ONGC's Q3 net profit rises 26% to Rs 11,045 crore on high gas prices

Board okays 2nd interim dividend of Rs 4 per share with face value of Rs 5

State-run ONGC’s net profit increased 26 per cent year-on-year to Rs 11,045 crore in the December quarter (Q3FY23) owing to higher prices of gas under the administered price mechanism (APM).

Net profit was, however, 13.88 per cent lower than Rs 12,826 crore India’s largest oil and gas producer reported in the preceding September quarter.

Gross revenues rose to Rs 38,584 crore during the quarter, marking a 35.5 per cent jump from Rs 28,474 crore earned in the year-ago quarter.

ONGC shares closed flat with a marginal gain of 30 paise over its previous close at Rs 148.45 on February 14 on the National Stock Exchange.

ONGC reported a 195 per cent rise in its gas realisation in the latest quarter. Under the pricing guidelines issued in 2014, the government has raised domestic natural gas price by 41 per cent to $8.57 per mmbtu (Million British Thermal Units) for the second half of FY23, against $6.1 per mmbtu in the first half.

The spike in domestic gas price has brought some relief to oil and gas producers that faced the heat of windfall taxes.

The company’s gross billing for the crude oil it produced rose 15 per cent to $87.13 per barrel in the quarter from $75.73 a barrel in Q3 last year. Net realisation after considering windfall taxes stood at $84.9 per barrel.

On Tuesday, the company’s board approved a second interim dividend of Rs 4 to its shareholders on each equity share of Rs 5. The total payout on this account will be Rs 5,032 crore. The record date for distribution of dividend has been fixed for February 24. The first dividend paid out by the company had been Rs 6.75 per share.

ONGC produces over 1.26 million barrels of oil equivalent per day, contributing around 71 per cent of India’s domestic production. Its wholly-owned subsidiary ONGC Videsh (OVL) is the biggest Indian multinational, with 35 oil & gas assets in 15 countries.  

The company reiterated that uncertainties and constraints across the global supply chain due to the Russia-Ukraine conflict have adversely affected the production of crude oil and gas.

“Significant peaks in energy prices and political stands of different nations in the aforementioned matter have significantly impacted energy productivity, affordability, and cost inflation, besides the lingering aftermath of the restrictive conditions due to the Covid-19 pandemic," it said.

ONGC sells crude oil, refined at refineries to produce petrol, diesel and other petroleum products, at international benchmark rates. Prices had soared following the Russian invasion of Ukraine.

The company said it made seven discoveries so far in 2022-23 – four are onland and the rest are offshore in its operated acreages. Of these, two are prospects, while five are pools.

Windfall tax impact

Overall earnings remained affected by the government’s windfall tax regime, company officials said. Crude oil prices have witnessed extreme volatility in 2022. This has resulted in very high prices for end consumers at petrol pumps. Countries around the world have implemented various measures to mitigate the adverse impacts on consumers.

Windfall tax is one of the measures that helps in dealing with the situation.