Analyst Concall
ONGC confident KG Basin oil output to be 45,000 bpd FY25-end
This story was originally published at 20:43 IST on 12 November 2024
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--ONGC: Apr-Sept capex of INR 240 bln includes INR 60 bln for ONGC Petro
--CONTEXT: ONGC management comments at post-earnings analyst call
--ONGC: FY25, FY26 oil and gas cumulative production to be 44.9 mln tonnes
--ONGC: Expect gas output of 10 mscmd from KG-DWN-98/2 by FY25-end
MUMBAI – Reiterating its guidance, Oil and Natural Gas Corp. Ltd. said it expects its deepwater KG-DWN-98/2 Block in the Krishna Godavari (KG) basin to produce 45,000 barrels of crude oil per day by the end of 2024-25 (Apr-Mar), the management said in a post-earning analyst call Tuesday. The company said the block currently produces 25,000 barrels of oil per day from its eight flowing wells, adding that it will open five more oil wells shortly.
ONGC expects to produce 10 million standard cubic metres of gas per day by the end of FY25 from its KG field, the management said. However, it may spill over to the initial few months of FY26 as well, it said. The company is opening up new wells, which it expects to augment gas production along with oil.
ONGC's management expects to produce 22.8 million tonnes of crude oil and 22.1 million tonnes of gas-equivalent in FY25. In FY25 and FY26, the company expects cumulative production of 44.9 million tonnes of oil and gas-equivalent. In FY26 and FY27, ONGC expects cumulative production of 46.2 million tonnes of oil and gas-equivalent.
ONGC has guided for a capital expenditure spend of INR 340 billion-360 billion for FY25, FY26 and FY27 each. Earlier, ONGC had guided for INR 320 billion-330 billion for FY25 and FY26, as per an ICICI Securities Ltd. brokerage report.
The capital expenditure incurred by the company in Apr-Sept was around INR 240 billion, the management said. Out of this, INR 60 billion went towards its subsidiary ONGC Petro Additions Ltd. On a standalone basis, the company incurred a capital expenditure of INR 170-INR 180 billion in the first half of FY25.
The capacity utilisation of ONGC Petro Additions in Jul-Sept increased to 94% from 89% in Apr-Jun. The subsidiary's revenue in the latest quarter was INR 36.64 billion. ONGC Petro Additions' earnings before interest, taxes, depreciation, and amortisation in Jul-Sept was INR 786.7 million, up from INR 290 million in Apr-Jun. The subsidiary reported a net loss of INR 6.37 billion, lower than Apr-Jun's loss of INR 9.83 billion.
ONGC expects projects with Larsen & Toubro Ltd. and Mazagon Dock Shipbuilders Ltd. to be completed by the end of FY26. Both the projects will produce gas, and are primarily for the wellhead platforms, the management said.
Gas drilled from new wells or from interventions in existing wells is termed new gas. In 7–8 years, ONGC expects most of the gas produced from existing fields to qualify as new gas, the management said. The government in August approved a 20% premium for gas produced from new wells. New gas produced gets a 20% premium over the regulated or administrative pricing mechanism price. The regulated price is capped at $6.5 per million British thermal units.
Revenue earned from new gas by ONGC is not substantial currently as it started billing for it only in September, the management said. ONGC expects the revenue generated by new gas to show a marked difference from FY26.
ONGC's other income in the September quarter was INR 47.66 billion, up 128% on year. This figure includes dividends received from Indian Oil Crop. Ltd. of INR 14.04 billion, INR 750 million from ONGC Videsh Ltd., INR 12.85 billion from Hindustan Petroleum Corp. Ltd., INR 2.51 billion from Mangalore Refinery and Petrochemicals Ltd., and INR 560 million from Petronet LNG Ltd.
ONGC said it is not looking for the discovery of a refinery in Prayagraj, Uttar Pradesh. While the company would be interested in looking for petrochemical projects, the management said it does not have a location in mind.
ONGC's September quarter net profit increased 17% on year to INR 119.84 billion on lower statutory levies. However, its revenue from operations fell 3.6% in the same period to INR 338.81 billion owing to lower crude oil prices. ONGC's average oil price realisation from its nominated fields dipped 7.7% on year to $78.33 per barrel in Jul-Sept.
On Tuesday, shares of ONGC closed 0.3% lower at INR 256.15 apiece on the National Stock Exchange. End.
Reported by Anand J.C. and Ayushman Mishra
Edited by Deepshikha Bhardwaj
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