Tue Jan 30, 2007 7:40 PM IST
NEW DELHI/MUMBAI (Reuters) - Oil and Natural Gas Corp. Ltd. (ONGC), India's most valuable company, said its quarterly net profit rose 20 percent, beating forecasts, as it sold more crude and a mandated discount to refiners fell.
State-run ONGC's crude production in the December quarter rose 12 percent from a year earlier to 7.13 million tonnes.
"I've always been bullish about ONGC's performance and the outlook is very positive," Chairman R.S. Sharma told reporters on Tuesday.
The oil and gas producer, hobbled by government caps on oil and gas prices, said net profit rose to 46.68 billion rupees from 38.87 billion rupees a year ago.
ONGC is required by the government to sell crude at a discount to refiners to keep down the cost of fuel.
ONGC said the discount to the market price of crude it had to offer fell to $11.27 a barrel in the quarter from $16.37 a year earlier. That allowed it to sell crude at an average of $50.87 a barrel versus $42.57 a year ago.
"The earnings are going to be taken very positively by the market tomorrow, but it is very surprising that ONGC has earned more than $50 a barrel for its crude, a very healthy sign for the company," said Jayesh Shroff, fund manager at SBI Mutual Fund.
Ten analysts polled by Reuters had forecast a 6 percent rise in net profit to 41.07 billion rupees for ONGC, which produces 80 percent of India's oil and gas.
During the quarter, the company's overseas arm, ONGC Videsh Ltd. (OVL), started selling its 20 percent share of Sokol crude from Russia's Exxon Mobil-operated Sakhalin-1 oilfield.
ONGC said it would spend 61.52 billion rupees to boost output from its key Mumbai High offshore fields, where a fire destroyed a large platform in July 2005 and cut production.
ONGC said it would set up new facilities at the fields to process 48,000 bpd of crude oil and 6.8 million cubic metres of gas per day.
The earnings statement came as analysts await a drilling update from exploration in the Krishna Godavari basin off India's east coast, where ONGC has discovered a new gas field.
ENAM Securities analyst Harshavardhan Dole estimates the gas find could add about 4 billion barrels of oil equivalent (boe) to existing reserves of around 5.1 billion boe.
Analysts are also hopeful the government may revise its gas price regime in ONGC's favour.
During the quarter, shares in ONGC rose 12 percent, beating an 8.5 percent rise in those of rival and top private firm Reliance Industries Ltd., with which it competes for position of India's top company by market value.
ONGC, which has a market value of more than $44 billion, also a beat 10.7 percent rise in the benchmark BSE index, but lagged an about 16 percent rise in the oil sector index.
The company's shares closed 0.5 percent lower at 914.60 rupees ahead of its results on Monday. The Mumbai stock market was closed for a holiday on Tuesday.
© Reuters 2007. All Rights Reserved.
Comments