In an otherwise subdued quarter, the fact that Cairn India Ltd’s Rajasthan fields are starting production is a major highlight. Reliance Industries Ltd (RIL), too, on further allocation from the empowered group of ministers, has ramped up production at the KG D6 fields.
On subsidy sharing, with no clarity on oil bonds, we assume auto fuel losses to be borne by upstream companies and cooking fuel by oil marketing companies.
We expect RIL to report a 3% quarter-on-quarter (q-o-q) growth in net profit (Rs3,970 crore). Production at D6 would average 46 million standard cu. metre, while we expect gross refining margins at $5.5/bbl (consolidating for Reliance Petroleum Ltd).
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Cooking fuel losses would be Rs9,200 crore and auto fuel losses Rs5,500 crore. We expect oil marketing companies to post losses as they would bear the entire cooking fuel losses. Based on first half upstream subsidy sharing, we expect Oil and Natural Gas Corp. Ltd and Oil India Ltd’s net realization on crude to be $51 (Rs2,331) and $55/ bbl, respectively. We expect GAIL (India) Ltd to gain year-on-year on lower subsidy impact and better transmission volumes.
The Rajasthan field will account for around 40% crude production. We expect pricing to be at a 10% discount to Brent, and include higher trucking costs and cess at Rs2,575 per tonne.
Among other sources, we expect Petronet LNG Ltd to maintain sales volume at 113 trillion British thermal unit and regas charges at Rs23/million British thermal unit. We expect Aban Offshore Ltd to report a q-o-q growth in earnings (+149%), mainly owing to increase in utilization (Q3 to average 85%, over 60% in Q2).
Graphics by Ahmed Raza Khan/Mint