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Higher subsidy payout coupled with increase in exploration expenses dents ONGC’s net profit for the first quarter of 2013-14. The company has reported a 33.9 per cent drop in its net profit at Rs 4,015.98 crore for the quarter ended June 30, 2013, against Rs 6,077.70 core for the same quarter last fiscal.
A.K. Banerjee, Director (Finance), said that the net profit has reduced because sales revenue has come down by Rs 866 crore due to higher subsidy burden. ONGC as part of the burden sharing mechanism to partially offset losses incurred by the public sector oil marketing companies extends discounts to them on crude oil and products they buy from it.
ONGC shared a subsidy burden of Rs 12,622 crore in first quarter of 2013-14 (Rs 12,346 crore).
Banerjee said that operating cost have also gone up by Rs 699 crore. This was because of exploration and production work-over programme and other expenditure costs during the quarter. ONGC incurred an additional expenditure of Rs 355 crore due to depreciation (Rs 120 crore), depletion (Rs 177 crore) and impairment (Rs 37 crore).
It has also made a one-time provision towards employees' provident fund that impacted the company's profit before tax (PBT) by Rs 1,100 crore, Banerjee said. Total income has decreased from Rs 21,216.24 crore for the quarter under review (against Rs 20,505.03 crore).
Crude oil production during the quarter including fields stood at 6.007 million tonnes down from 6.025 mt in the corresponding quarter last fiscal. Similarly, gas production dropped to 6.181 billion cubic metre (6.417 bcm).
The company’s numbers were much below the market expectations, which were expecting the profits between Rs 4,900 crore and Rs 5,532 crore.
On partnering with global explorers such as Shell and ConocoPhillips for expediting work in its deepwater block, KG-DWN-98/2, ONGC Director Finance said, "We are waiting for the results of four appraisal wells that are under way. Once, the results come we would move ahead for discussions."
“They are on our radar. But it is not that we restrict ourselves to them. There can be more players too,” Banerjee added.
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