New Delhi: Oil and Natural Gas Corp. Ltd (ONGC), India’s biggest energy explorer, posted a fourth consecutive decline in quarterly profit because of lower crude oil prices and discounts given to state refiners, but beat estimates.
Net income declined 27% to Rs4,850 crore in the three months ended 30 June from Rs6,640 crore a year earlier, New Delhi-based ONGC said in a statement to the Bombay Stock Exchange (BSE) on Thursday. Net sales fell 26% to Rs14,880 crore.
The median estimate of 11 analysts surveyed by Bloomberg was for a first-quarter profit of Rs4,670 crore.
Lower profit may curb the explorer’s plans to invest in boosting output in new areas overseas.
ONGC has surged 64% in Mumbai trading this year on speculation prime minister Manmohan Singh will ease curbs on state-set fuel prices, reducing the need to subsidize refiners by selling oil at a discount.
Since they can’t do anything about the government’s subsidy policy, they will need to increase production, Deepak Pareek, Mumbai-based analyst with Angel Broking Ltd, said before the earnings were announced.
Most of the additional production could come from overseas when new fields start.
ONGC shares were little changed at Rs1,092.85 on BSE on Thursday, while the benchmark index, Sensex, rose 2.61% to 15,231.04 points. Earnings were announced after the markets closed.
State-run ONGC said its profit would have been higher by Rs242 crore if the discounts hadn’t been given.
Crude was sold at $58.25 a barrel after paying discounts compared with $69.13 a barrel a year earlier, the company said in a statement.
The explorer’s output in the April-June period declined 4.5% to 6.1 million metric tonne, the oil ministry said on Wednesday.
ONGC’s Bombay High fields, off the country’s west coast, produce more than half the nation’s oil.
The company may spend Rs6,600 crore this year to maintain production levels at fields in the Arabian Sea and the Bay of Bengal, director of offshore operations Sudhir Vasudeva said on 21 April.
Output at ONGC’s overseas fields may fall 9% this year, R.S. Butola, managing director of overseas unit ONGC Videsh Ltd, said on 9 June. Production may increase by 2012 when new fields in Brazil and Myanmar start, he added.