ONGC’s Q1 Profit Falls More Than Expected Despite Lower Expenses
ONGC reports lower profit despite a fall in expenses.
State-owned Oil and Natural Gas Corporation Ltd.'s profit fell more than expected to its lowest in six quarters even as India's largest oil explorer paid the government less in royalty.
Net profit dropped 10.5 percent to Rs 3,885 crore in the quarter ended June over the previous three months, according to a stock exchange filing. The consensus estimate of analysts tracked by Bloomberg had forecast a 5 percent increase in profit. Revenue declined 12.1 percent to Rs 19,074 crore.
Expenses fell 32.4 percent mainly due to reduced statutory levies, including royalty, paid to the central and state governments. Statutory levies fell 40 percent from the previous quarter to Rs 4,490 crore. The expenses were higher a quarter ago as ONGC had made royalty payments worth Rs 2,444 crore to Assam and Gujarat.
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Operating income stood at Rs 8,823 crore, while operating margin was 46.3 percent.
Net realisations fell 7 percent as ONGC made $51.03 per barrel of crude oil, compared to $54.9 per barrel in the previous quarter. This was slightly higher than global benchmark Brent crude oil which averaged at $50.8 per barrel during the same quarter.
ONGC’s crude production rose 0.8 percent to 6.4 million metric tonnes during the quarter. Natural gas production rose 1.4 percent to 6.03 billion cubic metres.
The explorer discovered five new locations for oil drilling in the first quarter, of which three were offshore and the rest onshore, according to its media statement.
Earlier this month, the Cabinet approved a proposal for ONGC to buy out the government's entire stake in refiner Hindustan Petroleum Corporation Ltd. to create a state-run oil behemoth that’ll be able to compete with global rivals.
Shares of ONGC closed 0.34 percent lower ahead of the results compared to an unchanged benchmark S&P BSE Sensex.