RIL reported reasonably good gross refining margins (GRMs) of $8.40 per barrel for the three months to June 2013, slightly better than the Streets estimates. RILs GRMs in the March quarter were $10.10 per barrel while in the first quarter a year earlier, they were $7.60.
The numbers were muted since revenues for the petrochemicals business were flat y-o-y at R21,950 crore while profits went up marginally. Moreover, production of gas at the KG-D6 Basin came in at just 15 million standard cubic metres per day.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) or operating profit went up to R7,075 crore, a rise of 3.9% y-o-y, driven by better margins in the refining and petrochemicals businesses. The lower output in the oil and gas division, however, offset some of those gains.
The RIL stock, which has gained 15% since June 26 after the government announced that the domestic price for gas would be $6.83, based on the Rangarajan formula, from April 2014, closed at R923.15 on Friday.
The management explained that the GRMs in the quarter, although at a premium of between $1.80-1.90 to the Singapore benchmark, were lower on a quarterly basis because of smaller diesel and petrol cracks during the quarter. Earnings before interest and tax (Ebit) for the refining business fell to R2,951 crore in the first quarter, lower 16.2% sequentially but up 38.5% y-o-y. RIL has been increasingly sourcing cheaper heavy crude from Venezuela.
The management is optimistic about the petrochemicals business, where it is expanding capacity. We are investing heavily in the petchem business, Alok Agarwal, CFO, told newspersons. Ebit margins for the segment stayed flat sequentially at 8.6%.
Ebit for the oil and gas business fell to Rs 352 crore from Rs 972 crore in the first quarter of the previous fiscal. The bulk of this earning has been contributed by the shale gas business, for which Ebitda grew 74% y-o-y to $165 million.
The government has approved the capex for MA1 and D1D3 fields, Agarwal said, adding that the maximum capex would take place in FY15 and FY16. The capex approved by the government for FY14 is $1.2-1.3 billion.
The production of shale gas at the companys overseas ventures is currently at 37.7 billion cubic feet (bcf), an increase of 71% y-o-y, while production at the KG-D6 Basin is approximately 49.2 bcf. Production at the Panna-Mukta fields is roughly 16.9 bcf.
RIL has cash reserves of Rs 93,000 crore and debt of Rs 80,307 crore.