ONGC net misses estimates as cost of drilling dry wells doubles
RAKTEEM KATAKEY and DEBJIT CHAKRABORTY
NEW DELHI -- ONGC’s first-quarter profit missed analyst estimates after India’s biggest explorer doubled costs for drilling dry wells and sold crude at a steeper discount.
Net income rose 19% to 47.8 billion rupees ($782 million) in the three months ended June 30 from 40.2 billion rupees a year earlier, New Delhi-based ONGC said in a statement yesterday. That missed the 58.5 billion-rupee median estimate of 29 analysts surveyed by Bloomberg. Sales rose 13% to 218.1 billion rupees.
“Higher exploration write-offs took a bite out of ONGC’s profits,” said Dhaval Joshi, a Mumbai-based analyst at Emkay Global Financial Services Ltd. “Without this, the profits could have been closer to expectations.”
ONGC wrote down 38.3 billion rupees during the quarter for exploration costs, compared with 15.68 billion rupees a year earlier. It gave 132 billion rupees of discounts to refiners, including Indian Oil Corp. in the quarter, compared with 126.2 billion rupees a year earlier, according to the statement.
The discount is required by the Indian government and takes away almost half of ONGC’s profit every quarter to partly compensate state-run refiners for selling fuels below cost. Finance Minister Arun Jaitley is preparing to sell shares in the company to help narrow the nation’s budget deficit to the lowest in eight years.