ONGC earns Rs 1,286-cr Q3 profit despite write-off after oil slump
CMD D K SARRAF INFORMS CRUDE OIL PRODUCTION WAS 6.52 MT, GAS OUTPUT WAS 5.77 BILLION CUBIC METERS
ONGC has announced that it has taken a one-time impairment charge on reserves due to slump in oil prices. Its net profit of Rs 1,286 crore in October-december was 64 per cent lower than Rs 3,571 crore in the same period a year ago, ONGC Chairman and Managing Director Dinesh K Sarraf told reporters.
With oil prices slumping to 12-year low, it wrote down the value of reserves it holds by Rs 3,994 crore. The write- down is called impairment. “It wasn’t a bad quarter but for the impairment, we consciously took, to keep our balance sheet clean,” he said adding but for the write-off the net profit would have been Rs 3,898 crore.
Revenue was down 2.3 per cent to Rs 18,547 crore on falling oil prices, he said. ONGC realised $44.34 per barrel in the third quarter, down from $50.56 a barrel net realisation in the same period a year ago. Unlike last fiscal, the company did not have to pay any fuel subsidy in October-december as the Government decided to make good all of the losses that state-owned fuel retailers incurred on selling kerosene and LPG at sub-market rates. Previously, ONGC as well as Oil India Ltd had to make good a certain part of the losses.
Sarraf said crude oil production in the third quarter was marginally down at 6.52 million tons from 6.61 million tons a year ago while gas output fell 4 per cent to 5.77 billion cubic meters.
“The company has assessed the indications of significant impairment as at December 31, 2015 due to fall in crude oil prices in the international market, and accordingly the company has tested its Cash Generating Units for the impairment. As a result, an amount of Rs 3,994 crore has been provided as impairment loss and shown as exceptional items for the quarter,” Sarraf said.
On domestic gas pricing, Sarraf said that going by the trends till December, a 15% fall in prices is expected from April 1. He added that the company might write to the government to hold the domestic gas price at $4.2 per mbtu.
He said that ONGC made 14 oil and gas discoveries in 201516. In first nine months of current fiscal, ONGC reported net profit dropping 16 per cent to Rs 11,588 crore. Revenue was however up 1.2 per cent to Rs 62,147 crore.
ONGC Videsh Ltd and Rosneft signed an Agreement of Confirmation of successful completion of the first stage pre- completion actions in relation to the creation of a joint venture in JSC “Vankorneft” on December 24, 2015. The document was signed in continuation of the agreement of sale and purchase of a 15 per cent share in Vankorneft and the shareholders agreement in regard of the enterprise management. ONGC and OIL also signed anmou on December 23, 2015, for Joint collaboration leading to mutually beneficial R&D projects fulfilling commitment under the head of “JIP- Joint Industries Project” mandated in the sectorial innovation council report of Union Government for the E&P sector.
ONGC’S Hazira Plant won the prestigious ‘Certificate of Merit’ in National Energy Conservation Award 2015 organized by Ministry of Power for adopting energy conservation measures. The National Energy Conservation Awards are presented to industries and other establishments every year by the Ministry of Power with the objective of promoting energy conservation among all sectors of economy.
The company also received Oil and Gas conservation award from the Minister of State (Independent Charge) P&NG Shri Dharmendra Pradhan on 18th January, 2016 on the occasion of Oil & Gas Conservation Fortnight-16 in New Delhi for ONGC’S role in spreading message of oil & gas conservation.