Profit slumps at India's ONGC on provisions, write-offs
NEW DELHI/MUMBAI (Reuters) - India's state-controlled Oil and Natural Gas Corp (ONGC.NS) reported a bigger than expected 34 percent fall in its first-quarter profit on Monday, as higher write-offs for dry wells and depreciation, along with a one-time provision for a pension scheme, dented margins.
ONGC, India's fourth-biggest company by market value, posted a net profit of 40.16 billion rupees ($660 million) for the April-June quarter, down from 60.8 billion rupees last year . Net sales fell 4.3 percent to 192.18 billion rupees.
Analysts on average had expected the company to post a net profit of 49 billion rupees for the quarter, according to Thomson Reuters Starmine data.
Exploration-related write-offs rose 30 percent to 15.7 billion rupees, while depreciation and depletion costs were up 17 percent at 23.3 billion. The company also made a one-time pension scheme provision, which hit pre-tax profit by 11 billion rupees, Finance Director Aloke Bannerjee said.
The cost of helping subsidize domestic fuel prices was nearly flat at 126.22 billion rupees compared with 123.46 billion a year earlier. However, lower crude prices during the quarter pulled down ONGC's net realization to $40.17 per barrel from $45.91 a year ago.
ONGC does not fully benefit from high crude prices because India caps the retail prices of diesel, cooking gas and kerosene, with oil and gas producers such as ONGC having to share the cost by selling to state refineries at a discount.
ONGC, which has struggled to maintain production from its ageing wells off India's west coast, aims to produce 6 to 9 million standard cubic meters per day (mscmd) of gas by 2017 from its offshore east coast acreage situated adjacent to Reliance Industries' (RELI.NS) giant KG-D6 field.
It is to discuss selling a stake in its licence with ConocoPhillips (COP.N) and Shell (RDSa.L), among others. "They are on our radar," Bannerjee told reporters.
Shares in ONGC, valued at nearly $38 billion, closed 1.8 percent higher on Monday, ahead of the results. The stock has risen 4 percent so far in 2013, compared with a 2.5 percent fall in the sectoral index .BSEOIL.
(Reporting by Devidutta Tripathy and Prashant Mehra; Editing by Greg Mahlich)
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