Better refining margins, gas sales from K-G basin push up profit
Reliance Industries Ltd (RIL) is back to what it does best. After a gap of five quarters, India’s largest private sector company posted a 15.8 per cent increase in net profit during the quarter ended December 2009.
The increase in profits has been on account of better gross refining margins (GRM) and higher natural gas sales from the Krishna-Godavari basin, analysts said.
RIL’s net profit for the December 2009 quarter was Rs 4,008 crore, against Rs 3,462 crore in the corresponding quarter of last year.
“Both our key projects, namely, the new SEZ refinery and KG-D6 oil and gas development, have ramped up successfully and safely. Reliance is well poised to benefit from the improving global economic environment and domestic markets’ opportunities,” said Chairman and Managing Director Mukesh D Ambani.
During the quarter under review, when global GRMs stood at $1.49 a barrel, RIL posted a GRM (earning on turning every barrel of crude oil into fuel) of $5.90 per barrel against $10 per barrel during the corresponding previous quarter, the company said in a media release.
Analysts had expected RIL to post a GRM of $5.30 per barrel. Global GRMs, on the other hand, fell to $1.9 during the quarter. “GRMs were very volatile last year but we expect them to be better in the next quarters,” said Alok Agarwal, chief financial officer, RIL.
Agarwal said the quarter had several new records, including highest turnover, PBDIT, PBIT, highest ever gas production and quantity of crude processed, at 16.62 million tones.
The new refinery has operated more than 58,000 barrels per day on some days, with utilisation at 115 per cent for the quarter. Agarwal said GRM would improve in 2010. The first three weeks of January started well.
“Sequential increase in GRMs and gas sales has helped RIL post increase in profit. The company has posted results marginally above the Street’s expectation, though the petrochemical margins have reduced sequentially,” said Vinay Nair, senior analyst, Khandwala Securities.
The turnover of the company rose 92.31 per cent at Rs 56,856 crore, against Rs 29,564 crore in the corresponding period a year ago.
The revenue from refining grew nearly 142.8 per cent to Rs 48,000 crore, mainly due to the merger of the 580,000 barrels per day only-for-exports refinery of Reliance Petroleum. Income from the petrochemical business was Rs 2,055 crore, up by 24 per cent.
During the three-month period, revenue from the oil and gas segment, which includes exploration, development and production, more than tripled to Rs 3,530 crore against Rs 1,031 crore during the corresponding previous quarter.
The petrochemicals business saw a 16.9 per cent rise in revenue to Rs 14,756 crore. The company, which began production of natural gas from its KG-D6 facility in April 2009, has ramped up the production to over 60 million standard cubic metres per day (mscmd). During the quarter, RIL produced 337,000 tonnes of crude oil and 9,014 mscmd of natural gas from its eastern offshore KG-D6 field. RIL said 16 of the 18 wells of KG-D6 have commenced production; the other two are ready, too.
Reliance, which has made a bid to acquire Netherlands-based bankrupt petrochemicals firm LyondellBasell Industries, said it had outstanding debt of Rs 70,008 crore as on December 31, 2009, and cash reserve of Rs 15,959 crore.
RIL’s scrip closed 0.06 per cent down at Rs 1,053.15 on the Bombay stock exchange.
