block-wise operations and performance:

a. Dirok:

- Average Production: Gas - 17.76 mmscfd & Condensate - 311 bopd

- Revised Field Development Plan (RFDP) completed and submitted for extension of Production Sharing Contract (PSC)

- Workover operations completed and additional gas reserves added from the previously unexplored Sand-9

- Laying of 15 kms of pipeline in forest section is completed to connect to Duliajan hub and completion of North-Eastern Gas Grid will eliminate the current demand constraints for the block.

b. B-80:

- Average Production: Gas - 5.23 mmscfd & Oil - 753 bopd

- Gas is sold through IGX (Indian Gas Exchange)

- Participating Interest elevated to 100% from 60%

- Both wells in this block are operational.

- Planned for the work-over of existing wells and drilling three new wells to improve the production.

- A portion of the gas is sold at the rate of 12.05% of Brent, while the remaining quantity is sold on IGX at a higher price.

c. PY-1:

- Average Production: Gas - 0.12 mmscfd & Condensate - 3 bopd.

- Seismic reprocessing and in-house study has been completed based on which three prospective well locations are released.

- Review of geological model by Fractured Basement Specialists to confirm the well locations and review the field potential.

d. Kharsang:

- Average Production: Gas - 0.45 mmscfd & Oil - 361 bopd

- The Company obtained Environmental Clearance (EC) for drilling 40 new development wells and five exploration wells. Spud the first development well on 31st March 2025 after a gap of about 12 years.

- The initial plan is to drill nine development wells; of these, drilling of Well KSG-71 was successfully completed and hooked up for production in May 2025.

e. Cambay Blocks - Asjol, Palej & North Balol:

- Average Production: Gas - 0.51 mmscfd & Oil - 77 bopd.

- EC obtained for drilling two wells each in North Balol and Asjol.

- Ring-Fenced PSC for Palej has been submitted to MoP&NG for approval.

f. Block AA-ONHP-201 7/19:

- Reprocessed the 3D Seismic data, PSDM data interpreted, and the final well locations have been released.

- EC obtained.

- Applied for two years Revenue Sharing Contract (RSC) extension, post which it is planned to drill the first exploration well.

g. Umatara:

- Indian Oil Corporation Ltd. is the Operator of this Block.

- Geological & Geophysical study completed and the location for the first well has been released.

- Environmental clearance has been obtained and mobilization notice for Rig has been issued.

Key Performance Indicators related to HSE:

KPI\u2019s statistics	FY 2024-25	FY 2023-24
Fatalities Accident Rate (FAR)	0.00	0.00
Lost Time Injury Rate (LTIR)	0.01	0.00
LTI Severity Rating	0.00	0.00
No. of LTIs	1	0
Days since last LTI	123	680
Oil Spill Incidents	0.00	0.00

Reserves

As of March 31, 2025, our in-house estimates of proved and portable (P + P) reserves, on a working interest basis, stand at 47.87 MMBOE which doesnt include the reserves of 14.37 MMBOE pertaining to 40% PI acquired in Block B-80 from Adbhoot Estates Private Limited (AEPL), by way of assignment agreement on March 31, 2025 which is pending approval of the Government of India.

FINANCIAL PERFORMANCE

Your Company achieved a consolidated turnover of $ 42,086.99 lakhs in the financial year 2024-25. The net profit after tax was $ 14,720.77 lakhs. On a standalone basis, revenue for the current year has decreased to $ 30,606.90 lakhs from $ 48,836.15 lakhs during the previous year, mainly due to oil in stock in Block B-80 and reduction in oil and gas prices.

The average price realised on sale of crude oil for financial year 2024-25 is US$ 75.97 / bbl and for gas is US$ 9.80 per mmbtu, against US$ 78.73/bbl for crude oil and US$ 11.57 per mmbtu for gas during the previous year.

The Companys production on working interest basis during the year is 10,78,687 boe (2,955 boepd) and for the previous year was 9,42,154 boe (2,574 boepd). The increase is mainly due to assignment of 40% participating interest in Block B-80. Other income for the current year stood at $ 7,891.10 lakhs as against $ 3,287.94 lakhs in the previous year, which includes interest income (Refer Note no. 48 of Standalone Financial Statements) and income from financial investments.

Operating Costs

During the year, the cost towards production expenses decreased to $ 26,327.94 lakhs compared to $ 27,634.75 lakhs in the previous year. This decrease is due to reduction in plant hire charges. Other expenses have decreased to $ 1,043.52 lakhs from $ 1,370.62 lakhs in the previous year. This is mainly on account of reduction in rates and taxes.

Finance Costs

The Company incurred finance costs of $ 597.88 lakhs during financial year 2024-25, in addition to the finance cost on unwinding of decommissioning liability of $ 1,073.81 lakhs, compared to $ 1,385.46 lakhs and $ 868.76 lakhs respectively in the previous year. This decrease is on account of repayment of loans during the year

Net Profit / Loss

On a standalone basis, the Profit-After-Tax is $ 14,747.29 lakhs as against $ 8,500.21 lakhs in the previous year. The increase in profits is mainly due to reduction of operating charges of facilities pertaining to the previous quarters of the year and other interest income.

However, on a consolidated basis, the Profit-After-Tax is $ 14,720.77 lakhs as against $ 22,642.98 lakhs in the previous year. The decrease is mainly on account of oil and gas price reduction and reduction of operating charges of facilities.

Cash Flow

The Operating profit before working capital changes is $ 11,640.17 lakhs in the current financial year compared to $ 10,681.01 lakhs in the previous year. The effective cash and cash equivalents of the Company at the end of the financial year is $ 763.65 lakhs, as against $ 879.77 lakhs in the previous year. The Company is having a Bank deposit of $ 5,834.82 lakhs (Refer Note no. 19 of Standalone financial statements).

Ratio Analysis

The key financial ratios on a standalone basis are as follows:

Particulars	FY 2024-25	FY 2023-24
Trade Receivable Turnover Ratio	2.63 times	3.91 times
Inventory Turnover Ratio	2.57 times	8.91 times
Current Ratio	2.35 times	1.68 times
Debt-Equity Ratio	0.04 times	0.07 times
Operating Profit margin	34%	19%
Return on Net Worth	13%	1 0%

Companies (Indian Accounting Standards), Rules 2015

In accordance with the Companies (Indian Accounting Standards), Rules 2015 of the Companies Act, 2013, the Company has followed the Indian Accounting Standards (Ind AS) for preparation of its financial statements.

Critical Accounting Policies and Estimates

The preparation of the financial statements requires the Companys management to make several estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the period. When alternatives exist among various accounting methods, the choice of the adopted accounting method can have a significant impact on reported amounts. The following is a discussion of the accounting policies, estimates and judgments which the management believes are most significant in the preparation of the financial statements.

Oil and Gas Properties

We account for crude oil and natural gas properties under the Successful Efforts Method (SEM) of accounting. Under the SEM, costs to (i) acquire mineral interests in crude oil and natural gas properties, (ii) to drill and equip exploratory wells that find commercial quantities of proved reserves, and (iii) to drill and equip development wells are capitalized. Proved property acquisition costs are amortized by the Unit of Production Method on a field by-field basis, based on total proved developed crude oil and natural gas reserves, as approved by the Management Committees of the respective Unincorporated Joint Ventures. Costs associated with drilling successful exploratory wells and drilling development wells are amortized by the Unit of Production Method on a field-by-field basis. These costs, along with support equipment and facilities, are amortized based on proved developed crude oil and natural gas reserves. Survey and seismic acquisition costs are expensed.

Besides being the recommended method under the Guidance Note issued by the Institute of Chartered Accountants of India, the Company believes that the SEM is the most appropriate method to use in accounting for our crude oil and natural gas properties as it provides a better representation of the operational results for a company of our size.

Site Restoration Liability

The Companys Site Restoration Liability consists of estimated costs of dismantling and abandoning producing well sites and facilities, site reclamation and similar activities associated with our oil and gas properties. The recognition of Site Restoration Liability requires that the management makes estimates, assumptions, and judgments regarding such factors as estimated probabilities, amounts and timings of obligation. The corresponding amount is added to the cost of the producing property and is expensed in proportion to the production for the year and the remaining estimated proved reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and reflected as an adjustment to the provision and the corresponding producing property.

Liquidity

At the yean end, HOEC had cash and cash equivalents of $ 763.65 lakhs. Cash surplus is placed in debt-oriented liquid funds and bank deposits. HOEC manages its short-term liquidity to generate returns by investing its surplus funds, while ensuring safety of capital.

Capital Requirements

Your Company has adequate working capital and discretionary capital required for the development of existing oil and gas blocks. The capital required for exploration activities would be met by the internal accruals of the Company. Additionally, the Company is actively seeking inorganic growth opportunities, which will be risk-weighted before making any capital commitments, and the Company may raise additional capital and debt as and when necessary.

Internal Control Systems and their Adequacy

The Company maintains a comprehensive system of internal control. This comprises the management systems, organizational structures, processes, and standards that are implemented to conduct our business operations. The Company has a proper and adequate system of internal control commensurate with the size and nature of business. These systems provide reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, and ensuring compliance with corporate policies.

The Company also conducts periodic evaluations, mainly through its Internal Audit and Statutory Audit teams to determine the adequacy of its internal controls system.

The Company has appointed M/s Guru & Ram LLP, Chartered Accountants, an independent firm with expertise in internal audit and assurance, which inter-alia ensures the adequacy of the procedures of recognizing and managing risks applied by the Management, the effectiveness of the internal controls system and the quality and reliability of the information given to the Management with regards to the System of Internal Controls. The adequacy of the internal controls system is monitored by the Audit Committee, through reports submitted to it. Reports by the Management and the Internal Auditors include assessments of the major risks and the effectiveness of the internal controls system in addressing them.

Systemic weaknesses identified, if any, are incorporated in the reports, including the impact they had or could have had, as well as the actions of Management to correct them. No significant control failures were reported during the year.

As part of the Companys internal control process, any transactions with related parties are approved by the Audit Committee and Board of Directors and appropriately disclosed in the financial statements.

The Companys Information Technology (IT) Department provides the required tools and solutions to all employees to manage the operations with support of IT systems and applications efficiently using internal and external resources.

The Company has internal controls regarding fixed assets, inventories, cash and bank checks, etc., such as physical security, inventory counts and reconciliations of physically counted quantities with the recorded ones. Further, the Company has a schedule of quarterly inventory verification to confirm inventory levels as per accounting records. The Company also has a list of delegated authorities and responsibilities, which depicts assigned authorities to various Company executives, to conduct certain transactions or actions (e.g., payments, receipts, contracts, etc.).

RISK MANAGEMENT

As an upstream oil and gas company operating in both onshore and offshore contract areas, we are inherently exposed to a variety of risks at both surface and subsurface levels. In addition to these operational challenges, the Company faces a range of external factors, including fluctuations in foreign exchange rates, insurance-related risks, complexities associated with joint ventures, competitive pressures, credit risks, transportation, infrastructure challenges, general safety concerns, and legal & regulatory hurdles.

These risks and uncertainties, many of which lie beyond our control, have the potential to impact our business operations, financial stability, and overall reputation. To address these challenges proactively, we are committed to the continuous identification and monitoring of key risks and uncertainties, with the aim of minimizing their impact on our operations.

Our Senior Management team, the Risk Management Committee, and the Board of Directors engage in regular discussions and reviews of the Companys risk profile and management strategies. This collaborative approach ensures that we operate in a manner that effectively mitigates potential risks.

Risk and Response

The key risks which may significantly impact our operational and financial stability and profitability, and the corresponding mitigation strategies are outlined below:

Strategic and Operational Risks:

Risk	Mitigation
Business Model	Our Risk Management Committee along with the Management team and Board Members regularly assess the Companys business model to make necessary adjustments in response to changing economic conditions.
Portfolio Mix	In order to mitigate potential risks, our Company strategically manages a diverse portfolio of oil and gas assets. Maintaining a well-balanced portfolio mix spread across various sedimentary basins and at different stages of the project life cycle, helps us minimize our exposure to geographical, geological, and commodity market risks.
Exploration, Geological and Reservoir Risk	Exploration is a high-risk endeavor, as only a small percentage of exploration wells lead to commercial discoveries. At HOEC, we follow a systematic geo-scientific workflow under internal technical guidance, which is then peer-reviewed by third-party experts. This approach helps us develop a clearer understanding of the assets potential and make informed decisions moving forward, thereby minimizing geological and reservoir risks while maximizing opportunities for success.
Reserves Estimation and Recovery Risk	The process of estimating underground accumulations of crude oil and natural gas involves a high level of technical judgment and relies heavily on the quality of geological and reservoir data. Due to the inherent uncertainties in this process, actual recoverable reserves often differ significantly from initial estimates. Reservoir engineering plays a key role in navigating these uncertainties and ensuring accurate estimations. The Company carefully considers these factors when making decisions regarding resource development and production.
Community Relationship	We have implemented a robust local content policy to ensure that we are actively engaging with our stakeholders. We prioritize hiring local personnel whenever possible and provide support for their skill development. This commitment to the community not only benefits our operations but also fosters a positive and collaborative environment for all involved.

Economic / Financial Risks:

Risk	Mitigation
Commodity Price Volatility	HOEC does not currently use any hedging instruments to manage our oil and gas revenue. By remaining vigilant and proactive in our cost optimization efforts, we aim to mitigate the potential negative impacts of commodity price fluctuations on our Companys financial performance. Additionally, the impact of a declining oil/gas price is partially offset by the production sharing formula in the Production Sharing Contracts (PSCs), which results in an increased share of gross production for the company in a falling oil price scenario due to the cost recovery mechanism in place.
Foreign Exchange Exposure and Interest Rate Risk	HOEC benefits from a natural hedge to a certain extent. This is because a large portion of its receivables and expenditures are denominated in United States Dollars (US$). This helps to reduce the Companys vulnerability to fluctuations in foreign exchange rates and interest rates.
Cost Inflation impacting both Goods and Services	HOEC implements structured planning processes that provide ample time for procuring services and tracking critical path activities. The Company also maintains historical procurement cost data and consistently monitors market changes to stay ahead of potential cost increases.

Health, Safety and Environmental Risks:

Risk	Mitigation
Health, Safety and Environment	Prior to the commissioning of production installations, HOEC conducts HAZOP, HAZID, SIMOPS, and Safety Integrity Level (SIL) studies to identify and mitigate process hazards related to safety and environmental impact. The Company maintains a risk register and an Emergency Response Plan for all operating installations.
	HOEC has established a comprehensive policy on Health, Safety, and Environment, outlining the organizations commitment and approach to managing these aspects in the workplace. The Company adheres to the guidelines set forth by regulatory authorities at both the Central and State levels, and conducts compliance audits regularly.
	Operations are initiated only after Environmental Impact Assessments are prepared and approvals from authorities are obtained. A robust HSE management system is implemented across all HOEC installations.
	In preparation for any potential crises, a Crisis Management Plan (CMP) has been developed, and a Crisis Management Team (CMT) has been formed to ensure safe operations in challenging offshore environments.
Natural catastrophes	HOEC diligently conducts pre-monsoon preparations and consistently maintains its facilities to withstand normal weather variations. Furthermore, the Company conducts regular mock drills and has a strong crisis management system in place to effectively respond to any emergencies.
	HOEC also ensures that appropriate insurance coverage is in place to protect its properties.
Industrial Accidents, Oil spill	Increased focus on health and safety measures, inspections and process assessments, communication assessments and proper emergency response preparation are the key components of mitigating the impact of industrial accidents and oil spills.

Compliance, Ethical and Governance Risks:

Risk	Mitigation
Legal, Regulatory and Litigation	HOECs operations are governed by various laws and regulations. Any changes in regulations could potentially affect the Companys overall value. To mitigate these risks, we conduct proactive assessments and ensure strict compliance with all applicable laws. The Company is currently involved in several ongoing litigations. Adverse rulings in these cases could significantly impact the Companys financial standing.
Ethical Conduct	At HOEC, we place a high value on ethical conduct and strive to maintain transparent and responsible relationships with all our stakeholders. To ensure accountability and integrity within our organization, we have implemented a robust Whistleblower Policy. This policy allows employees to report any unethical behavior directly to the Chairman of the Board, providing a safe and confidential channel for addressing concerns. By fostering a culture of transparency and accountability, we are committed to upholding the highest ethical standards in all aspects of our operations.
Corporate Governance	HOEC acknowledges the critical importance of upholding strong corporate governance procedures and processes. The Company has implemented a robust governance framework to ensure compliance with regulatory guidelines and best practices. The Board regularly reviews and monitors compliance with applicable regulatory guidelines.

Insurance Coverage

Our business operates in an environment characterized by diverse risks. To safeguard against potential financial losses arising from operational hazards such as physical damage, seepage and pollution, employer liability, third-party liability, goods in transit, and comprehensive general liability, we maintain insurance coverage for both our operated and non-operated assets.

This coverage is subject to standard deductibles and recovery limits. We ensure that our insurance levels are not only adequate but also aligned with industry standards. To achieve this, we conduct regular assessments of our risk exposure and evaluate the cost and availability of insurance options. Based on these evaluations, we adjust our insurance program as necessary to provide optimal protection for our business. Additionally, the Company obtains Directors and Officers Liability Insurance to cover expenses related to legal representation.

Overall, HOEC takes a proactive approach to managing the risks that impact its operational and financial performance. We have established comprehensive strategies to mitigate these risks and effectively navigate potential challenges.

TALENT DEVELOPMENT

At HOEC, our primary business objective is to drive transformation through the strategic integration of talent and technology. We are focused on cultivating a pool of exceptionally skilled individuals in our core areas of expertise: Exploration, Drilling, and Development. To enhance our operational efficiency, we have established partnerships with reputed oilfield service providers that possess the scale, resources, and systems necessary to support our initiatives.

Our Company offers a robust platform for talented individuals to nurture their ideas, collaborate effectively, and deliver value that resonates with all stakeholders. Our commitment to creating sustainable stakeholder value is linked to our ability to attract, motivate, and retain top-tier talent. To this end, we continuously strengthen our technical talent pool by engaging experienced professionals on both full-time and part-time basis.

We are dedicated to fostering a supportive and dynamic work environment where employee engagement thrives. We value work-life balance and actively embrace gender diversity within our workforce. Our unwavering commitment to developing and deploying individuals with the requisite skills, capabilities, and determination is essential in achieving our business objectives. Advancement opportunities are based on performance and aptitude, ensuring a fair and equitable playing field for all employees.

STRATEGIES FOR SUSTAINABLE OPERATIONS

As India positions itself as a pivotal player in the global energy sector, the intricate balance between economic growth and environmental conservation becomes increasingly vital. Hence, it is essential to enhance energy supply while effectively addressing the challenges associated with both onshore and offshore oil and gas exploration. This must be pursued alongside a steadfast commitment to environmental stewardship in the quest for sustainable development.

At HOEC, we are driven by our vision to become the finest Independent Oil and Gas Company, dedicated to transforming the interests of all stakeholders through the integration of Talent and Technology. We are committed to building a robust organization that creates long-term stakeholder value while we Grow Responsibly. Our aim is to uphold the highest standards of corporate behavior towards all stakeholders and the local communities in which we operate.

We firmly believe that All Lives Have Equal Value, and ensuring safety of all concerned parties is of paramount importance. To monitor our Health, Safety, and Environmental (HSE) performance, we generate comprehensive statistics, both leading and lagging indicators, for each operational site on a monthly basis. Additionally, we conduct Environmental Impact Assessments (EIA) to evaluate the environmental and social implications of our activities, including assessments of ambient air quality, groundwater, surface water, soil quality, and emissions. These studies are crucial for securing the necessary approvals from the Ministry of Environment, Forests, and Climate Change.

We have implemented a robust Emergency Response Plan (ERP) for our production operations, drilling campaigns, and project execution activities to ensure swift response in the event of an emergency. We also conduct monthly mock drills to assess the efficacy of our emergency response procedures.

In the financial year 2024-25, HOEC has continued to uphold a strong health and safety record. We have implemented specialized training programs focused on Job Safety Awareness (JSA) and Risk Assessment, alongside various Health, Safety, and Environment (HSE) awareness campaigns at our operational sites.

This information has been provided in accordance with the guidelines set forth by the Securities and Exchange Board of India in the Business Responsibility and Sustainability Report (BRSR), which is included as part of this Annual Report.

BUSINESS OUTLOOK

As we look ahead to fiscal year 2025-26, the outlook for oil and gas companies in India presents a complex landscape of both opportunities and challenges. The sector is undergoing significant transformation in response to evolving market dynamics, regulatory changes and technological advancements. Coupled with the increasing demand for energy and the growing emphasis on sustainable alternatives, upstream oil and gas companies must navigate the delicate balance of optimizing profitability while investing in sustainable practices.

At HOEC, we are strategically positioned for long-term success by prioritizing the conversion of the resources identified within our asset portfolio. By embracing industry best practices, leveraging new technologies, and fostering collaboration with key stakeholders, we are dedicated to contributing to a more sustainable energy future. As a result, we are well-equipped to thrive in the evolving energy landscape.

Note:

In preceding sections of this Annual Report, in particular the Boards Report and Managements Discussion and Analysis Report:

a. previous year figures were re-grouped to confirm to the current year presentation; and

b. figures have been rounded off.