ONGC reports 15-year low in quarterly profit as oil slump takes a toll
NEW DELHI (Bloomberg) -- Oil & Natural Gas Corp. reported the lowest quarterly profit in more than 15 years following the slump in crude prices. The decline may extend for another quarter, the company said.
Net income at India’s biggest energy explorer fell to 12.86 billion rupees ($188 million) in the three months ended Dec. 31 from 35.7 billion rupees a year earlier, the state-owned company said in a statement Thursday. The profit missed an average estimate of 38.3 billion rupees by 27 analysts compiled by Bloomberg. The company took a 39.94 billion rupee impairment charge on account of the fall in crude prices, which reduced profit by 26.12 billion rupees, according to the statement.
“It wasn’t a bad quarter but for the impairment, we consciously took, to keep our balance sheet clean,” Chairman Dinesh Kumar Sarraf told reporters in New Delhi on Thursday.
Brent oil, the global benchmark, averaged about $44.75/bbl in the quarter, 42 percent lower than a year earlier. The explorer is tasked by Prime Minister Narendra Modi’s government with securing supplies as India targets to cut import dependence by 10% by 2022. The profit decline hinders the company’s plan to spend 11 trillion rupees by 2030 to add assets in India and overseas. Sales fell almost 2% to 184 billion rupees.
“The impairment was imminent due to the oil’s slump,” said Dhaval Joshi, a Mumbai-based analyst at Emkay Global Financial Services Ltd. “The outlook will remain weak as long as crude prices are low.”
The company, which usually sells crude at a discount to state refiners that then offer some fuels below cost for the poor, didn’t give any rebate to the fuel retailers in the quarter. The company made an average $44.34 on every barrel of oil sold during the three-month period, as against $35.52/bbl last year, which included discounts. The profit is the lowest since the quarter ended June 30, 2000.
ONGC fell 4.9% to 203.15 rupees in Mumbai on Thursday, amid a rout in Indian stocks as the benchmark S&P BSE Sensex dropped 3.4%. The stock has declined 16% this year. The earnings were announced after the close of trading.
