ONGC Q2 2009 net profit up 6% on lower subsidies, higher oil prices

Friday, October 30, 2009, 14:59 by Business Editor

Oil & Natural Gas Corp. (ONGC), India’s biggest government-owned energy explorer, said net profit in the three months ended September 30, 2009 climbed 5.8 percent to 5,090 crore rupees on higher earnings from crude oil sales.

Net income in the second quarter rose to Rs 5,090 crore, or 23.8 rupees a share (EPS), Rs from 4,808 crore, or 22.48 rupees apiece, the New Delhi-based ONGC said in a statement to the Bombay Stock Exchange yesterday. Sales declined to Rs 15,080 crore from Rs 17,407 crore a year earlier.

ONGC  said profit also rose after the government allowed ONGC to cut discounts given to state-owned refiners such as Indian Oil Corp (IOC)., reducing the explorers subsidy burden. ONGC sold crude at $56.42 a barrel in the quarter after giving discounts, 21 percent higher than last year. Discounts to state refiners fell 80 percent to Rs 2,630 crore in the quarter from Rs 12,663 crore.

ONGC has to sell crude oil at a discount to the state refiners to help them compensate for losses from selling petrol and diesel below cost. ONGC was exempted from bearing losses from sale of kerosene and liquefied petroleum gas.

The company’s total expenses during the second quarter of 2009 fell to Rs 8,713 crore from Rs 11,177 crore. Interest payment dropped to Rs 3.54 crore from Rs 97.4 crore in the year-ago quarter.

The explorer plans to spend Rs 24,720 crore in the year ending March 2010, ONGC said in a statement posted on its web site. ONGC said it has made five oil and gas discoveries in the quarter ended September and another four this month.

ONGC said it plans to add 72.65 million tons of ultimate oil and gas reserves in the year ending March 2009 and 76.17 million tons in the subsequent year against actual of 68.90 million tons in 2008-09.

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