ONGC’s Q1 profit falls 21% as oil prices slump, output drops
Mumbai/New Delhi: Oil & Natural Gas Corp.’s quarterly profit declined 21% as oil prices slumped and output fell.
Net income at India’s biggest energy explorer dropped to Rs4,230 crore ($638 million) in the three months ended 30 June from Rs5,370 crore a year earlier, the New Delhi-based company said in a statement to exchanges. Sales dropped 21% to Rs17,670 crore.
The state-run explorer is key to Prime Minister Narendra Modi’s goal of increasing the nation’s energy security and reducing import dependence by 10 percent in the next six years. Declining earnings will weigh on ONGC’s plans to invest billions of dollars to develop oilfields and boost flagging output from aging fields. It could also hinder efforts to add assets in India and overseas.
ONGC sold crude oil to refiners including Indian Oil Corp. at $46.10 a barrel in the quarter, compared with $59.08 a barrel a year earlier after adjusting discounts to state refiners, according to the statement. The rebate, for selling fuels below cost when oil is expensive, amounted to Rs1,096 crore in the year-earlier period. The company didn’t give any discounts on crude oil in the quarter ended 30 June. ONGC sold gas at $3.06 per million British thermal units from $4.66 per million Btu a year ago.
Brent crude, the benchmark for half of world’s crude including India’s, averaged $47.03 a barrel in the three-month period ended 30 June, 26% lower than a year earlier. The contract traded at $47.16 a barrel at 1:44pm in London.
ONGC’s total oil output fell to 6.34 million tons in the first quarter from 6.48 million a year ago, while gas production slipped 5.6% to 5.49 billion cubic meters.
The company’s shares rose 2.7% to Rs244.95 at the close in Mumbai on Wednesday. The stock has risen 1.3% this year, compared with a 11% gain in the benchmark S&P BSE Sensex. Bloomberg