ONGC profit slips 19.5% on write-offs, high costs

Fall despite not having to bear subsidy burden in Q4.

Belying market expectations, state-run ONGC on Thursday reported a 19.5 per cent drop in its net profit for January-March 2015 to Rs 3,935 crore against Rs 4,889 crore in the corresponding period a year ago, due to a steep fall in realisations from crude oil sales from joint venture projects like the Barmer field as also write-offs on dry wells.

The fall in profit is despite the fact that the explorer did not have to bear any oil subsidy burden in the fourth quarter of FY15 and reported a net realisation of $55.63 per barrel on crude sales against $32.78 a barrel in the same quarter last year.

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Total income from operations grew 1.6 per cent to Rs 21,647.5 crore in Q4FY15 compared with Rs 21,313 crore in the year-ago period. Analysts expected the Maharatna firm to report a profit of Rs 5,500 crore or thereabouts after tax in the quarter on revenues of roughly the same level it actually achieved.

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The PSU firm’s operating cost rose by Rs 1,278 crore, impacting the profit, and it wrote off Rs 291 crore of exploration expense for drilling wells that did not result in any discovery. In the fourth quarter of FY15, revenue from value-added products was down 35 per cent year-on-year to Rs 1,866 crore.

ONGC has an ambitious target to drill about 1.74 million tonnes of incremental crude oil and 2.98 bcm of additional natural gas in FY16. The explorer produced 22.26 million tonnes of crude oil in FY15, marginally higher from previous year. FE

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