How were the latest quarter results of ONGC for Dec-21 quarterly period?

There was little surprise in the good numbers of ONGC as crude prices have rallied sharply by over 75% in the last one year boosting realizations in a big way. With Brent at over $94/bbl, ONGC witnessed a spike in realizations in crude oil as well as in gas. For example, the realizations from crude were higher by 75% while the realizations from gas were higher by 62% on yoy basis.

ONGC reported 57.3% growth in sales at Rs.126,818 crore. The total crude oil output of ONGC across offshore crude, onshore crude and distillates stood at 5.451 MMT. Gas production for Dec-21 quarter was at 5.564 BCM. Both the volumes of oil and gas were lower on a yoy basis so most of the gains came from realizations. ONGC declared 3 new discoveries in the quarter of which 2 are inland and 1 is offshore. The sales for Dec-21 quarter were sharply higher despite lower volumes on cyclone Taukate and COVID.

Operating profits for Q3 were higher by 144.62% at Rs.15,599 crore. There was a 3-fold increase in offshore E&P EBIT in the quarter and at the same time a sharp turnaround in onshore E&P EBIT. However, refining and marketing saw lower EBIT in Q3. Even ONGC Videsh saw operating profits more than double. Dollar realization per barrel improved from $43.20/bbl in Dec-20 quarter to $75.73/bbl in Dec-21 quarter. The gas price realizations improved 62% yoy from $1.79/mmbtu to $2.90/mmbtu. OPM improved from 7.91% in Dec-20 quarter to 12.30% in Dec-21 quarter.

Net profits for the Dec-21 quarter were up four-fold or 334.12% yoy at Rs.10,932 crore as the superior operating performance got transmitted to PAT. While rise in input costs were controlled, the realizations from gas and oil got a big boost. However, sequential profits were lower by -39.5% due to the deferred tax writebacks of Rs.8,715 crore in the Sep-21 quarter. This is a one time and unsustainable shift.