ONGC Posts Net Profit Of Rs 15,206 Crore In Q1, Revenue Growth Of 83.8 Per Cent

The state-run oil and gas explorer, Oil and Natural Gas Commission (ONGC), reported net profit for Q1FY23 of Rs 15,206 crore, driven by record oil and gas prices and which was also a 250.8 per cent year-on-year growth of over Rs 4,335 crore in the June quarter of FY22, the company said on Friday (12 August).

Revenue from operations of the energy major increased to Rs 42,320.72 crore in the first quarter of this financial year from Rs 23,021.64 crore in the year-ago period, showing 83.8 per cent variation and the operating margin improved to 49.57 per cent against 32.01 per cent in Q1 of FY22.

The company's offshore revenue were at Rs 27,990 crore as against Rs 14,673 crore in Q1 of FY22, while onshore revenue contribution was Rs 14,330 crore as against Rs 8,348 crore in the same quarter of the last fiscal. On a consolidated basis, ONGC's profit nearly doubled to Rs 11,937 crore, and revenue also shot up to Rs 182,894 crore.

The company's crude oil production was up 1.9 per cent during the quarter on a YoY basis to 5.494 million metric ton and the total gas production also increased 1.4 per cent to 5.383 billion cubic metres.

The company has recently signed a two-year Memorandum of Understanding (MoU) with renewable energy company Greenko to jointly pursue opportunities in renewables, green hydrogen, green ammonia and other derivatives of green hydrogen.

The agreement is in line with the National Hydrogen Mission to make India a global green hydrogen hub and the initiatives undertaken under this MoU will contribute towards India's target of producing of 5 million tonnes of green hydrogen per annum by 2030.

This MoU will also act as a stepping stone for ONGC to achieve renewable energy targets as per its energy strategy 2040. With the share of renewables in the energy mix increasing on the back of cost competitiveness, climate change awareness and strong regulatory push, ONGC is looking at de-risking of portfolio against long term disruptions and reducing carbon footprint by moving into renewables space.

The other explorer Oil India reported revenue at Rs 59.6 billion which was a 99 per cent YoY growth over the June quarter of FY22, which was in line with estimate of Motilal Oswal analysts and was aided by in-line volumes and realisation at $112.7/bbl.

Oil sales stood at 0.76 mmt showing growth of 6 per cent YoY and 4 per cent sequentially. Gas sales stood at 0.59 bcm, down 2 per cent YoY and up 7 per cent QoQ in 1QFY23.

According to Motilal Oswal, Oil India has been unable to raise its oil and gas production meaningfully in the recent past with crude oil production up by only 4 per cent yoy to 0.78mmt and gas production rising 8 per cent to 0.77 bcm.

Even as Brent remained high amid geopolitical risks and demand concerns, oil sector PSUs like Bharat Petroleum -- according to Nomura analysts – saw a first quarter deep in red, impacted by a large retail fuel marketing under-recovery of Rs 12 per litre on petrol/diesel and Rs 200 per cylinder on domestic LPG. However, its standalone EBITDA loss of Rs 59 billion was boosted by BPCL merging Bina refinery from 30 June 2021.

Hindustan Petroleum's 1Q standalone EBITDA loss of Rs 129 billion was also due to large retail fuel marketing under-recovery of Rs 12 per litre on petrol/diesel, Rs 200 per cylinder on domestic LPG and also a weaker-than-expected refining margin.

Fitch Ratings had projected that marketing losses on account of price-freezes for gasoline, gasoil and liquified petroleum gas (LPG) during recent periods of elevated crude-oil prices could pressure the profitability of Indian oil marketing companies (OMCs).

The OMCs have borne the largest share of the burden of surging crude oil prices in 2022, despite government tax cuts, with only limited price rises being passed on to end consumers.

Fitch expects near-term prices to continue to reflect the government's efforts to balance the country's fiscal needs, inflationary pressure in the economy and the OMCs' financial health.

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