New Delhi: Oil & Natural Gas Corp (ONGC), India's biggest explorer, Wednesday reported a surprise 3 percent increase in second-quarter profit as rupee depreciation boosted earnings and helped counter record subsidy payout.
Net profit in the July-September quarter rose to Rs 6,063.86 crore, or Rs 7.09 per share, compared to Rs 5,896.57 crore or Rs 6.89 a share in the same period a year ago, ONGC Chairman and Managing Director Sudhir Vasudeva told reporters here.
"Both oil and gas production have been flat and our net realisation has been less due to subsidy payout. It is only rupee depreciation which saved the day," he said.
The higher profit breaks a sequence of four consecutive quarters of lower net profit.
ONGC bills its oil and gas consumers in dollars and a depreciation in rupee adds to its revenues.
ONGC paid Rs 13,796 crore to subsidise diesel, cooking gas (LPG) and kerosene in the second quarter as opposed to Rs 12,330 crore payout in the same period last fiscal.
Upstream oil producers like ONGC give discounts on crude oil they sell to refiners to cover for a part of the losses incurred on sale of diesel and cooking fuel rates lower than cost of production.
ONGC said its net profit would have been higher by Rs 7,621 crore if it had not paid the fuel subsidy.
"Our net realisation after paying subsidy in Q2 was USD 44.84 per barrel as compared to USD 46.76 per barrel in Q2 of last year," he said.
"Our net realisation has been coming down and in H1 it was only USD 42.56 per barrel. We need net crude price of USD 60 per barrel to be able to fund Rs 35,000 crore plus of annual capex plans.
"If the current trend of realisation continues we will have to dip into our cash reserves to the extend of Rs 5,000 crore this year and a similar amount next year," he added.
ONGC had a cash reserve of Rs 13,000 crore at the beginning of the fiscal which would be exhausted in 2-3 years.
Turnover increased 13 percent to Rs 22,414.67 crore in July-September from Rs 19,885.09 crore a year earlier.
Crude oil production was almost unchanged at 5.01 million tonnes while natural gas output dipped 1.4 percent to 4.55 billion cubic metres.
Shares of ONGC closed at Rs 268.40 apiece, up 0.96 percent on the BSE.
First Published: Wednesday, November 13, 2013, 18:01