RIDING on high crude oil prices, India’s biggest government firm, is likely to post a 15.2% rise in the second quarter net profit to Rs 4,800 crore. Analysts believe that ONGC’s profits could have been much more but for the strong rupee appreciation. Its mandatory discount to refiners is likely to prove a dampener for the company, when it announces its Q2 results on Tuesday.
The rupee has appreciated by around 13% in the past 12 months averaging at Rs 40.53 during the September 2007 quarter. This is likely to cancel out a large chunk of benefits from other positive factors such as a 25% fall in the subsidy burden and a year-on-year (y-o-y) rise in production of both oil and gas.
During the September 2007 quarter, the E&P major is likely to report around 1.7% higher crude oil production at 6.5 million tonne, while the production of natural gas is estimated to be higher by 7.8% at 5.65 billion cubic metres. However, crude oil production in September dropped marginally to 2.79 million tonne when compared with 2.81 million tonne in September 2006 and planned production of 2.87 million tonne. The benchmark WTI crude oil prices during the quarter ended September 2007 averaged at around $75.5 per barrel, which was around 7% higher compared to the average during the corresponding previous quarter.
During the quarter, ONGC paid advance tax of Rs 2,401 crore, 17% more than Rs 2,052 crore paid by the company in the same period last year. This is the highest advance tax paid by any corporate in this quarter. ONGC’s subsidy burden during the September 2007 quarter is likely to come down sharply by around 25% to below Rs 3,800 crore from Rs 5,032 crore in the quarter ended September 2006. The company’s performance during the corresponding previous quarter was also burdened with a penalty of Rs 365 crore towards extension of licence period.
ONGC, which accounts for over 70% of India’s total natural gas production, has long pleaded with the petroleum ministry to revise upwards the gas prices set under the administered pricing mechanism.
The rupee has appreciated by around 13% in the past 12 months averaging at Rs 40.53 during the September 2007 quarter. This is likely to cancel out a large chunk of benefits from other positive factors such as a 25% fall in the subsidy burden and a year-on-year (y-o-y) rise in production of both oil and gas.
During the September 2007 quarter, the E&P major is likely to report around 1.7% higher crude oil production at 6.5 million tonne, while the production of natural gas is estimated to be higher by 7.8% at 5.65 billion cubic metres. However, crude oil production in September dropped marginally to 2.79 million tonne when compared with 2.81 million tonne in September 2006 and planned production of 2.87 million tonne. The benchmark WTI crude oil prices during the quarter ended September 2007 averaged at around $75.5 per barrel, which was around 7% higher compared to the average during the corresponding previous quarter.
During the quarter, ONGC paid advance tax of Rs 2,401 crore, 17% more than Rs 2,052 crore paid by the company in the same period last year. This is the highest advance tax paid by any corporate in this quarter. ONGC’s subsidy burden during the September 2007 quarter is likely to come down sharply by around 25% to below Rs 3,800 crore from Rs 5,032 crore in the quarter ended September 2006. The company’s performance during the corresponding previous quarter was also burdened with a penalty of Rs 365 crore towards extension of licence period.
ONGC, which accounts for over 70% of India’s total natural gas production, has long pleaded with the petroleum ministry to revise upwards the gas prices set under the administered pricing mechanism.
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