Oil and Natural Gas Corporation’s fourth quarter profit jumped 12% mainly on reversal of impairment loss as well as lower provisioning for dry wells. The state-run oil and gas producer’s profit rose to Rs 44.16 billion in three months to March despite a 24% contraction in revenue that slid to Rs 164.24 billion due to a sharp fall in oil prices. The company realized a net crude oil price of Rs 2354 ($34.88) per barrel in the quarter compared with Rs 3,463 ($55.63) a year ago.
The fourth quarter profit was primarily driven by write backs of some impairment losses taken last quarter, lower provisioning for dry wells and the government taking over the burden of oil price discounts ONGC had provided to fuel retailers in the first half of 2015-16, A K Srinivasan, director (finance) said.
ONGC wrote back about Rs 8.50 billion of impairment losses it took in the previous quarter as oil prices rebounded, boosting the value of the company’s assets. The company has used a crude oil price range of $40-54/barrel for valuing its assets for the purpose of impairment. The provision for dry wells was lower by Rs 6 billion while the government decision to take over most of ONGC’s oil subsidy burden for 2015-16 boosted quarterly profit by Rs 3.50 billion.
An impairment of Rs 30 billion also swung ONGC’s overseas arm, ONGC Videsh, to a loss of Rs 20.94 billion for 2015-16, chairman Dinesh Sarraf said. This was probably the first loss for ONGC Videsh in a decade, Sarraf said. Sarraf declined comment on whether ONGC was in talks to acquire Gujarat State Petroleum Corporation (GSPC) or its key project in the KG basin off the eastern coast.
ONGC currently has a cash reserve of Rs 140 billion. Sarraf said the company would evaluate marginal fields’ data and bid in the auction that was launched on Thursday. Most of 67 marginal fields were discovered by ONGC but not developed for years, prompting the government to take over these fields and put up for auction. Glen Rice Authentic JerseyShare This