ONGC Q3 net profit plunges 14% on dwindling oil prices
The decrease in earnings was primarily driven by a 6.4% reduction in the price realized for crude oil, which stood at $81.59 per barrel
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New Delhi: Oil and Natural Gas Corporation (ONGC), a state-owned entity, announced a 14 per cent decrease in net profit for the third quarter ending December 31. The standalone net profit amounted to Rs 9,536 crore, marking a 13.7 per cent decline compared to the same period in the previous fiscal year. This decline is attributed to a drop in oil and gas prices.
According to the company statement, the decrease in earnings was primarily driven by a 6.4 per cent reduction in the price realized for crude oil, which stood at $81.59 per barrel, and a 24.2 per cent decline in gas prices to $6.5 per mmBtu. Additionally, lower production of crude oil and natural gas further impacted profitability, with crude oil production decreasing by 3.3 per cent to 5.22 million tonnes and gas output declining by 4.3 per cent to 5.12 billion cubic meters.
The company's gross revenue also experienced a downturn, dropping by 10 per cent to Rs 34,789 crore in Q3. In response to the challenging financial conditions, the ONGC board approved a second interim dividend of 80 per cent or Rs 4 per share, amounting to a total payout of Rs 5,032 crore. This dividend supplements the first interim dividend of Rs 5.75 per share declared in November last year.
For the first nine months of the fiscal year, ONGC's standalone net profit fell by 24 per cent to Rs 29,767 crore, primarily due to a drop in oil prices to $75.55 per barrel from $97.10 and a 5 per cent decrease in gas prices to $6.57 per million British thermal unit. Production during this period was also lower.
ONGC attributed the reduction in production output for the first nine months of FY 2023-24 to various factors, including the shutdown of Panna-Mukta offshore platforms for the commissioning of a new crude oil pipeline and the impact of Cyclone Biparjoy in June 2023. To address declining production from mature and marginal fields, ONGC is implementing proactive measures such as well interventions and advancing new well drilling activities.
Furthermore, the company highlighted its progress in exploration and development activities, including the commencement of crude oil production from the KG-DWN-98/2 Block on January 7, 2024. ONGC also reported nine oil and gas discoveries in the current fiscal, with plans to establish a 100% subsidiary company dedicated to green energy and gas business pursuits.
