Oil & Natural Gas Corp. (ONGC), India’s biggest energy explorer, reported a 48 percent increase in first-quarter profit after the rupee value of crude sales rose.
Net income climbed to 60.8 billion rupees ($1.1 billion), or 7.10 rupees a share, in the three months ended June 30, from 40.95 billion rupees, or 4.79 rupees, a year earlier, the New Delhi-based state-owned company said today in a stock exchange filing. The median estimate of 32 analysts compiled by Bloomberg was a profit of 54.4 billion rupees. Sales rose 24 percent to 200.8 billion rupees.
The rupee’s decline in the quarter countered falling crude prices for ONGC, which bills customers in U.S. dollars and increases earnings after conversion into the local currency. The explorer plans to spend 1.25 trillion rupees to boost oil and natural gas output in the next five years.
“This quarter, the lower rupee boosted their profit,” Sujit Lodha, a Mumbai-based analyst at Asian Market Securities Pvt., said before the earnings announcement. “ONGC also has to find more reserves and increase production. That’s where growth is going to come from.”
ONGC has gained 8.7 percent this year compared with a 14 percent increase in the benchmark Sensitive Index (SENSEX) and briefly became India’s biggest company by market value last month. The stock fell 0.3 percent to 278.95 rupees yesterday, giving it a market value of $43 billion, third-highest among the nation’s publicly traded companies.
“Since oil and gas are priced in dollars, the rupee’s depreciation last quarter boosted revenue and profit,” Chairman Sudhir Vasudeva said. “This is even though the net realization per barrel fell.”
Four Discoveries
The explorer made four discoveries in the last month, it said in the statement. Oil production rose 3.2 percent to 6.543 million tons while gas production was 6.417 billion cubic meters.
ONGC is mandated by the government to give discounts on oil supplies to state-run refiners to partly compensate them for selling fuels below cost. It needs to sell crude for at least $55 a barrel to fund capital expenditure, Vasudeva said July 25.
The company said it sold crude oil at $46.62 a barrel in the quarter compared with $48.74 a barrel a year earlier. Discounts given to refiners were 123.5 billion rupees, compared with 120.5 billion rupees a year earlier, according to the statement. During the quarter, the discount per barrel was $63.27 a barrel compared with $72.53 a barrel a year ago, Vasudeva said.
Brent Benchmark
Brent crude, a benchmark for more than half of the world’s oil, averaged $108.76 a barrel in the quarter, 7 percent lower than a year earlier. The rupee declined 8.6 percent against the U.S. dollar in the period, the worst performer among major currencies in the Asia-Pacific region.
The explorer may spend an additional $1 billion to acquire shale assets in the U.S. It plans to focus on shale and deepwater areas to double production and triple profit by 2030, Vasudeva said May 29.
To contact the reporters on this story: Pratish Narayanan in Mumbai at pnarayanan9@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net
To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net
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