Mukesh Ambani-led Reliance Industries (RIL) on Friday reported its biggest quarterly profit in seven years at R6,381 crore for the three months to March. RIL\u2019s performance was driven by the refining business that saw spectacular gross refining margins (GRMs) of $10.1 per barrel. RIL posted a 5% jump in net profits for the full financial year 2014-15 to Rs 23,566 crore as dampened crude oil prices, averaging $85.4 per barrel in FY15, propped up RIL\u2019s gross refining margins (GRM), which rose to $8.6 per barrel against $8.1 pre barrel in the previous year. The company\u2019s stock ended the day flat at Rs 926.85 on the BSE on Friday. It has outperformed the BSE Sensex so far this year with a gain of 4.01% against 3.43%. The operator of the world\u2019s largest refining complex also recorded its highest quarterly refining EBIT of R4,902 crore in Q4 FY15, up 23.7% year-on-year supported by lower flat prices resulting in lower fuel costs and firm gasoline, gasoil and naphtha cracks. The company in a press release said that the full year earnings before interest and tax (EBIT) for the refining business increased by 18.2% y-o-y to R15,827 crore, helped by low energy prices, strong light product cracks, favourable crude differentials and stable middle distillate. During FY15, the benchmark Singapore complex margin averaged $6.3 per barrel compared with $5.9 per barrel in FY14 and for Q4 it strengthened to $8.5 per barrel. Mukesh Ambani, chairman and managing director, Reliance Industries, said: \u201cFY 2014-15 has been a very successful and important year for Reliance. In a time when the collapse of crude oil prices unsettled the hydrocarbons markets, our refining business delivered record earnings. This year we also made giant strides in our quest to sustain Reliance\u2019s growth momentum with the highest-ever capital investment into our hydrocarbon business and our next-generation digital services initiative.\u201d RIL, with a presence across refining and petrochemical, crude oil and shale, telecom and retail, saw a 13% fall in consolidated revenues to R3,88,494 crore mainly on account of fall in exports. With a decrease in oil and product prices, exports from India were lower by 17.1% at R2,28,651 crore against R2,75,825 crore in the previous year. The lower crude prices also impacted the petrochemicals revenues that fell 6.9% y-o-y to Rs 96,804 crore. The EBIT for the petrochemicals business was down 1.3% to Rs 8,291 crore owing to weakness in the paraxylene and mono ethylene glyco (MEG) and purified terephthalic acid (PTA) segments. On y-o-y basis, prices for PX, PTA and MEG were down by 13-21%. RIL is executing four key downstream projects in its core refining and petchem business with estimated capex of $15.5 billion. This includes a petcoke gasification plant, refinery off-gas cracker, polyester\/aromatics capacity expansion and import of ethane from US. A March 30, Morgan Stanley report notes that RIL has already spent upwards of $10 billion (70%) on these projects which are expected to add $3.2 billion in incremental Ebitda in the first full year of operations. Lower oil prices and falling gas production hit RIL's domestic exploration and production (E&P) business with revenues falling 9.2% to Rs 5,507 crore and EBIT dipping sharply by 23% on account of lower realizations. On a quarterly basis the Q4 revenues and EBIT were down by 9.2% and 38.6% respectively, due to lower oil prices and lower gas production from KG-D6 and Tapti fields.\u00a0 The ageing Panna-Mukta fields produced 7.23 million barrels of crude oil, a fall of 2% on y-o-y basis and 70.7 billion cubic feet (bcf) of natural gas a growth of 8.1% on y-o-y basis in FY15. While Tapti fields produced 14.25 bcf of natural gas in FY15 a 48% fall in production. The KG-D6 field produced 1.96 million barrels of crude oil, and 158 bcf of natural gas in FY15, a fall of 3% and 12%, respectively, on a y-o-y basis. The decline in production was largely owing to a natural decline in the fields and partial shutdown of MA field due to Hudhud cyclone. Although the new gas price of $5.61\/mmbtu is applicable to all producers, RIL still needs to wait for completion of litigation before it can see any incremental gains from the price hike. The government announced that because arbitration is pending with RIL relating to production shortfall and cost recovery for its D1\/D3 field at its KGD6 block, operators will be paid the earlier price of US$4.2\/mmbtu until the shortfall of gas is made good. The softening of commodity prices also dented the company's shale gas operations in the fourth quarter of the calendar year FY14. For the quarter, WTI averaged 34% lower sequentially at $48.63\/bbl and Henry Hub Gas prices averaged 23% lower sequentially at $2.88\/mmbtu in Q4 FY15. On a full year basis the shale operations fared better with revenues up 25% to Rs 6,010 crore and EBIT up 58% to Rs 1,949 crore. For FY15, WTI averaged lower by 18% y-o-y at $81.0\/bbl while Henry Hub Gas was lower by 8% at $3.8 RIL and its joint venture partners in the US drilled 180 wells and put on production 212 wells in FY15. The total producing well count stood at 865 in March 2015, compared with 653 wells in March 2014, while the average gross production improved by 17% to 1228 Mcfe\/day in Q4 FY15, compared to 1053 Mcfe\/day in Q4 FY14. However, RIL stated in the release that activity levels slowed down across JVs during Q4 FY15, given weak market conditions. The Morgan Stanley report notes that weak oil prices mean that shale earnings will decline in F16e and production will remain lacklustre, reflecting expected capex cuts of >25-30%. Though it was previously expected that shale will contribute 5% of profits by Fy18, they now expect shale to be <2% of earnings by F18, the report added. The press release also stated that Reliance Jio Infocomm (RJIL), a subsidiary of RIL, is currently in the process of setting up a pan India telecom network. RJIL is the only private player with broadband wireless access spectrum in all the 22 telecom circles of India. RIL operates two refineries with a combined capacity of 1.24 million barrels a day located next to each other at Jamnagar in Gujarat. The units have the ability to process cheaper, lower grades of crude into high-value products for use in Europe and the US. It spent about Rs 1 lakh crore during the fiscal year ended March to expand businesses, including petrochemicals, refining, telecommunications and US shale gas projects, according to the press statement.