Country's biggest oil explorer ONCG on Thursday reported 12 per cent jump in the March quarter net profit as it reversed part of impairment losses and got back some of the fuel subsidy from the government.
At Rs 4,416 crore, Oil and Natural Gas Corp's net profit in the January-March quarter was 12.2 per cent higher than Rs 3,935 crore net profit in the same period of the previous fiscal, Chairman and Managing Director D K Sarraf told reporters here.
The profit was mainly as it reversed Rs 800 crore of impairment taken earlier on drop in oil prices and got another Rs 633 crore from the government for excess fuel subsidy it had paid earlier. It also gained Rs 1,585 crore on dry well provisioning.
"We had in the third quarter of 2015-16 fiscal provided for an impairment loss of Rs 3,994 crore. This has now been brought down to Rs 3,142 crore after crude oil prices rebounded a bit," he said.
Impairment is taken to reflect value of oil and gas reserves a company holds after prices have fallen.
ONGC had in the first quarter of 2015-16 paid Rs 1,133 crore to fuel retailers to subsidise LPG and kerosene and another Rs 596 crore in the July-September quarter.
The subsidy accounts have been adjusted in view of slump in oil prices to multi-year low. The April-June subsidy has been trimmed to Rs 1,096 crore and all of such payout of the second quarter has been returned, he said.
Profit rose despite crude oil production falling by 1.7 per cent to 6.34 million tons. Gas output also dropped by nearly 10 per cent to 5.24 billion cubic meters.
ONGC was exempted by the government from payment of any fuel subsidy last year, leading to the profit boost.
Sarraf said the company got $34.88 on every barrel of crude oil it sold in the January-March quarter of 2015-16 fiscal as against $55.63 a barrel in the year ago period.
The reduction in oil price realised meant that its turnover fell by 24.3 per cent to Rs 16,424 crore in Q4.
For the full fiscal 2015-16, ONGC posted a net profit of Rs 16,004 crore on a turnover of Rs 78,569 crore. This was as against Rs 17,733 crore net profit in 2014-15 on a turnover of Rs 83,094 crore.
The company has also taken an impairment of about Rs 3,000 crore on reserves of its overseas subsidiary, ONGC Videsh Ltd.
With the slump in oil prices, government exempted ONGC from paying any subsidy in the second half of 2015-16 fiscal.
Total subsidy payout in 2015-16 at Rs 1,096 crore compared with Rs 36,300 crore payout in the previous fiscal.
But for the subsidy payout, the net profit would have been higher by Rs 607 crore in April 2015 to March 2016 fiscal.
During 2015-16, ONGC's own fields produced 22.36 million tons of oil, marginally higher than 22.26 million tons in the previous year.
"In 2014-15, we reversed the declining trend in oil production and in 2015-16 we actually saw it rise marginally.
But for the efforts put by ONGC team, the output should have declined by 6-7 per cent going by the natural course taken by old and ageing fields," Sarraf said.
Together with output from joint venture fields, ONGC's oil production was flat at 25.93 million tons.
Natural gas production however fell 3.8 per cent to 21.18 billion cubic meters from the company's own fields; together with joint venture fields, it was down 4.2 per cent to 22.53 bcm.
Sarraf said ONGC Videsh Ltd produced 5.51 million tons of crude oil in 2015-16, almost unchanged over 5.53 million tons of the previous year. Natural gas production was marginally higher at 3.41 bcm.
OVL is unlisted overseas arm of ONGC and it is not required to disclose quarterly numbers.