Oil and Natural Gas Corporation (ONGC) plans to increase crude output from new fields in three years after stagnant production from ageing blocks curbed profit growth.
ONGC produces 45 percent of India's oil, may raise annual output 12 percent to 28 million metric tons in the year starting April 2013. ONGC reported second- quarter net income rose 6 percent to 53.9 billion rupees ($1.2 billion), missing analysts' estimates after increasing provisions for dry wells.
ONGC is lagging behind global producers including Exxon Mobil Corp. and PetroChina Co. that have beaten earnings estimates this quarter after oil prices increased. India in June more than doubled gas prices to boost ONGC's earnings before selling a 5 percent stake by March.
The Indian explorer needs to boost earnings to compete with Cnooc Ltd. and China Petroleum & Chemical Corp. in the race for overseas energy assets. India lost out to China in at least $12.5 billion of deals for assets in the year ended June 30.
ONGC shares gained 0.2 percent to 1,307 rupees at 10 a.m. in Mumbai trading compared with a 0.1 percent increase in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock has gained 11 percent this year.
Resource Base
ONGC has a strong resource base and that will start showing in the next few years. Natural gas production may increase 67 percent to 100 million cubic meters a day starting April 2015. Four-decade-old fields that have reached their peak make up about 80 percent of ONGC’s current output. The explorer has awarded $3.5 billion of contracts in the past 18 months that will enable new fields to start in three years. Production that has been languishing for some time will get a boost. Then, there will be some pressure on volumes.
Dry Wells
The company wrote off 24.4 billion rupees for dry wells in the second quarter compared with 6.5 billion rupees a year earlier, including depletion, amortization and impairment loss, rose to 44 billion rupees from 23.6 billion rupees, according to the earnings statement.
Oil and gas price increases boosted the New Delhi-based explorer’s profit to the highest level in more than two years.
ONGC supplied crude at $62.75 a barrel in the quarter after giving discounts to state refiners as partial compensation for selling fuels below cost, an 11 percent increase from a year earlier. The government also allowed ONGC to more than double gas prices to 6,818 rupees per thousand cubic meters in June.
Discounts given by ONGC to state refiners rose 15 percent to 30.2 billion rupees from a year earlier. The subsidy bill was 55.2 billion rupees in the three months ended June 30.
ONGC produces 45 percent of India's oil, may raise annual output 12 percent to 28 million metric tons in the year starting April 2013. ONGC reported second- quarter net income rose 6 percent to 53.9 billion rupees ($1.2 billion), missing analysts' estimates after increasing provisions for dry wells.
ONGC is lagging behind global producers including Exxon Mobil Corp. and PetroChina Co. that have beaten earnings estimates this quarter after oil prices increased. India in June more than doubled gas prices to boost ONGC's earnings before selling a 5 percent stake by March.
The Indian explorer needs to boost earnings to compete with Cnooc Ltd. and China Petroleum & Chemical Corp. in the race for overseas energy assets. India lost out to China in at least $12.5 billion of deals for assets in the year ended June 30.
ONGC shares gained 0.2 percent to 1,307 rupees at 10 a.m. in Mumbai trading compared with a 0.1 percent increase in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock has gained 11 percent this year.
Resource Base
ONGC has a strong resource base and that will start showing in the next few years. Natural gas production may increase 67 percent to 100 million cubic meters a day starting April 2015. Four-decade-old fields that have reached their peak make up about 80 percent of ONGC’s current output. The explorer has awarded $3.5 billion of contracts in the past 18 months that will enable new fields to start in three years. Production that has been languishing for some time will get a boost. Then, there will be some pressure on volumes.
Dry Wells
The company wrote off 24.4 billion rupees for dry wells in the second quarter compared with 6.5 billion rupees a year earlier, including depletion, amortization and impairment loss, rose to 44 billion rupees from 23.6 billion rupees, according to the earnings statement.
Oil and gas price increases boosted the New Delhi-based explorer’s profit to the highest level in more than two years.
ONGC supplied crude at $62.75 a barrel in the quarter after giving discounts to state refiners as partial compensation for selling fuels below cost, an 11 percent increase from a year earlier. The government also allowed ONGC to more than double gas prices to 6,818 rupees per thousand cubic meters in June.
Discounts given by ONGC to state refiners rose 15 percent to 30.2 billion rupees from a year earlier. The subsidy bill was 55.2 billion rupees in the three months ended June 30.
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