Details Share Capital - Authorised Share Capital - Paid up Intrinsic Value per Share Dividend Earnings Per Share (EPS) Net Worth Sales / Operational Income Profit before tax Profit after tax Capital Employed Return on-capital employed Debt : Equity
Unit Rs. Million Rs. Million Rs. % Rs. Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million % Ratio
2000-2001 2500 2140 144* 80 22 30770 20242 6014 4674 30018 15.57 0.09:1
2001-2002 2500 2140 161 75 25 34417 18960 8032 5252 33264 15.79 0.08:1
2002-2003 2500 2140 162 130 43 34569 28968 13406 9167 40730 22.51 0.07:1
2003-2004 2500 2140 188 140 44 40287 31450 14817 9497 45729 20.77 0.07:1
2004-2005 2500 2140 220 160 50 47107 38880 16231 10617 51953 20.44 0.07:1
2005-2006 2500 2140 273 265 79 58483 55502 26744 16899 59167 28.56 0.06:1
2006-2007 2500 2140 320 260 77 68491 53892 24826 16400 71413 22.97 0.12:1
2007-2008 5000 2140 371 275 84 79330 60819 27134 17889 73932 24.20 0.02:1
2008-2009 5000 2140 436 305 101 93310 72414 33870 21617 89192 24.24 0.006:1
Annual Report 2008-09
Annual Report 2007-08
Annual Report 2006-07
Annual Report 2005-06
Annual Report 2004-05
Annual Report 2003-04
Dear Shareholders,
It gives me great pleasure to extend a warm welcome to all of you to the 50th Annual General Meeting of your Company. Th e Annual Report for the year ended 31st March 2009, along with the Report of the Directors and Audited Accounts for the year ended 31st March, 2009, has already been circulated. With your permission, I shall take these as read.
Your Company completed 50 glorious years of its existence on 18th February, 2009. All of us are indeed proud to be a part of the Company in its long and eventful journey.
Industry Scenario
The year 2008-09 has been a difficult period in the Hydrocarbon Industry worldwide. We saw continued high demand for oil in emerging markets like India and China. It is also a fact that production is declining in certain regions where fi elds are maturing. Th e fall in oil prices has been quite rapid since the Indian crude basket climbed to the highest level of US$ 142.04 per barrel on July 3, 2008 and slumped to US$ 35.83 per barrel on December 24, 2008. In India, the demand for oil is increasing continuously and our country is importing 128.155 MMT of crude oil which is around 77% of its demand. Th is is expected to increase further in future. Th e country’s crude oil import bill was US$ 75.70 Billion in 2008-09 as against US$ 67.988 Billion last year. Your Company is putting all its efforts and resources to supplement the energy demands of the nation by increasing exploration and production activities.
Company Scenario
The year was full of challenges and struggles, but every Oilindian contributed in overcoming these challenges, stimulating change and growth in every facet of your Company’s operations.
Your Company is the second largest national oil and gas Company in India as measured by total proved plus probable oil and natural gas reserves and production for the year 2008-09. Besides the nominated PELs and MLs, your Company is now operating in India with 3 pre-NELP JV blocks (1 production and 2 exploratory) and 24 NELP blocks besides having participating interest in 17 Blocks in 7 countries overseas.
For fiscal 2009, the Company’s gross production amounted to approximately 24.95 million barrels of oil (3.47 MMT) and approximately 2.27 billion cubic meters of natural gas. Th is is approximately 10.41% and 6.91% of India’s total production of crude oil and natural gas, respectively.
Performance Recognition
You will be happy to know that your Company performed resiliently in an environment characterized by volatility in energy sector, oscillating crude oil prices and indications of a depressing market. Th e Company registered growth and came out with better results.
During the year, Dalal Street investment journal awarded your Company the “PSU with the highest Book Value award”. Th e award was given in a ceremony in Delhi by Mrs. Shiela Dixit, Chief Minister of Delhi. Your Company also received the prestigious Greentech Environmental Excellence Gold Award – 2008 for its eff orts in green movement and environmental protection in its oil fields.
You will be pleased to know that during the year your Company was honoured by the MOP&NG at the inaugural function of Oil Conservation Fortnight, OGCF-2008 at New Delhi, with the Best Overall Performance Award amongst upstream sector oil companies, for the activities carried out during Oil and Gas Conservation Fortnight-2008.
Four drilling rigs S-2, S-3, S-4 and S-7 of your Company were accredited with ISO 9001-2000 certification.
The Company’s 190-bed hospital (Oil India Hospital) at its fi eld headquarters was accredited with the Integrated Management System Certifi cation (ISO9001:2000, ISO 14001:2004 and ISO 18001:2007) during the year. We believe, Oil India Hospital is the fi rst public sector hospital in the north-east to be ISO accredited.
Physical Performance
In comparison with the previous year’s crude oil production of 3.10 MMT, this year the production is 3.47 MMT, an increase of over 12% compared to 2007- 08. Th is is the highest ever crude oil production achieved by your Company. Natural gas production was 2268.38 MMSCUM as compared to 2340.46 MMSCUM last year. While your Company achieved the highest daily rate of natural gas production of 6.43 MMSCMD from Assam and Arunachal Pradesh, the overall production during the year was lower due to less off take by consumers. LPG production was 47610 tonnes. Your Company has also increased its daily production potential of Natural Gas from Rajasthan to 0.93 MMSCMD. All these could be achieved despite the environmental problems in some of our major operational areas.
I am happy to state that the crude oil production since April, 2009, has also increased substantially and the production rate now is around 3.56 MMTPA. Further, the Company has since achieved highest ever natural gas production rate of 6.67 MMSCMD in Assam and Arunachal Pradesh.
Your Company continued to give more emphasis on 3D seismic survey and 3495 SQKM of 3D seismic data was acquired during the year which is the highest ever and about 305 % higher than that acquired in 2007-08. Your Company also completed acquisition and processing of fi rst ever 4D seismic survey over Dikom fi eld.
In overseas operations your Company completed 721 GLKM of 2D Seismic survey in Gabon and an additional 279 GLKM of 2D survey is being completed in 2009-10. 3D acquisition of 700 SQKM in Libya was also completed during the year and two wells are planned to be drilled in Libya during 2009-10.
As of March 31, 2009, the Company’s estimated independent proved plus probable crude oil reserves were approximately 577.47 million barrels and proved plus probable natural gas reserves were approximately 63.41 billion cubic meters. In addition your Company has a participating interest of 8.19 million barrels of proved plus probable reserves in the Kharsang fi elds in the Assam- Arakan basin in the State of Arunachal Pradesh.
Your Company made four discoveries during the year in the State of Assam. These discoveries were in West Madhuting Structure, West Makum, Madhuting Structure and in Mechaki West. Mechaki is a signifi cant discovery in upper Assam with a commercial oil and gas strike at a depth of more than 5556 m, one of the deepest commercial hydrocarbon discoveries in the country. In the discovery well (Mechaki Well No.2), a number of prospective oil and gas bearing sands with a total net hydrocarbon pay of about 50 m have been encountered. The well has been tested to a production potential of over 1000 barrels of oil equivalent per day. Th is signifi cant discovery has opened up adjoining areas for further exploration of deep seated hydrocarbon prospects.
The achievement of drilling meterage during the year was 1,15,867 m. Four new charter hire rigs in addition to two existing charter hire rigs have become operational, taking the total number of drilling rigs to 17 (Seventeen). During the last quarter itself your Company drilled 38369 m compared to 25511 m during the same period last year. During the year, three J-Bend and three Horizontal wells were drilled with encouraging results. We will continue induction of new technologies like J-Bend and Horizontal drilling and these eff orts are expected to substantially increase the drilling meterage and production.
Your Company’s improved quality control initiatives have helped to bring down the percentage of suspended water in delivered crude to refi neries to 0.42 % by weighted average, a signifi cant improvement compared to 0.46% in 2007-08. Eff orts are still on to bring down the same to the minimum extent possible to match international standards.
Financial Performance
Your Company’s total income for the year 2008-09 reached a level of Rs.8137.88 crores as compared to Rs 6795.46 crore for the previous year. The profit after tax at Rs.2161.68 crores is the highest ever earned by your Company inspite of sharing a very high subsidy burden on crude oil and LPG and paying higher amount of statutory levies compared to previous year. Th e total subsidy share was Rs. 3023.28 Crores in 2008-09, compared to Rs. 2305.09 Crores in 2007-08, which works out to an increase of 31.16 %. Net worth of your Company increased to Rs. 9331 crores up by 17.6 % over the previous year of Rs. 7933 crores.
You will be happy to learn that for the year 2008-09, your Board of Directors has recommended a fi nal dividend of 155%. Th is is over and above the interim dividend of 150%. Th e total dividend of 305% works out to Rs. 652.71 crores. Your Company had paid 275% dividend during the year 2007-08.
Your Company also made substantial contribution both to the State and Central exchequer in terms of Cess, Royalty, Sales Tax etc. Th e contribution to the State Exchequer during the year was Rs. 1314.63 crores and that to the Central Exchequer was Rs. 2862.72 crores.
Strategy and Thrust
Exploration and Production Your Company continues to pursue its aggressive Exploration, Development and Production Strategy through stepping up seismic survey activities, augmenting exploratory, delineation and development drilling and optimal exploitation of production potential.
Your Company has 24 NELP Blocks out of which it is the operator in 12 Blocks and these include 4 blocks acquired under NELP-VII round bidding during the year. Th ese blocks are located across the nation and your Company has initiated action to undertake all activities for timely completion of the Minimum Work Programme.
Today your Company has a total acreage of 1,60,959 Sq Km and most of these are in Category I basin.
The Baghewala field in Rajasthan has around 131 MMT (Indicated Category) of oil-in-place in its upper carbonate and lower Bilara + Jodhpur sand stone reserves. Exploitation of this heavy oil reserves is a priority of your Company. Th e fi rst pilot well for this was drilled under technical collaboration with M/s PDVSA of Venezuela and testing of the same remained inconclusive. Your Company has now initiated actions for setting up alternate arrangements for experimental cold production of heavy oil
. Natural Gas is another area of priority for your Company. OIL is presently producing around 6.40 MMSCMD of natural gas from its Upper Assam & AP fi elds to meet its internal requirement and market commitment of 5.475 MMSCMD. Your Company has committed to supply 1.0 MMSCMD natural gas to Numaligarh Refi nery by 2009-10 and 1.35 MMSCMD natural gas (feedstock+fuel) to Brahmaputra Cracker and Polymer Ltd. from 2011-2012. Your Company plans to enhance its natural gas production potential from the present level to 10.0 MMSCMD in the north-east mainly from non-associated gas source to meet the future requirement of natural gas, compensation for calorifi c value to consumers in post cracker scenario and cushion gas required for operational fl exibility. In order to meet this demand your Company has initiated a time bound action plan for development of Non-Associated Gas fi elds and distribution network infrastructure.
In Rajasthan, the gas produced from Tanot, Dandewala & Bagitibba is being supplied to RRVUNL through GAIL’s pipeline for generation of electricity. New gas supply agreement has been entered with RRVUNL with enhanced price of gas for supply @ 0.90 MMSCMD against the current withdrawal level of approximately 0.654 MMSCMD for a three (3) year period. To meet with the enhanced gas demand, three development gas wells were drilled during 2008-09 in Dandewalla area. Your Company has reached the highest ever daily production potential of 0.93 MMSCMD in Rajasthan.
Overseas Participation
Your Company now has overseas presence in eight countries, with acreage of 41273 SqKms. During 2008-09, your Company in consortium with GSPC and HPCL was successful in winning 2 blocks, Block Nos. 3 and 4, in the last bid round off ered by GANOPE, Egypt.
In Areas 86 and 102/4 in Libya (comprising of 5 Blocks), your Company has 50% Participating Interest (PI) as operator & IOCL-50% PI. Five blocks in these areas are in fi rst phase of exploration. Acquisition, Processing and Interpretation of 2D and 3D seismic has been completed. You will be happy to note that it is proposed to spud the fi rst well during the third quarter of 2009-10. Your Company in consortium with IOCL and M/s SONATRACH, Algerian National Oil Company was awarded area 95 and 96 (comprising of 4 blocks - 6934 sq km). Th e consortium is led by Sonatrach (50 %-Operator) with OIL & IOCL 25 % each. Acquisition of 2D & 3D seismic data is planned in 2nd quarter of 2009-10.
In Gabon Shakhti Block, your Company has completed 2D survey data acquisition of about 700 GLKM in the area. Processing and interpretation of the data is currently being undertaken. Based on results of 2D data interpretation, 3D seismic survey is planned prior to taking up drilling activities.
We had last year mentioned about commercial gas discovery in an Exploration Service Contract for Farsi Off shore Block, Iran, where your Company has 20% PI as a member of the consortium led by OVL. Th e consortium is now in discussion with National Iranian Oil Company (NIOC) and Iran Off shore Oil Company (IOOC) on its development plan.
In Sudan, the construction of the product pipeline has been completed and the same was handed over to the Ministry of Energy and Mines (MEM), Sudan. Your Company has 10% PI in the pipeline. Th is pipeline has already started generating revenue. Seven installments towards repayment from the Ministry of Energy and Mines have been received.
Your company also has 17.5% PI in one block in Nigeria, 15% PI in two blocks in Yemen and 12.5% PI in one deepwater off shore Block in East Timor where we have farmed in with Reliance Industries Ltd.
Besides looking for acquisition of producing/discovered E&P blocks, your Company is also actively pursuing acquisition of companies having a good portfolio of exploration acreages and producing assets.
Diversification
During the year the Company generated revenue by providing laboratory, rental or expert consultative services to a number of E&P operators. Th e Business Development and Th ird Party Projects Group is continuously scouting for E&P business both in-country and overseas. Flow of large number of enquiries and tenders from national and international companies for providing E&P services shows an optimistic scenario and scope for business expansion through Business Development initiatives.
NRL-Siliguri Product Transportation Pipeline Th e Numaligarh-Siliguri Product pipeline has been commissioned and product upliftment has started. Your Company expects to generate revenue of more than Rs. 100 Crores per annum from this pipeline.
Dry Leasing of Dark Fibre (OFC) Till date 3108 pair route kilometer of dark fi bre of pipeline department has been commercialized by leasing the same to diff erent telecom operators in the States of Assam and West Bengal. Th is has earned revenue worth Rs. 1070.31 lakhs for your Company.
City Gas Business Your Company has signed MoUs with GAIL, IOCL and BPCL to pursue City Gas business and proposes to participate in future rounds of City Gas supply contracts which will be off ered from time to time.
Technology Performance
Your Company is continuously striving for enhancing technological capabilities for exploration success, enhanced production, operational improvement and efficient performance. Your Company’s Technology Management Team (TMT) continuously scouts for technologies suitable for oil fi eld operations resulting in production enhancement and cost reduction. Th e following are some of the technologies absorbed / upgraded during the year.
Th e existing geologic modelling software PETREL was upgraded to PETREL 2009 which now makes it possible to work on multiple regional 2D and 3D datasets under the same canvas.
Your Company acquired an Integrated Irap RMS solution which allows multiple disciplines to work together in parallel leading to acceleration of the fi eld development planning cycle.
An E&P Field Development Centre equipped with state-of-the-art industry standard software, hardware and aesthetic working environment is now fully functional at Duliajan.
Use of microbial paraffi n remediation technique to minimize wax deposition in tubing.
New state-of-the-art IP based Avaya make survivable media gateways (mini exchanges) have been installed at Digboi, Kharsang, Manabhum, South Bank, Tengakhat, Dikom and Kathalguri replacing cable network and nearly obsolete MART communication system.
Video conferencing facility has been established between Corporate Offi ce, NOIDA and Duliajan office.
Document Management System (DMS) has been created for maintaining land records.
The latest 2D and 3D drawing software AUTOCAD 2009 with 10 nos. of work stations were installed in the Design, Drawing and Survey section of Civil Engineering department.
Human Resource – Our Asset
I am proud to say that your Company has a strong team of employees who through their competence and commitment are giving shape to our dreams and building of a new future for your Company. Your Company through its policies has always encouraged its workers to innovate and apply new ideas so as to achieve quantum leaps in both size and scale of operations. Th e Company’s Human Resources philosophy is to establish, build and retain a strong performance and competency driven culture with greater sense of accountability and responsibility. Towards this end, your Company, as a matter of practice, recruit professionally qualified persons through open advertisements and has a host of welfare measures for the benefit of its employees and their families.
Your Company provides regular and periodic training and development to help its employees acquire new knowledge and skills necessary for them to perform better in their present and future roles.
Revision of pay scale for executives of your Company has been approved by Govt. with effect from 1st January 2007, which is under implementation.
A Task Force is working to formulate a policy on an eff ective system of recognition of performance and reward. The Task Force has combined inputs from questionnaire, random group discussions, benchmarking with 6 nos. of PSU and Private sectors and various other feedbacks. It is now in the final stage of approval.
An on-line property return system “e-Sampatti” has been introduced through the intranet portal OILWEB. Th is has made easy accessibility of submitted data by the user, as well as by the Personnel and Vigilance departments.
A new suggestion scheme was introduced in the organization from 22.12.2008. Th is is aimed at generation of ideas and suggestions from workpersons and officers for improved work safety processes, better quality of work life etc. leading to enhanced productivity for the organization.
Health, Safety, Environment and CSR Initiatives
Your Company has always committed itself to conducting business with a strong commitment for environment preservation, sustainable development, safe workplaces and enrichment of the quality of life of its stakeholders and the community at large. Your Company has sustained focus on HSE matters. We have improved our performance on safety related issues and tried to inculcate safety as a way of life amongst all our own and contractor’s employees. The health of our employees is very close to our heart. We continue to provide excellent quality medical and health services to all our employees and their families. Our performance on sustainable development and green environment issues has benefited by the selection and adoption of non-polluting technologies in all our operations. The extensive awareness and commitment among our people for protection of the environment has helped us to innovate and go beyond mere compliance levels.
Your Company’s social welfare and community development initiatives focus on the key areas of education, healthcare and the overall development of basic infrastructure for the benefi ts of the neighbouring localities in its operational areas.
The Company continues to invest considerable financial support annually through its ongoing schemes viz ., “Social Welfare Scheme ”, “Area Development Scheme” and OIL –SIRD initiatives which cover a wide range of activities like constructions of roads, setting up of educational institutions, promotion of various agro-based activities and sports. The above schemes cover about 1,400 villages under its extended operational areas. Your Company continues with renewed vigour its eff ective mobile dispensary services. A number of educational, health and socio-cultural institutions of repute have been important benefi ciaries of your Company’s well thought out CSR contributions. Your Company has so far been contributing around 0.75% to 1 % of its net profit towards CSR activities.
All these sustainability initiatives go a long way in strengthening OIL’s role as an active member of the Global Compact Programme of the United-Nations.
Growth Vision
With India’s energy needs projected to grow by 30% in the next five years, the future is indeed exciting and full of promise for your Company. Initiatives have been taken towards transformation of OIL to a learning organization with inherent fl exibility to adapt to changes. OIL nurtures the Vision to become a global player across the oil & gas value chain, which is possible with its positive approach and with the help of its committed workforce.
IPO
As informed in the last AGM, your Company was to come out with its IPO last year. However due to the volatile market conditions it had to be deferred. As the market conditions have improved and a stable Government is in place it is the right opportunity for us to come out with our IPO and accordingly we have relaunched the activities pertaining to IPO. Th e Company has now fi led its updated Red Herring Prospectus with SEBI. Th e listing would give your Company more visibility and unlock the real value of your Company.
Corporate Governance
Your Company reiterates its commitment towards the pursuance of highest standards of Corporate Governance in the overall interests of all stakeholders of the Company. We are also very happy to reiterate that Six Independent Directors have been inducted in the Board of your Company. Th eir rich experience and knowledge will help the Company to achieve greater heights. With the induction of six independent directors and formation of Board Committees, each of which is chaired by one of them, the principles of integrity, transparency, accountability and value creation will be further strengthened.
Before I conclude I would like to state that it is my privilege to preside over my fi rst AGM as Chairman and Managing Director of your Company. I am sure it will be an enriching experience with such informed shareholders. My best wishes to you all.
Acknowledgements
In conclusion, on behalf of the Board of Directors of your Company I thank all our stakeholders for their continued support ,whose trust and confi dence are pillars of strength in all our endeavours.
I would like to thank all members of the OIL family for their tremendous dedication and passion that they have shown in carrying forward all our activities. Th e Board wishes to thank the Government of India and the various State Governments for their valuable support and guidance in your Company’s business. We are confi dent of continuing to have the full support and cooperation of all our stakeholders in the current fi scal too, as we make all-out eff orts for success in another challenging year.
Jai Hind
Dated: 17.08.2009
Place: Duliajan
Sd/-
(N.M. Borah)
Chairman & Managing Director
Share Holding Pattern
Face Value Rs 10 Each
No of Shares
President of India 21,00,00,000
Employees & Others 40,04,400
Total 21,40,04,400
Total Share Capital Rs. 214,00,44,000
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