ONGC Q2 profit surges 6.6 times on tax writeback, higher crude prices

State-run Oil & Natural Gas Corp reported a sharp jump in its net profit for the second quarter of this fiscal year, as it benefited from higher crude oil prices and adopted a lower tax structure.

Standalone net profit for the July-September period rose 6.6 times, or 565%, to Rs 18,348 crore from Rs 2,758 crore a year earlier, the state-run explorer said Friday. Profit exceeded analysts’ estimates of around Rs 6,300-6,400 crore.

Gross revenue climbed 44% to Rs 24,353 crore from Rs 16,916 crore.

ONGC said its operating margin expanded to 48.17% in the second quarter from 32.78% a year ago thanks to an increase in global crude oil prices.

The company’s realization on crude oil increased about 70% to $69-71 per barrel from around $41 per barrel a year earlier. This offset a 3.8% fall in total crude oil output to 5.471 million metric tonnes from 5.686 MMT a year earlier.

ONGC Q2: Other highlights

1) ONGC board approved interim dividend of 110%, which means Rs 5.50 on each equity share of Rs 5.

2) The total dividend payout on this account will be Rs 6,919 crore.

3) Consolidated gross revenue for Q2 rises 465 to Rs 1,22,029 crore from Rs 83,619 crore a year earlier.

4) Consolidated net profit Rs 18,749 crore, up 230% from Rs 5,675 crore a year earlier.

5) Total gas production fell 7% on year to 5.467 billion cubic metres from 5.88 billion cubic metres.

Lower output, lower tax

ONGC said production of crude oil and gas declined mainly due to restrictive conditions created by cyclone Tauktae and due to the impact of Covid-19. A delay in mobilization of Mobile Offshore Production Unit Sagar Samrat to WO-16 Cluster project also impacted production from this field, ONGC said.

ONGC also said that, during the quarter, it has decided to opt for lower tax regime with effect from 2020-21. Accordingly, it recognized provision for tax expenses and re-measured its net deferred tax liabilities.

The net impact due to availing the option has resulted in a decrease in deferred tax by Rs 8,541 crore and decrease in current tax by Rs 1,304 crore, the company said.