ONGC Q1 net drops 8.2% to Rs 3,885 cr

Gross revenue zoomed 7.2% to Rs 19,073 cr

A technician is pictured inside a desalter plant of Oil and Natural Gas Corp (ONGC) on the outskirts of Ahmedabad. (File photo: Reuters)

State-run Oil and Natural Gas Corporation (ONGC) posted an 8.2 per cent fall in net profit for the June quarter (Q1) of 2017-18 to Rs 3,885 crore, against Rs 4,233 crore in the corresponding quarter in FY17.

A major reason for the fall was believed to be a drop in domestic natural gas prices by 19 per cent from $3.06 per million metric British thermal unit (mmBtu) in FY17 to $2.48 per unit this year. Meanwhile, the gross revenue for Q1 of FY18 zoomed 7.2 per cent to Rs 19,073 crore, compared with Rs 17,784 crore in Q1 of FY17.

“There was higher employee expenditure, drop in other income and drop in natural gas pricing that resulted in a drop in net profit on a year-on-year basis,” said Dhaval Joshi, an analyst with Emkay Global Financial Services. The total crude oil production for the period under review increased 1.6 per cent to 6.44 million tonne (mt) from 6.35 mt in Q1 of FY17. Total gas production for the quarter, too, increased 9.8 per cent to 6.03 billion cubic metre (BCM) compared with 5.49 BCM in Q1 of FY17.

ONGC has notified five discoveries in Q1 of FY18. Of them, three were made in offshore blocks while the other two discoveries were at onshore blocks. This comes at a time the Cabinet Committee on Economic Affairs gave an in-principle nod to the sale of government equity in Hindustan Petroleum Corporation (HPCL), along with the transfer of management control to ONGC, on July 19.

The department of investment and public asset management expects to wind up the acquisition of 51.1 per cent stake by ONGC by the end of FY18. It has already initiated the process of appointing two consultants and a law firm in this regard.