ONGC profit up 12% on nil underrecovery

Gross revenue during the quarter, however, dipped 24% to Rs 16,424 cr; it partly reversed a previously-taken charge, leading to a one-off gain of Rs 852 cr

Oil and Natural Gas Corporation (ONGC), state-run petroleum explorer, on Thursday posted a 12 per cent jump in profit after tax (PAT) for the quarter ended March on account of nil under-recovery and part-reversal of impairment provisions made earlier due to the crude price decline.

The company thus posted a PAT of Rs 4,416 crore during the quarter ended March as compared to Rs 3,935 crore in the corresponding period a year ago, and much higher than consensus estimate of Rs 2,380 crore, according to Bloomberg poll of analysts. “While the average crude price was down significantly during the quarter, we could offset its impact by the reversal of provision for impairment and also write-off of wells,” ONGC’s Finance Director A K Srinivasan said.

Gross revenue during the quarter, however, dipped 24 per cent to Rs 16,424 crore from Rs 21,683 crore in the corresponding quarter of the previous year. The revenue, however, was higher than consensus estimates of Rs 15,877 crore. The Indian basket of crude averaged $31.67 per barrel in the fourth quarter as compared to $52.7 per barrel in the corresponding quarter of the previous year.

The company had provided Rs 3,994 crore as impairment loss due to the fall in crude oil prices for the quarter ended December 2015. The impairment was re-assessed during the last quarter of 2015-16 and Rs 852 crore was written back. Following the write-back, the net impairment loss came down to Rs 3,142 crore.

“Consequently, profit before tax for the quarter is higher by Rs 852 crore and lower by Rs  3,142 crore for the year ended March 2016,” the company said.

The government had initially directed ONGC to provide its share of under-recovery burden of oil marketing companies (OMCs) to the extent of Rs 1,729 crore for 2015-16, including Rs 1,133 crore for the June quarter, Rs 596 crore for the September quarter and nil for the December quarter. Later, the burden was revised to Rs 1,096 crore for the June quarter and nil for the remaining three quarters.

ONGC reported gross realisation of $34.88 per barrel for the fourth quarter of 2015-16 as compared to $55.63 per barrel in the corresponding quarter of the previous year, indicating the decline in crude oil prices during the year. For 2015-16, the company reported a gross realisation of $48.26 per barrel while net realisation came to $47.14 per barrel after accounting for an upstream discount of $1.12 per barrel.

ONGC’s PAT for 2015-16 was down 9.8 per cent at Rs 16,004 crore from Rs 17,733 crore in 2014-15, mainly due to the dip in crude oil prices. Gross revenue during the year also dipped 5.4 per cent to Rs 78,569 crore from Rs 83,094 crore in 2014-15.

The discount to OMCs impacted its PAT by Rs 607 crore. In 2014-15, the company had provided a discount of Rs 36,300 crore, which had impacted its PAT by Rs 20,437 crore.

ONGC’s total crude oil production during 2015-16 was flat at 25.93 million tonnes compared to 25.94 million tonnes a year ago. Total gas production however, dipped 4.2 per cent to 22.53 billion cubic meters from 23.52 billion cubic meters in 2014-15.

The company’s share price on the Bombay Stock Exchange (BSE) today closed at Rs 216.70, up 3.09 per cent as compared to previous close.