ONGC shares jump over 7.5% after Q1 results conference call; BSE Oil & Gas index jumps over 3.5%

On Monday, the company reported a 15% drop in its June quarter net profit due to a higher exploration cost write-off.

Its net profit came in at ₹8,938.10 crore for the quarter under review as compared to ₹10,526.78 crore reported in the corresponding quarter of the previous fiscal. The profit was also lower sequentially compared to ₹9,869.37 crore in the January-March quarter. 

The oil upstream company wrote off ₹1,669.73 crore in costs incurred in the unsuccessful survey and drilling of wells to find oil and gas. This is compared to ₹1,015.81 crore in April–June 2023.

Its revenue from operations rose to ₹35,266.38 crore in the first quarter from ₹33,814.33 crore a year ago.

Q1 Conference Call Highlights

As per news reports, the company, in its conference call, said that the oil production from KG-98/2 stands at 12,000 bopd and is expected to ramp up from Q3. It added that peak production of 45,000 bopd will be achieved in subsequent quarters. Further, capex guidance for ONGC standalone is ₹32000 crore for FY25/26, while ONGC Videsh (OVL) capex guidance is ₹5600 crore (excluding Mozambique), the company said in its call, as per the reports.

Oil prices

Oil prices in the international market settled higher on Tuesday, bouncing off multi-month lows hit in the previous session, as investor attention turned to supply tightness and financial markets recovered from their recent slump. This is positive for oil exploration companies such as ONGC, Oil India, among others. This is because the crude these companies extract can be sold at higher prices, which can result in improved profit margins, given that production costs often remain relatively constant. 

The BSE Oil & Gas index was trading over 3.5% higher, with all its constituents trading in green.

ONGC stock performance

The stock has jumped over 90% in the past year and over 150% in the last five years.