State-run oil producer Oil and Natural Gas Corp reports a notable profit increase in the June quarter driven by stronger crude prices and cost reductions, but ongoing output decline signals a shift in investor focus towards output expansion and exploration initiatives.
Oil and Natural Gas Corp has reported a sharp improvement in profit for the June quarter, helped by stronger crude prices and lower costs, but its production trend still underlines why investors are focused on output growth rather than earnings alone.
The state-run producer said crude realisation from its own fields rose to $99.5 per barrel in the quarter, up from $78.3 in the previous three months and $66.1 a year earlier, while gas realisation improved to $7.0 per million British thermal units. According to Business Standard, the higher pricing environment, together with lower interest expense and reduced survey and exploration costs, helped lift net profit even as production remained under pressure.
Output, however, continued to drift lower. Oil production from ONGC’s own fields fell 5% from a year earlier to 4.7 million metric tonnes, while gas output from those fields slipped 1.9% to 4.8 billion cubic metres. Including joint ventures, total oil production was down 5.5% year on year and gas production fell 2.3%, even though both were broadly flat from the previous quarter, Business Standard reported. The company said the decline reflected year-on-year variation and temporary operational issues at KG-DWN-98/2.
Livemint said consolidated operating profit rose 28.04% to ₹16,504.65 crore and profit after tax increased 33.88% to ₹9,804.07 crore. Total income, though, fell 4.51% from the previous quarter to ₹163,108.12 crore, while the operating margin was 10.12%. The share price eased in trading after the results, according to Livemint.
Beyond the quarterly numbers, ONGC is leaning heavily on a larger drilling and exploration push. Business Standard said the company is targeting standalone oil and gas production of 39 million metric tonnes in FY27 and 40 million metric tonnes in FY28, with capital spending of $3.5 billion to $4 billion planned for FY27. It is also preparing for a programme called Samudra Manthan, which envisages 100 deepwater exploratory wells, while management expects incremental gas supply from projects including East Coast CP, Tapti and Daman by December 2026.
The company is also seeing progress at some of its overseas and downstream assets. According to the report, ONGC Videsh improved oil output and benefited from production at Sakhalin-1, while the Sakhalin asset is expected to support a return to profitability. By contrast, OPaL’s performance weakened in the quarter as higher feedstock costs pushed it to a loss and reduced plant utilisation.
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