ONGC 1Q Net up 48%; Strikes New Reserves in Western Offshore

NEW DELHI - Oil & Natural Gas Corp., India's largest explorer, Saturday posted a 48% rise in its quarterly net profit, beating analyst estimates, and said it has discovered a new pool of reserves in western offshore that could significantly boost its output.

A fall in crude-oil prices on global economic turmoil has hurt profit from the exploration and production business of oil majors like Exxon Mobil Corp. and ConocoPhillips.

However Indian explorers have bucked the trend as they bill refiners in Indian rupee, which fell 21% against the dollar during the quarter, boosting earnings.

The New Delhi explorer said net profit for the quarter ended June 30 rose to 60.78 billion rupees ($1.1 billion) from 40.95 billion rupees in the year earlier period.

Eleven analysts polled by Dow Jones Newswires expected an average net profit of 48.99 billion rupees.

Sales for the quarter rose 24% to 200.84 billion rupees from 161.99 billion rupees a year earlier.

The state-run company accounted for 62% of India's crude oil and 49% of its natural-gas output in the year ended March 30.

ONGC said it has discovered a new pool of reserves in western offshore. This could help it boost output of its D1 field five times to 60,000 barrels a day by March 2014 from 12,500 barrels a day now.

The Mumbai High western offshore accounts for 70% of the company's production.

ONGC's standalone total crude-oil output for the quarter ended June 30 fell 3% to 454,460 barrels a day.

"This discovery indeed has come up with a lot of promise signifying a substantial increase in the production for the company. Finally we have made it to a large discovery which was eluding us for long," Chairman Sudhir Vasudeva said in a news conference.

ONGC's local production has been declining for the past five years as majority of its producing fields are ageing and as it hasn't been able to bring any new major field into production.

It has set an ambitious target for four-times growth in market capitalization, three-fold increase in revenue and a two-fold rise in production by 2030.

ONGC, which along with other state-run explorers, has to sell crude oil and products to refiners at below market prices, said the discounts on crude sales shaved of 71.49 billion rupees from its profit in the most recent quarter.

The discounted sales are a part of government mechanism to support state-run refiners, who sell fuel products at government set rates to keep inflation under check.

Post discounts to retailers, ONGC earned $46.62 a barrel, down 4.4% on year. But in rupee terms earnings per barrel of crude sold rose 15.9%.


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