ONGC net up 22% at Rs 5,097 crore

Oil and Natural Gas Corporation, the country's biggest explorer, has posted a better than expected 22 per cent increase in profit in the second quarter at Rs 5,097.48 crore, from Rs 4,173.98 crore in the corresponding period a year ago.

Analysts had expected a 15 per cent rise in net profit at around Rs 4,810 crore.

Total income increased 10.76 per cent to Rs 16,623.88 crore in the quarter from Rs 15,008.26 crore in the corresponding period a year ago.

Earnings per share increased to Rs 23.83 from Rs 19.51.

Profit growth was largely due to higher crude oil prices during the quarter and a lower subsidy payout to oil marketing companies as compared to that a year ago, Chairman and Managing Director R S Sharma said.

Gross earnings from a barrel of crude oil during the quarter was $78.04, which was 9.02 per cent higher than the $71.58 per barrel it earned in the corresponding quarter last year.

Net realisation, after subsidy payout to oil marketing companies, was $55.93 per barrel during the period, as compared with $45.42 per barrel in the previous corresponding period.

ONGC shares closed 1.54 per cent lower (or Rs 19.05) on the Bombay Stock Exchange on Tuesday at Rs 1,219.55.

The ONGC chief said there were some areas of concern for the company such as the strengthening rupee and gas pricing.

"The exchange rate remaining constant, each dollar variation against the rupee impacts our revenues by about Rs 800 crore," Sharma said.

ONGC's revenues were adversely affected by about Rs 1,600 crore in the quarter as the value of the rupee averaged $40.53 as compared with $46.37 in the previous corresponding quarter. "This wiped out 14 per cent of our revenues," he said.

Sharma pointed out that the company was losing Rs 4 crore a day in gas sales at government-controlled prices. It currently sells gas at Rs 3.2 a cubic metre.

"If we are allowed to increase prices to Rs 3.6-3.7 a cubic metre we will break even. We are advocating a price of Rs 4.5 per cubic metre ($2.5 per million British thermal units) in order to make profits, as our expenditure on exploration is huge," he said.