ONGC boosted by higher oil prices, forex gains

[1]

State-run producer Oil & Natural Gas Corp reported a higher-than-expected 48 per cent jump in quarterly profit as the company benefited from higher crude oil prices and foreign exchange fluctuations.

India's third-biggest company by market value reported net profit of Rs 60.8 billion for its fiscal first quarter ended June, up from Rs 41 billion a year earlier.

Analysts, on average, had expected a net profit of Rs 49.6 billion, according to a poll of brokerages.

Net sales rose 24 per cent to Rs 200.8 billion as the company benefited from the year-on-year rise in its average sale price for crude oil.

The company, which prices its locally produced gas in dollar terms, has benefited from the sharp depreciation in the rupee.

The rupee weakened by 8.5 per cent during the April-to-June period and has lost a fifth of its value over the past year.

ONGC does not fully benefit from rising crude prices because India caps prices of petroleum products such as diesel, cooking gas and kerosene and producers such as ONGC share the cost of subsidising refineries by selling crude to them at a discount.

Net realisations from oil sales, after giving discounts to state-run refiners, were slightly lower at $46.62 per barrel from $48.74 a barrel a year earlier.

ONGC said its net profit was reduced by Rs 71.5 billion for the quarter by gross discounts of Rs 123.5 billion to state-run refiners. It had given discounts of Rs 120.5 billion a year earlier.

Shares in ONGC have risen nearly 9 per cent so far in 2012, underperforming a 13.6 per cent rise in the Sensex. The stock closed 0.3 per cent lower on Friday, valuing the firm at $43.3 billion, ahead of the results.

ONGC has made a fresh discovery at the D1 offshore field off India's western coast, chairman Sudhir Vasudeva said.

The discovery would boost in-place reserves at the field to an estimated 140 million tonnes of oil-equivalent, from 82 million tonnes now, he said. The company has also made three other smaller discoveries in the past month.

ONGC, which has been investing heavily to maintain output from its old fields, has outlined capital expenditure of Rs 331 billion in the current financial year.

The company has said it aims to raise crude oil production by 15 per cent to 28 million tonnes, or 560,000 barrels per day (bpd), by March 2014.

State oil marketing companies this week racked up record losses of $7.3 billion on the back of a sharp depreciation in the rupee and delays in reimbursement of the government's share of the fuel subsidy.