State-owned oil exploration and production companies Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL) delivered strong performance in the June quarter (Q1FY27), driven by higher crude oil prices. Standalone Ebitdax (Ebitda excluding exploratory wells cost write-offs) rose 61% year-on-year to ₹29,250 crore for ONGC and 110% to ₹4,300 crore for OIL in Q1FY27, according to Nomura Global Markets Research.
Although Brent crude prices have moderated from their recent peak, the average price in Q2FY27 so far remains roughly 20% higher than in Q2FY26, aiding near-term earnings visibility for both companies. Additionally, they are expected to gain a medium-term boost from the government’s ₹84,000-crore Samudra Manthan scheme, approved in July, which reduces exploration risk by supporting deepwater projects.
Even so, company-specific factors will determine the pace of earnings growth and stock performance. So far in CY26, ONGC stock is up 2%, trailing OIL’s 11% returns. As of 2 pm on Tuesday, Oil India shares were trading nearly 4% higher at ₹470.80 on the NSE, while ONGC shares were up 0.15% to ₹240.20.
Contrasting production trajectories
ONGC is struggling to arrest its declining oil and gas output, which fell 3.9% year-on-year to 9.8 million tonnes of oil equivalent (mmtoe) in Q1FY27 (including joint-venture shares). The drop was driven by reservoir complexities at the KG-98/2 block, delayed pipeline replacement projects caused by bad weather, and temporary well shutdowns during project commissioning. For FY27, standalone production guidance excluding JVs is set at 39 mmtoe, slightly above FY26’s 38.9 mmtoe. Output is projected to rise further to nearly 40 mmtoe in FY28.
“We stay cautious on ONGC’s production guidance given misses every year for the last eight years while its past production has consistently fallen at a 2.4% CAGR and 1P reserves at 2.7% CAGR for the last five years,” said Nuvama Research. The brokerage has cut FY27/28 Ebitdax estimates by 7%/5% on lower profits at HPCL and higher effective royalty rates post rollback of it’s restructuring by the government.
Meanwhile, OIL saw an 11% increase in crude oil production to 0.95 million tonnes in Q1FY27. The company achieved its highest-ever daily crude production of 11,017mt/day on 3 August and expects to sustain a quarterly oil production run-rate of around 1mmt in FY27. It’s aiming for 3.9mmt in FY27 and more than 4.0mmt in FY28. “Driven by this optimism and Q1FY27 performance, we increased our production expectations for oil and gas by 7%/2% to 3.8mmt/3.2bcm in FY27 and by 8%/4% to 4.0mmt/3.5bcm in FY28,” PL Capital wrote in a report.
However, natural gas production fell by 8%, to 0.76 mmtoe due to lower offtake by consumers in the northeastern region and the absence of pipeline connectivity to transport surplus gas to the rest of India. The company is undertaking several pipeline projects to integrate its fields in the northeast with other regions, with the first project expected to come online in the next few months. Gas production is expected to reach 5 mmtoe by FY29 after all projects are complete.
Year-on-year revenue growth in Q1FY27 was robust for both companies: up 45% for ONGC and nearly 60% for OIL. Crude oil realization improved by around 50% for both at $99.4 a barrel for ONGC and $99.7 a barrel for OIL. ONGC also saw a notable 62% increase in realization for new well gas to $13.3 per million British thermal units (mbtu). Shares of ONGC and OIL are trading at 6.3 times and 7.7 times their one-year forward earnings, respectively, according to Bloomberg consensus estimates.