India?s exploration and production major Oil & Natural Gas Corporation’s (ONGC) net profit was down by 26.94% at Rs 4,847.9 crore for the quarter ended June 30 as compared to Rs 6,636.3 crore for the corresponding period of previous year.
Total income decreased to Rs 15,924 crore from Rs 21,102.2 crore, a fall of 24.53%. The decrease in quarterly profit was for the fourth consecutive time and it was largely due to dip in crude prices and discounts given to the state-run oil marketing companies.
Oil prices have tumbled 56% from the July peak last year. The price of OPEC basket of twelve crudes stood at $64.68 a barrel on Wednesday, compared with $65.04 the previous day, according to OPEC Secretariat calculations.
According to ONGC chairman RS Sharma, the company gave a discount of Rs 429 crore on crude sales to state-run refiners during the quarter.
ONGC’s net realisation after subsidy payouts fell to $58.25 per barrel in the June quarter from $69.13 a year ago. ONGC sources said its gross realisation per barrel more than halved to $60.58 per barrel from $125.83 a year ago following sharp decline in crude prices. ONGC’s crude oil production in the quarter fell 4.5% to 6.12 million metric tonne, the company release said.
“ONGC’s PAT in first quarter in FY10 appears lower than that in Q1FY09, but that is due to the significant difference in the crude oil price in the two periods. Q1FY10 PAT (Rs 4,847.9 crore) is much higher than Q4FY09(Rs 2,200 crore), primarily, due to the resurgence in crude oil price in the June 2009 quarter. EBITDA shows similar trends, being higher in Q1FY10 compared to Q4FY09 but lower than that in Q1FY09. It is also important to note that profitability margins in Q1FY10 are not worse than Q1FY09 – EBITDA margin is actually higher at 66% (compared to 61%) while PBT and PAT margins are broadly similar at 46% and 30% respectively (compared to 47% and 31% respectively). Higher EBITDA margin in Q1FY10 is aided by the lower under recovery burden in this quarter as compared to Q1FY09 (revenue impact of Rs 400 crore vs Rs 9,800 crore and PAT impact of Rs 200 crore vs Rs 5,500 crore),” says Abhinav Goel, Director Fitch Ratings.
Mumbai-based analyst, who desired not to be quoted, said, ?There has been an all round hit. ONGC’s costs have gone up. Only buffer is reduction in subsidy.?
Meanwhile, ONGC Board has approved setting up of Polypropylene Unit by MRPL integrated with its Phase-3 refinery project at a total project cost of Rs 1803.78 Crore to be executed in 39 months (38 months for mechanical completion and 1 month for commissioning). The capacity of the plant is 440,000 TPA of Polymer grade Propylene product.