The Assam-based oil producing company, Oil India, is reaping gains from higher natural gas prices as it replicated the September 2010 quarter performance and posted good profit growth in the December quarter, too. The strong performance is set to continue as production growth is likely to be steady.
Profits from the natural gas segment jumped nearly four-fold to . 165.3 crore, contributing nearly 12% to the company’s pre-tax profits as against just about 4% a year ago. Gas production during the quarter, although higher on a sequential basis, was down 1.6% against the year-ago period at 0.62 billion cubic meters.
The company also benefited from better realisation for its crude oil after doling out discounts to downstream marketing companies. At $67 per barrel, the net realised oil price was the highest for the company in the past several quarters — 14% higher on a year-onyear basis — and boosted the oil segment’s sales by 11% to . 2,047.5 crore. The company, which is targeting 1 million tonne oil production every quarter, improved its output by 2.6% to 0.93 million tonne during the December quarter. A 3.8% appreciation in rupee proved to be the only negative factor.
The pipelines division posted a profit for the first time in the December quarter. The PBIT from the transport segment was at . 9.8 crore for the December quarter compared with a loss of . 18.3 crore in the year-ago period. It also booked a one-time gain of . 51.5 crore towards revision in transportation tariffs pertaining to earlier years.
The company reported a 26.6% growth in net profit at . 908 crore, while revenues for the quarter were up 17% at . 2,388.6 crore. The subsidy burden the company shouldered was around 19.5% higher than the year-ago period at . 558.6 crore. However, the December quarter’s profit was lower than the September quarter numbers as staff and depreciation costs soared.
Considering the latest earnings and the correction in the scrip over the last few weeks, the price-to-earnings ratio stands at 11.6, lower than ONGC’s 12.8. The company has lined up an aggressive capex programme of . 7,400 crore for FY11 and FY12 combined. More than a quarter of this is earmarked for inorganic growth, while nearly 60% will be spent on exploration and development. With steady production growth, low subsidy burden and substantial capital expenditure lined up, the company’s profit growth is likely to continue.
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