Oil explorers rally as crude boils

Shares of two state-run oil explorers rose by 3.21% to 6.23% amid rising crude oil prices.

ONGC (up 6.23%) and Oil India (OIL) (up 3.21%) jumped.

In the commodities market, Brent crude for December 2021 settlement was up 0.21% at $81.43 a barrel. It has jumped 12.15% in the past one month.

Higher crude oil prices boost oil explorers' average realisation from every barrel of the oil sold.

Shares of ONGC hit a 52-week high of Rs 158.90 today. The stock has soared 202.70% from its low of Rs 51.80 hit on 13 March 2020.

In the past one month, the stock has surged 28.20% as against 2% rise in the Sensex. It has jumped 128.13% in the past one year compared with 52.13% surge in the Sensex.

 

Shares of OIL hit a 52-week high of Rs 267.70 on 1 October 2021. The stock has soared 277.50% from its low of Rs 66 hit on 13 March 2020.

In the past one month, the stock has surged 36.68% as against 2% rise in the Sensex. It has jumped 188.10% in the past one year compared with 52.13% surge in the Sensex.

Fitch Ratings on Monday (4 October 2021) said that the 62% increase in natural gas prices by the Indian government will boost the profitability of upstream companies in the country and support their investment spending.

The price for gas from fields that were assigned by the state to oil companies, mainly state-owned ONGC and OIL, increased to $2.90 per million British thermal units (mmBtu) for October 2021-March 2022 from $1.79 per mmBtu in April 2021-September 2021.

The government also increased the price ceiling for gas produced from deepwater and other difficult fields to $6.13 per mmBtu from $3.62 per mmBtu.

ONGC's and OIL's ratings and standalone credit profiles (SCP) remain unchanged as the price increase was largely in line with Fitch's expectations, driven by the rise in global prices over July 2020-June 2021. However, sustained high gas prices will strengthen ONGC's 'bbb+' SCP and add buffer to OIL's credit metrics, which will support its capex to expand capacity at subsidiary Numaligarh Refinery, Fitch added.

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