ONGC pares debt by 35%, but low oil & gas prices a concern
The Centre said it has issued draft notification for separate emission norms for agriculture machinery and construction equipment vehicles. MoRTH has invited suggestions on a draft notification seeking to amend Central Motor Vehicles Rules 1989 to separate the emission norms for agricultural machinery (agricultural tractors, power tillers and combined harvesters) and construction equipment vehicles, a release said.
Online retailer Amazon launched an upgraded 'Amazon Easy' store format that integrates its multiple services through a single touchpoint. The format would offer a touchand-feel product experience through a physical product display, the firm said. Customers can also place an order on Amazon.in with assistance from the store staff and either pick up the order from the store or get it delivered at the doorstep.
The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter, and slashed production rates as the coronavirus pandemic caused a drastic fall in fuel prices and demand.
The dramatic reductions in asset valuations and decline in output show the depth of the pain in the second quarter. Fuel demand at one point was down by more than 30 per cent worldwide, and still remains below pre-pandemic levels.
Several executives said they took massive writedowns because they expect demand to remain impaired for several more quarters as people travel less and use less fuel due to the ongoing global pandemic that has killed more than
700,000 people.
Of those five companies, only Exxon Mobil did not book sizeable impairments. But an ongoing reevaluation of its plans could lead to a “significant portion” of its assets being impaired, it reported, and signal the elimination of
20 per cent or 4.4 billion barrels of its oil and gas reserves.
By contrast, BP took a $17 billion hit. It said it plans to re-centre its spending in coming years around renewables and less on oil and natural gas.
Weak demand means oil producers must revisit business plans, said Lee Maginniss, managing director at consultants Alarez & Marsal. He said the goal should be to pump only what generates cash in excess of overhead costs. “It’s low-cost production mode through the end of 2021 for sure, and to 2022 to the extent there are new development plans being contemplated,” Maginniss said.
London-based BP has previously said it plans to cut its overall output by roughly 1 million barrels of oil equivalent (boepd) by the end of 2030 from its current 3.6 million boepd.
Of the five, Exxon is the largest producer, with daily output of 3.64 million boepd, but its production dropped 408,000 boepd between the first and second quarters. The five majors, which include Chevron Corp, Royal Dutch Shell and Total SA, also cut capital expenditures by a combined $25 billion between the quarters.
New Delhi, Aug 9: Stateowned Oil and Natural Gas Corporation (ONGC) has cut its debt by more than one-third but faces an uphill challenge to meeting planned expenditure during the current fiscal due to oil and gas prices falling below suboptimal levels, according to company officials and regulatory filings.
ONGC's outstanding debt of Rs 21,593 crore as on March 31, 2019 has come down to Rs 13,949 crore as on March 31, 2020, as it used revenue from better operations to retire some of the borrowings, according to the company's regulatory filings.
Out of this debt, longterm borrowings account for Rs 2,245 crore which are due for maturity in December 2029.
The company had cash and cash equivalent (including other bank balances) of Rs 968 crore as on March 31, 2020, up from a record low of Rs
504 crore a year back. Standalone debt-equity ratio at the end of March
31, 2020 is only 0.07, which is considered comfortable.
Company officials explained that ONGC has been working on bringing operational efficiencies and financial discipline and used surplus revenues to repay debt.
"While we ended the
2019-20 fiscal year with a comfortable financial position, we face an uphill challenge during the current 2020-21 financial year. The pandemic has played havoc on oil prices and government mandated gas price is way below cost of production," a senior official said.
ONGC has planned a capital expenditure of over Rs 26,000 crore and meeting that target with the current oil and gas prices will be a challenge, he said.
Another official said the company had taken an impairment loss of Rs
4,899 crore in Q4 FY'20 to factor in estimated future crude oil and natural gas prices. However, the company believes that oil and gas prices will recover in future and then this impairment loss shall be reversed as and when prices rise, he said.
ONGC once was India's most profitable company with a cash balance of over Rs 10,000 crore. But the fortunes reversed after the company bought the government's 51.11 per cent stake in oil marketing company Hindustan Petroleum Corporation Ltd (HPCL) and the Gujarat government's GSPC in a KGbasin gas block.
It funded the Rs 36,915 crore acquisition of 51.11 per cent equity shares in HPCL through internal funds of Rs 12,034 crore and balance Rs 24,881 crore from borrowed money from commercial banks.
The funding requirement of Rs 7,560 crore for Gujarat State Petroleum Corporation's KG block acquisition was met by borrowing against term deposits.
Its cash and balances dipped to touch a record low of Rs 504 crore in March 2019, down from Rs 1,013 crore in March 2018 and Rs 9,511 crore in March 2017 and Rs 9,957 in March 2016.
"We live in an era of suboptimal oil prices and government mandated natural gas prices that are way below the cost. The answer to such a scenario is to optimise cost and bring in operational efficiencies," an official said.
He said the company has sufficient lines of credit/ short term fund facilities with banks amounting to Rs 7,800 crore for meeting the working capital or deficit requirements. Further, the company has an overall limit of Rs 10,000 crore for raising funds through commercial paper.