Oil & Natural Gas Company Shares Q3 Results

Oil & Natural Gas Company Shares Q3 Results

Corporate Action
by 5paisa Research Team Last Updated: 2022-08-08T18:47:52+05:30

For most of the upstream oil companies this was always going to be a robust quarter with oil prices already quoting at $93/bbl in the Brent market. Over the last one year, ONGC witnessed a sharp spike in the realizations in crude oil and in gas. The realizations from crude was up 75% YoY while the realizations from gas were up 62% YoY. This was the key factor that triggered a surge in profits despite lower oil and gas volumes produced in Q3.
 

Rs in Crore

Dec-21

Dec-20

YOY

Sep-21

QOQ

Total Income (Rs cr)

₹ 1,26,818

₹ 80,630

57.28%

₹ 1,06,307

19.29%

Operating Profit (Rs cr)

₹ 15,599

₹ 6,377

144.62%

₹ 12,529

24.51%

Net Profit (Rs cr)

₹ 10,932

₹ 2,518

334.12%

₹ 18,055

-39.45%

Diluted EPS (Rs)

₹ 8.69

₹ 2.00

 

₹ 14.35

 

Operating Margins

12.30%

7.91%

 

11.79%

 

Net Margins

8.62%

3.12%

 

16.98%

 


For the Dec-21 quarter, ONGC reported 57.3% higher net sales revenues at Rs.126,818 crore on a YoY consolidated basis. This is net of excise duties imposed on crude. During December 2021 quarter, total crude oil production of ONGC across offshore crude, onshore crude and distillates stood at 5.451 MMT. This is -3.2% lower on a YoY basis. Even the total gas production for the Dec-21 quarter was lower by -4.2% at 5.564 BCM. On a sequential basis, the revenues were up by 19.29%.

The output of value added products during the quarter also saw a fall of -5.7% at 763 KT. The fall in the production of crude oil and gas can be largely attributed to a combination of restrictive conditions created by Cyclone Tauktae and COVID related restrictions. In the quarter, ONGC declared 3 new discoveries of which 2 are inland and 1 is offshore. The sales for Dec-21 quarter were higher despite lower volumes as there was substantially improved price realizations in the quarter as we will see in the operating profit analysis.

Let us now turn to the operating performance of ONGC for the Dec-21 quarter. The operating profits for Q3 were up 144.62% at Rs.15,599 crore. Operating profits were also higher by 24.51% on a sequential basis. ONGC witnessed 3-fold increase in operating profits in offshore E&P and a sharp turnaround in onshore E&P operating profits on the strength of better realizations. Refining and marketing business saw flat to lower operating profits in Q3. 

Even the international operations of ONGC Videsh saw operating profits more than double in the quarter. Let us now turn to the all-important aspect of realizations on various products of ONGC in the third quarter. In terms of realizations, dollar realization per barrel improved in the quarter by 75.3% for crude oil from $43.20/bbl in the Dec-20 quarter to $75.73/bbl in the Dec-21 quarter.

The solid price performance was not just about crude oil but also about gas, which is also seeing a global shortage currently. Even gas price realizations improved by 62% YoY from $1.79/mmbtu to $2.90/mmbtu. The outcome was that the Operating margins improved from 7.91% in Dec-20 quarter to 12.30% in Dec-21 quarter on operating efficiencies. However, operating margins were just about 51 bps higher on sequential basis, MOM.

Finally, we come to the bottom line of ONGC for the Q3. The net profits for the Dec-21 quarter was up 334.12% YoY at Rs.10,932 crore or more than a 4-fold increase in PAT. This was largely on account of the superior operating performance getting transmitted to the bottom line of the company. The profit boost came from controlled input costs but realizations of gas and oil more than offsetting fall in volumes.

Sequential profits were, however, sharply lower by -39.5% due to the deferred tax writebacks of Rs.8,715 crore in the Sep-21 quarter. This is a one-time inflow and hence not exactly comparable with previous or subsequent quarters. PAT margins improved from 3.12% in the Dec-20 quarter to 8.62% in the Dec-21 quarter. On sequential basis, the PAT margins were sharply lower due to the exceptional one-time deferred tax credit in Sep-21 quarter.

Overall, the numbers of ONGC were extremely impressive for the third quarter largely on the strength of improved realizations. However, the best of these benefits may have already been derived.


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