ONGC’s Profit Falls 21% as Oil Prices Slump, Output Drops

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  • Explorer sold crude at $46.10/bbl vs $59.08/bbl year ago
  • Net sales dropped 21 percent to 176.70 billion rupees

Oil & Natural Gas Corp.’s quarterly profit declined 21 percent as oil prices slumped and output fell.

Net income at India’s biggest energy explorer dropped to 42.3 billion rupees ($638 million) in the three months ended June 30 from 53.7 billion rupees a year earlier, the New Delhi-based company said in a statement to exchanges. Sales dropped 21 percent percent to 176.70 billion rupees.

The state-run explorer is key to Prime Minister Narendra Modi’s goal of increasing the nation’s energy security and reducing import dependence by 10 percent in the next six years. Declining earnings will weigh on ONGC’s plans to invest billions of dollars to develop oilfields and boost flagging output from aging fields. It could also hinder efforts to add assets in India and overseas.

ONGC sold crude oil to refiners including Indian Oil Corp. at $46.10 a barrel in the quarter, compared with $59.08 a barrel a year earlier after adjusting discounts to state refiners, according to the statement. The rebate, for selling fuels below cost when oil is expensive, amounted to 10.96 billion rupees in the year-earlier period. The company didn’t give any discounts on crude oil in the quarter ended June 30. ONGC sold gas at $3.06 per million British thermal units from $4.66 per million Btu a year ago.

Benchmark Crude

Brent crude, the benchmark for half of world’s crude including India’s, averaged $47.03 a barrel in the three-month period ended June 30, 26 percent lower than a year earlier. The contract traded at $47.16 a barrel at 1:44 p.m. in London.

ONGC’s total oil output fell to 6.34 million tons in the first quarter from 6.48 million a year ago, while gas production slipped 5.6 percent to 5.49 billion cubic meters.

The company’s shares rose 2.7 percent to 244.95 rupees at the close in Mumbai on Wednesday. The stock has risen 1.3 percent this year, compared with a 11 percent gain in the benchmark S&P BSE Sensex.