ONGC profit falls after four quarters of growth, to invest Rs 10,600 crore

Oil and Natural Gas Corp on Friday posted a 10 per cent fall in quarterly profit, its first drop after four quarters of growth, as lower crude prices hurt profitability from both onshore and offshore blocks.

Separately, the company said its board had approved investments of over Rs 10,600 crore($1.71 billion) to boost production from two western offshore formations.

The country's biggest oil and gas explorer has struggled to lift production from its ageing domestic fields and is aggressively investing overseas to secure energy assets for Asia's third-largest economy.

The state-owned company posted a profit of Rs 5,445 crore in the three months ended September 30, its fiscal second quarter, down from Rs 6,064 crore a year earlier.

Net sales fell 8.7 per cent to Rs 20,361 crore.

Analysts on average expected ONGC to post net profit of Rs 5,432 crore , according to Thomson Reuters data.

A higher burden from subsidised sales of products to state refiners to keep retail prices in check has squeezed ONGC's margins even as it spends heavily to boost overseas assets and maintain output at its domestic fields.

The company's cost of helping subsidise fuel fell slightly to Rs 13,641 crore from Rs 13,796 crore in the same quarter last year.

The company, in which the government plans to sell a 5 per cent stake worth close to $3 billion, is expected to benefit from government reforms to free diesel prices and raise natural gas prices.

Shares of the company, which has a market value of almost $54 billion, closed 2 percent higher ahead of the results on Friday in a broader Mumbai market that was up 0.38 per cent.

($1 = 61.8250 rupee)

(Reuters)