InvestorQ : Why did ONGC report such a huge loss in the Mar-20 quarter?
diksha shah made post

Why did ONGC report such a huge loss in the Mar-20 quarter?

Sam Eswaran answered.
2 years ago

India’s largest oil extractor, ONGC, reported a net loss of Rs.3098 crore for the Mar-20 quarter on the back of Rs.4899 crore written off in the quarter by way of impairment of assets. The average realization on crude oil fell by nearly $14/bbl to a level of $49/bbl and that really impaired the realizations of ONGC from the crude oil extraction business.

Even revenues were not spared in the case of ONGC. In fact, overall revenues for the Mar-20 quarter fell by 19.8% to Rs.21,456 crore. The impairment loss was largely on account of the steep fall in crude prices reducing the translation value of its inventory substantially. For the full year, ONGC profits nearly halved to Rs.13,444 crore.

Since the prices of oil and gas are sharply down, the company was forced to take major hits to account for the assert impairment. Crude production fell by 1.5% even as gas output was 7% lower. However, this may account for the worst case scenario as sub-50 levels of crude are factored into the price and any bounced in Brent prices from here should be positive.