Top Companies in Oil and natural Gas Sector

Indian Oil Company Ltd

– Incorporated on 30th June, 1959 as Indian Oil Company Limited

– merger of Indian Refineries Limited, which was earlier established in

1958 to set up refineries and pipelines.

–Subsequently Name of the Company Changed to Indian Oil Corporation.

–Operations now include refineries, pipelines and marketing.

–Domestic portfolio includes 9 Oil and gas blocks and 2 Coal bed methane
blocks

–Overseas portfolio consists of 9 blocks spread across Libya, Iran, Gabon,

Nigeria, Timor-Leste and Yemen.
 Hindustan Petroleum Corporation Limited
(HPCL)

• A corporation, relating with the business of oil

refining and marketing is known as Hindustan
Petroleum Corporation Limited (HPCL) from the
year 1974. Before it was called as Standard
Vacuum Refining Company, then it was ESSO
India, When ESSO and Lube India were
nationalised, the company was renamed to
HPCL. A Fortune 500 company, is one of the
major integrated refining and marketing oil
company in India. It is a mega Public Sector
Undertaking (PSU) with Navratna status.
 Indian Oil Corporation - Balance Sheet
Balance Sheet in Rs. Cr.
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Sources Of Funds `
Total Share Capital 1,168.01 1,168.01 1,192.37 1,192.37 2,427.95
Equity Share Capital 1,168.01 1,168.01 1,192.37 1,192.37 2,427.95
Share Application Money 0.00 24.36 0.00 21.60 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 28,134.66 33,664.92 39,893.88 42,789.29 48,124.98
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 29,302.67 34,857.29 41,086.25 44,003.26 50,552.93
Secured Loans 7,793.54 5,671.42 6,415.78 17,565.13 18,292.45
Unsecured Loans 18,610.77 21,411.27 29,107.39 27,406.93 26,273.80
Total Debt 26,404.31 27,082.69 35,523.17 44,972.06 44,566.25
Total Liabilities 55,706.98 61,939.98 76,609.42 88,975.32 95,119.18
 Indian Oil Corporation - Balance Sheet

Application Of Funds 05-06 06-07  07-08  08-09   09-10

Gross Block 43,662.84 54,770.29 56,731.50 62,104.64 71,780.60
Less: Accum. Depreciation 18,639.42 21,400.07 23,959.68 27,326.19 30,199.53
Net Block 25,023.42 33,370.22 32,771.82 34,778.45 41,581.07
Capital Work in Progress 9,620.03 4,394.30 9,170.22 18,186.05 21,268.63
Investments 14,521.39 19,990.86 21,535.78 32,232.13 22,370.25
Inventories 24,277.79 24,702.69 30,941.48 25,149.60 36,404.08
Sundry Debtors 6,699.48 6,736.06 6,819.23 5,937.86 5,799.28
Cash and Bank Balance 729.54 916.24 815.05 796.56 1,315.11
Total Current Assets 31,706.81 32,354.99 38,575.76 31,884.02 43,518.47
Loans and Advances 10,729.93 11,601.54 14,920.93 13,348.99 15,870.43
Fixed Deposits 14.63 9.73 9.38 1.46 0.00
Total CA, Loans & Advances 42,451.37 43,966.26 53,506.07 45,234.47 59,388.90
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 28,377.36 32,305.52 39,326.07 38,890.28 39,236.28
Provisions 7,589.38 7,633.41 1,172.99 2,603.46 10,271.56
Total CL & Provisions 35,966.74 39,938.93 40,499.06 41,493.74 49,507.84
Net Current Assets 6,484.63 4,027.33 13,007.01 3,740.73 9,881.06
Miscellaneous Expenses 57.51 157.27 124.59 37.96 18.17
Total Assets 55,706.98 61,939.98 76,609.42 88,975.32 95,119.18
 Indian Oil Corporation – Profit & Loss a/c
Profit & Loss account in Rs. Cr.
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover 193,216.88 238,348.37 270,410.49 329,806.88 291,201.10
Excise Duty 18,321.76 21,849.52 23,051.25 22,682.89 21,834.76
Net Sales 174,895.12 216,498.85 247,359.24 307,123.99 269,366.34
Other Income 1,605.16 3,810.01 3,128.54 -2,905.92 6,623.67
Stock Adjustments 2,599.33 -180.73 1,958.09 -1,674.56 5,044.25
Total Income 179,099.61 220,128.13 252,445.87 302,543.51 281,034.26
Expenditure
Raw Materials 159,012.86 193,290.80 223,214.64 273,708.98 240,712.77
Power & Fuel Cost 218.29 291.31 357.82 447.19 369.45
Employee Cost 1,799.23 2,586.80 2,894.86 5,686.96 5,741.05
Other Manufacturing Expenses 742.93 821.56 1,200.32 1,053.32 8,101.82
Selling and Admin Expenses 7,435.51 8,528.96 10,084.29 10,709.66 0.00
Miscellaneous Expenses 867.22 526.75 642.54 804.51 7,031.91
Preoperative Exp Capitalised -406.74 -542.83 -403.58 -544.01 0.00
Total Expenses 169,669.30 205,503.35 237,990.89 291,866.61 261,957.00
 Indian Oil Corporation – Profit & Loss a/c

Operating Profit 7,825.15 10,814.77 11,326.44 13,582.82 12,453.59

PBDIT 9,430.31 14,624.78 14,454.98 10,676.90 19,077.26

Interest 995.44 1,496.25 1,589.73 4,020.98 1,526.46

PBDT 8,434.87 13,128.53 12,865.25 6,655.92 17,550.80

Depreciation 2,201.46 2,590.31 2,709.70 2,881.71 3,227.14

Other Written Off 10.47 113.43 236.53 317.64 133.98

Profit Before Tax 6,222.94 10,424.79 9,919.02 3,456.57 14,189.68

Extra-ordinary items 498.45 76.73 178.64 915.26 -61.79

PBT (Post Extra-ord Items) 6,721.39 10,501.52 10,097.66 4,371.83 14,127.89

Tax 1,790.38 2,949.46 3,104.54 1,364.71 3,885.54

Reported Net Profit 4,915.12 7,499.47 6,962.58 2,949.55 10,220.55

Total Value Addition 10,656.44 12,212.55 14,776.25 18,157.63 21,244.23

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,460.02 2,250.89 655.81 910.48 3,156.34

Corporate Dividend Tax 204.77 361.72 76.48 154.74 508.83

Per share data (annualised)        

Shares in issue (lakhs) 11,680.12 11,680.12 11,923.74 11,923.74 24,279.52

Earning Per Share (Rs) 42.08 64.21 58.39 24.74 42.10

Equity Dividend (%) 125.00 190.00 55.00 75.00 130.00

Book Value (Rs) 250.88 298.22 344.58 368.86 208.21

 Hindustan Petroleum Corporation - Balance Sheet
Balance Sheet in Rs. Cr.
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 338.94 338.95 339.01 339.01 339.01
Equity Share Capital 338.94 338.95 339.01 339.01 339.01
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 8,396.80 9,259.70 10,224.28 10,391.62 11,218.96
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 8,735.74 9,598.65 10,563.29 10,730.63 11,557.97
Secured Loans 1,486.16 1,005.48 1,118.48 698.49 1,375.88
Unsecured Loans 5,177.67 9,512.05 15,668.22 22,056.68 19,926.49
Total Debt 6,663.83 10,517.53 16,786.70 22,755.17 21,302.37
Total Liabilities 15,399.57 20,116.18 27,349.99 33,485.80 32,860.34
Hindustan Petroleum Corporation - Balance Sheet

Application Of Funds        
Gross Block 13,479.25 15,638.48 19,570.05 20,208.63 24,988.37
Less: Accum. Depreciation 6,141.85 6,817.64 7,640.77 8,554.08 9,681.70
Net Block 7,337.40 8,820.84 11,929.28 11,654.55 15,306.67
Capital Work in Progress 2,363.88 4,243.56 3,315.95 5,001.27 3,887.59
Investments 4,027.64 7,127.47 6,837.05 14,196.47 11,387.22
Inventories 7,810.29 8,098.40 12,020.28 8,793.24 12,579.22
Sundry Debtors 1,392.26 1,577.78 1,710.67 2,240.91 2,437.34
Cash and Bank Balance 39.48 83.55 290.47 604.43 243.17
Total Current Assets 9,242.03 9,759.73 14,021.42 11,638.58 15,259.73
Loans and Advances 1,844.64 1,826.96 5,470.43 4,620.23 5,382.21
Fixed Deposits 3.11 3.24 3.54 3.88 0.00
Total CA, Loans & Advances 11,089.78 11,589.93 19,495.39 16,262.69 20,641.94
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 8,855.99 10,437.90 13,670.11 12,411.59 16,257.87
Provisions 563.14 1,227.72 557.57 1,217.59 2,105.21
  Total CL & Provisions 9,419.13 11,665.62 14,227.68 13,629.18 18,363.08
Net Current Assets 1,670.65 -75.69 5,267.71 2,633.51 2,278.86
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 15,399.57 20,116.18 27,349.99 33,485.80 32,860.34
Hindustan Petroleum Corporation - Profit & Loss a/c

Profit & Loss account in Rs. Cr.

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Income
Sales Turnover 77,489.96
`
97,647.32 112,098.27 131,802.65 114,888.63
Excise Duty 6,059.34 7,922.29 7,785.28 6,867.82 7,588.25
Net Sales 71,430.62 89,725.03 104,312.99 124,934.83 107,300.38
Other Income 319.95 572.71 928.76 486.62 1,646.16
Stock Adjustments 1,408.96 243.55 2,355.87 -1,836.78 3,249.96
Total Income 73,159.53 90,541.29 107,597.62 123,584.67 112,196.50
Expenditure
Raw Materials 67,942.13 82,875.69 100,436.36 114,637.24 100,716.07
Power & Fuel Cost 18.67 13.94 17.01 19.02 248.21
Employee Cost 690.77 729.42 867.66 1,137.19 1,617.32
Other Manufacturing Expenses 290.26 261.34 299.27 416.21 255.62
Selling and Admin Expenses 2,696.69 3,162.29 2,739.78 3,091.99 0.00
Miscellaneous Expenses 383.73 398.88 457.51 495.31 5,169.94
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 72,022.25 87,441.56 104,817.59 119,796.96 108,007.16
• Hindustan Petroleum Corporation - Profit & Loss a/c

Operating Profit 817.33 2,527.02 1,851.27 3,301.09 2,543.18

PBDIT 1,137.28 3,099.73 2,780.03 3,787.71 4,189.34

Interest 160.82 426.34 794.30 2,084.13 903.75

PBDT 976.46 2,673.39 1,985.73 1,703.58 3,285.59

Depreciation 688.97 704.00 850.82 981.29 1,164.40

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 287.49 1,969.39 1,134.91 722.29 2,121.19

Extra-ordinary items 220.05 309.03 386.96 138.68 -53.67

PBT (Post Extra-ord Items) 507.54 2,278.42 1,521.87 860.97 2,067.52

Tax 99.52 698.97 382.40 275.92 766.15

Reported Net Profit 405.63 1,571.17 1,134.88 574.98 1,301.37

Total Value Addition 4,080.12 4,565.87 4,381.23 5,159.72 7,291.09

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 101.80 610.80 101.59 177.78 406.35

Corporate Dividend Tax 14.28 97.75 17.26 30.21 67.49

Per share data (annualised)        

Shares in issue (lakhs) 3,393.30 3,393.30 3,393.30 3,393.30 3,386.27

Earning Per Share (Rs) 11.95 46.30 33.44 16.94 38.43

Equity Dividend (%) 30.00 180.00 30.00 52.50 120.00

Book Value (Rs) 257.44 282.87 311.30 316.23 341.32

 Accounting Policy
FIXED ASSETS – Land
• Acquired on perpetual lease as well as on lease for over
99 years is treated as free hold land.
• Land acquired on lease for 99 years or less is treated as
leasehold land.
• Cost of lease hold land for 99 years or less is amortised
during the lease period.
Construction Period Expenses on Projects
• Revenue expenses exclusively incurred for the project
during construction period are capitalised.
• Expenditure incurred on Research & Development ,other
than on capital account, is charged to Revenue.
• Cost of Right of Way for laying pipelines is capitalised.
 Cost of Right of Way
• Each year, thousands of individuals and companies
apply to the Bureau of Land Management (BLM) to
obtain a right-of-way (ROW) on public land.
 
A ROW grant is an authorization to use a specific piece
of public land for a certain project, such as roads,
pipelines, transmission lines, and communication sites. A
ROW grant authorizes rights and privileges for a specific
use of the land for a specific period of time. Generally, a
BLM ROW is granted for a term appropriate for the life of
the project.
 Valuation of INVENTORY

• Raw Materials
• Raw materials include mainly crude oil
• Valued at cost determined on weighted average basis or net
realizable value, whichever is lower.
• Stock in Process- valued at raw material cost + conversion
costs as applicable or net realizable value, whichever is lower.
• Stock-in-Trade - Finished products, other than lubricants, are
valued at cost determined on First in First Out basis or net
realisable value, whichever is lower.
• Stores and Spares : Valued at weighted average cost.
• Specific provision is made in respect of identified obsolete
stores & spares and chemicals for likely diminution in value.
• OIL & GAS EXPLORATION ACTIVITIES
• a) Survey costs are expensed in the year of incurrence.
b) Acquisition cost, cost of incomplete / undecided
exploratory wells and development costs are carried as
capital work in progress till the time these are either
transferred to producing properties on completion or
expensed in the year when determined to be dry, as the
case may be.
• c) Expenditure towards unfinished Minimum Work
Programme with and without extension of time is
expensed in the year of incurrence.
 IOCL
CHANGE IN PAID-UP SHARE CAPITAL
In the year 09-10 the company has rewarded it’s share holder by
issuing bonus share in the ratio of 1:1. one new bonus equity share
for every one existing equity share. Consequently, the paid-up Share
Capital of the Corporation has increased from Rs.1,213.98 crore to
Rs.2,427.95 crore.

DIVIDEND
The dividend declared in each year is as follows

Year 07-08 08-09 09-10

Dividend per share 5.5 7.5 13
Total Dividend 655.81 910.48 3156.34
 HPCL

• The employee cost for the year 2009-10 is higher due to provision
made for Rs. 318.25 Crores towards revision in the salary for non-
management staff, and perquisites & retiral benefits for management
employees.
• Dividend of Rs. 12 per share recommended for the year 2009-10
against Rs. 5.25 per share paid for the year 2008-09.
• The dividend declared in each year is as follows:
Year 2007-08 2008-09 2009-10
Dividend per share 3.00 5.25 12.00

Total Dividend 101.59 177.78 406.35

 Change in Accounting Policy for HPCL

• The Corporation has exercised the option as per AS-11

(notified under the Company’s Accounting Standard Rules,
2006) and has changed its accounting policy for recognition of
exchange differences arising on long term foreign currency
monetary items and adjusted the same to the cost of assets,
which hitherto were charged to the Profit and Loss Account.
• This change has resulted in increase in Profit for the current
year by Rs. 203.30 crores.
• The exchange difference of Rs. 199.46 crores pertaining to
financial year 2007-08 has been adjusted to General Reserve.
Accounting For Differences In Oil And Gas Sector

• Companies involved in the exploration and development of crude oil

and natural gas have the option of choosing between two accounting
approaches:
• 1. "successful efforts" (SE) method and
• 2. "full cost" (FC) method.
• 1. "successful efforts" (SE) method-
• The successful efforts (SE) method allows a company to capitalize
only those expenses associated with successfully locating new oil and
natural gas reserves. For unsuccessful (or "dry hole") results, the
associated operating costs are immediately charged against revenues
for that period.
• 2. "full cost" (FC) method -
• The alternative approach, known as the full cost (FC) method, allows
all operating expenses relating to locating new oil and gas reserves -
regardless of the outcome - to be capitalized.  
 Different Costs incurred
• Acquisition Costs
Acquisition costs are incurred in the course of acquiring the
rights to explore, develop and produce oil or natural gas.
• Exploration Costs
• exploration costs includes initial examination of a targeted area
and the decision of whether to drill at that location.
• Development Costs
Development costs involve the preparation of discovered
reserves for production such as those incurred in the
construction or improvement of roads to access the well site,
infrastructure to extract, gather and store the oil or natural gas
from the reserves.
• Production Costs
The costs includes extracting oil or natural gas from the
reserves,wages for workers and electricity for operating well
pumps.
• Much in the same way the financial results of a manufacturing
company are impacted by depreciation expense for plant,
property and equipment, those for an oil and gas company are
equally affected by periodic charges for Depreciation, Depletion
and Amortisation (DD&A) of costs relating to expenditures for
the acquisition, exploration and development of new oil and
natural gas reserves.
Principal Factors Affecting Oil and Gas Sector
• Raw Material Cost
• Forex Rates
• Rate of steel pipes
• Storage
• Transportation
• Insurance
• R & D Cost
 Key Factors affecting prices
• International oil prices depend on diverse factors.
• Supply side- Major Oil and Gas producing nations and companies
frequently collaborate to control the supply (and thus the price) of oil
in the international markets.
• political and socioeconomic conditions of oil-producing countries.
• Demand Side: Economic conditions and the level of Oil inventories
in the leading industrial nations of the world e.g. China, which
constitute the largest oil consuming nations, also play a significant
role in the increased demand for Oil.
• Suhas Bhide – Roll No. 05
• Sravan Iyer – Roll No. 15
• Sandeep Mandavkar – Roll No. 25
• Manohar Pathak – Roll No. 35
• Bhavin Shah – Roll No. 45
• Anil Tiwari – Roll No. 55