ONGC profit halves on low crude price

By: | Updated: February 15, 2015 11:57 AM

With crude oil prices slumping to a six-year low, the state-run explorer ONGC on Saturday reported a 49.9% drop in its net profit during the October-December quarter.

With crude oil prices slumping to a six-year low, the state-run explorer ONGC on Saturday reported a 49.9% drop in its net profit during the October-December quarter.

The firm reported profit after tax of R3,571 crore in Q3 against R7,126 crore in the corresponding period a year ago on gross revenues of R18,770 crore (R20,833 core in Q3 last year), reflecting its reduced profitability.

The drop in net profit would force ONGC to dip into its cash reserves to meet its capital expenditure programme, which it has said won’t be compromised. It intends to spend R30,000-32,000 as capex this fiscal and R36,000 crore in the next fiscal.

Global crude oil prices dropped over 60% since June 2014; it touched a six-year low of $45.2/barrel on January 12, and has since climbed to Friday’s price of $61.34.

ONGC, ONGC profit, ONGC crude price

Contrary to market expectations that ONGC will not have to bear any subsidy burden in Q3 because of the large payouts in the previous quarters to help the government meet its budget numbers, it had to shell out R9,458 crore to compensate PSU oil marketing companies for selling PDS kerosene and domestic cooking gas below cost. This was still much lower than its subsidy burden of R13,744 crore in same quarter last fiscal.

The gross price of every barrel of crude oil sold by ONGC during the third quarter was around $76/barrel. However, after offering discount of $40.43/barrel to state-run OMCs, it was left with net realisation of $35.57/barrel.

Dinesh K Sarraf, CMD of ONGC, told FE recently that the company had no intention to cut down our capex for 2015-16. “Rather, going by the progress of various projects, we, in all probability, will exceed our budget,” he had said.

The subsidy burden of the last few fiscals has consumed a large part of ONGC’s cash reserves, built up over the years. The reserves depleted by another 24% to around R10,000 crore by the end of FY14 from the level a year ago.

 

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition