ONGC reports Rs 6,734 cr net profit in Q4

State-owned Oil and Natural Gas Corporation (ONGC) reported a net profit of Rs 6,734 crore in the March quarter on the back of higher oil prices and exceptional income.

The firm had reported a net loss of Rs 3,214.41 crore in the January-March 2020 period, according to a company press statement.

In an investor call, ONGC Chairman and Managing Director Subhash Kumar said the company realised USD 58.05 for every barrel of crude oil produced and sold in January-March as compared to USD 49.01 a barrel realisation a year back.

Also, the company reversed impairment losses, recording an exceptional gain of Rs 2,613 crore in the quarter.

This follows a re-assessment of crude oil and natural gas prices, which have rebounded from lows hit last year.

Based on the assessment, the company has recorded a net impairment reversal of Rs 2,613 crore for the January-March quarter and Rs 1,375 crore for the year to March 31, 2021, he said.

"The increase in net profit in Q4 (of fiscal 2020-21) is mainly due to higher crude oil prices which were partly offset by historic low gas prices," he said.

Domestic gas price under the administered pricing mechanism - which are revised once every six months - was USD 1.79 per million British thermal unit in the January-March quarter, down from USD 3.23 a year back.

Kumar said the disruption caused by the pandemic led to ONGC producing 3.5 per cent less crude oil in the year at 22.53 million tonnes.

Gas output too was 8.4 per cent short at 22.81 billion cubic meters (bcm).

For the current year, the company is targeting 22.56 million tonnes of crude oil production, almost unchanged from the previous year, he said.

"The shortfall in natural gas production is primarily due to less offtake by customers due to COVID-19 pandemic. This has resulted in a production shortfall of condensate and value-added products (VAP) as well," Kumar explained.

Gas production may however rise to 24.89 bcm this year as new output from KG basin and western offshore comes on stream.

Kumar further said, "We think the worst is behind us." Prices are likely to increase 50-60 per cent in the next revision due on October 1, he noted.

The company, he said, is targeting a capital spending of Rs 29,500 crore in the current fiscal as compared to about Rs 28,000 crore spend on oil and gas production in the previous fiscal.

ONGC expects to maintain its production dominance, contributing 65 per cent of India's projected 40 million tonnes a year of output in next three years, he added.

Gross revenue during the quarter declined 1.2 per cent to Rs 21,189 crore compared to the corresponding period last fiscal.

For the full year, FY21, ONGC registered a 16.5 per cent decline in profit at Rs 11,246 crore and a 29.2 per cent fall in gross revenue at Rs 68,141 crore, compared to the previous year.

ONGC said it had declared a total 10 discoveries (3 in onland, 7 in offshore) during FY21 in its operated acreages. Out of these, six are new prospects (1 in onland, 5 in offshore) and four are pools of existing finds (2 in onland, 2 in offshore).

With the monetisation of Ashoknagar-1 discovery, "Bengal basin became the eighth sedimentary basin of India from which hydrocarbon has commercially been produced. This has resulted in up-gradation of Bengal basin to Category-I basin as per the new three-tier category-classification of sedimentary basins of India," said ONGC.

The company said it had recommended a final dividend of Rs 1.85 per share, taking the total dividend for FY21 to Rs 3.60 per share.