Higher output propels Oil India earnings

Turnover rose 9.2% to Rs 7,905.6 crore on an year-on-year basis. ?The increase in net profit is on account of three reasons–an increase in the production of both oil and gas, increase in net realisation and the appreciation of dollar against the rupee. Essentially, it is the growth in the production volume,? OIL director finance T K Ananth Kumar told FE.

Crude oil production rose 3.32% to 3.61 million metric tonne, while natural gas output jumped 6.43% to 2.41 billion cubic meters. In the fourth quarter of 2009-10 fiscal ending March 31, net profit rose to Rs 431 crore, a five-fold increase from the previous corresponding quarter.

Oil India CMD Nayan Mani Borah said that according to informal estimates, the recent upward revision of the administered price of natural gas from $ 1.79 to $4.2 per unit could roughly enhance the company’s top line by Rs 500 crore a year, while net profit could go up by Rs 315-340 crore.

The company produces 2 billion cubic meters of natural gas a year, of which 80-85% is sold at administered prices. Gas sold to power and fertilizer customers in the North East is given a 40% subsidy, which so far, has been reimbursed by the government to Oil India.

Ananth Kumar said that Oil India is expected to spend Rs 2,300 crore in the current financial year for expanding core activities such as exploration and production.

Borah said the company would look at acquiring overseas energy assets, which are already producing hydrocarbon, rather than those in the exploration stage. While he declined to give the specifics of the plan, he indicated that an ideal buy could be a field that produces 10,000 barrels per day of oil. ?That is the wishlist. But should there be something smaller in size, it does not mean that we won’t look at it,?he said. Sources said energy assets in Myanmar and Bangladesh could be in the company?s radar.