- 4Q profit at Indian oil explorer rises 12% year-on-year
- Company posts total exceptional gains of 29.35 billion rupees
Oil & Natural Gas Corp.’s profit rose after two quarters of declines as the company reversed earlier writedowns and as a weakened Indian currency cushioned the slump in crude prices for nation’s biggest energy supplier.
Net income increased 12 percent to 44.2 billion rupees ($658 million) in the three months ended March 31, the New Delhi-based company said in a statement Thursday. That beat the 23.8 billion-rupee mean estimate from 20 analysts compiled by Bloomberg. Fourth-quarter sales dropped 24 percent to 161 billion rupees.
ONGC reversed an impairment loss of 8.52 billion rupees as crude rebounded. Brent, the benchmark for half of world’s crude, has climbed more than 70 percent from a 12-year low in January. In addition, the company wrote back 15.48 billion rupees set aside as provisions on some exploratory wells. It also reversed a subsidy paid to state-run oil refiners for selling fuels below cost after the government refunded the money, resulting in a profit before tax of 5.35 billion rupees.
“The one-off reversals in impairment, subsidy and exploration costs helped the company post profit which was better than estimates, but the core earnings remain weak,” said Sachin Mehta, an analyst at Centrum Broking.
The state-run company also gained from the rupee’s fall against the dollar. It sells its oil and natural gas in U.S. dollars and gets a sales boost as the Indian currency weakens. The rupee averaged 67.49 a U.S. dollar last quarter, 8.4 percent weaker than the same period a year earlier.
ONGC’s impairment reversal was based on an increased oil price forecast in the range of $42 to $54 a barrel over the next few years, Chairman D.K. Sarraf said at a post-earnings press conference in New Delhi today. It sold crude oil to refiners including Indian Oil Corp. at $34.88 a barrel last quarter, compared with $55.63 a year earlier and $44.34 in the preceding three months.
The company’s shares have lost 11 percent this year, compared with a 1 percent increase in the benchmark S&P BSE Sensex. The stock rose as much as 5.4 percent in Mumbai on Thursday after the results were announced, before paring its gain to close 2.8 percent higher at 216.05 rupees.