ONGC profit dips 20% on higher costs, write-off

Revenue from value added products was down 35% to Rs 1,866 crore

State-owned ONGC today reported 19.5 per cent drop in net profit to Rs 3,935 crore for the quarter ended March 31, 2015, mainly due to higher operating cost and write-off on dry wells drilled.

The net profit of Oil and Natural Gas corp in January- March was lower than Rs 4,889 crore in the January-March period of the previous fiscal, 2013-14, ONGC Chairman and Managing Director Dinesh K Sarraf told reporters here.

While the company realised USD 55.63 for every barrel of oil produced as compared to USD 44.87 per barrel in the fourth quarter of the previous fiscal, operating cost rose by Rs 1,278 crore, impacting the profit.

The company wrote off Rs 291 crore of exploration expense for drilling wells that did not result in any discovery.

Besides, revenue from value added products (VAP) was down 35 per cent to Rs 1,866 crore.

For the full 2014-15 fiscal, the company wrote off about Rs 10,000 crore, of which Rs 2,700 crore was on account of dry wells, Sarraf said.

Also, the company had lower production from joint venture fields.

Sarraf said the company was exempt from paying any fuel subsidy in the fourth quarter of 2014-15 and will also not be required to pay any in the first quarter of current fiscal.

Turnover was up 1.3 per cent to Rs 21,683 crore.

While it was not required to pay any subsidy in Q4, the subsidy payout in full 2014-15 fiscal was Rs 36,300 crore that left a Rs 20437 crore dent on its bottomline, he said.

ONGC, which along with Oil India Ltd and GAIL meets more than half of the losses retailers incur on selling LPG and kerosene at government controlled rates, had a net profit of Rs 17,733 crore in 2014-15, down 19.7 per cent over previous year net of Rs 22,095 crore.

Crude oil production was marginally lower at 6.45 million tonnes in Q4 as opposed to 6.47 million tonnes a year ago. Gas output was down 5.83 per cent to 5.81 billion cubic meters.