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SAED applicability on KG 98/2 crude
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Oil & Natural Gas Corporation — Q3 FY24
ONGC reported Q3 FY24 standalone PAT of INR 9,536 crore, down 13.7% YoY due to lower crude and gas realizations and GST on royalty provisions.
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ONGC reported Q3 FY24 standalone PAT of INR 9,536 crore, down 13.7% YoY due to lower crude and gas realizations and GST on royalty provisions. Crude oil realization fell to $81.59/bbl from $87.13/bbl YoY. Production from the KG-DWN-98/2 project has commenced at 12,000 bbl/day oil and 1.75 MMSCFD gas, with peak production expected by FY26. Management guided for ~15% production growth over three years via multiple projects (KG 98/2, Daman Upside, CBM) with a CapEx of INR 60,000 crore. OpEx rose 1.7% YoY in Q3, but CFO attributed most increases to one-off items. Risks include potential SAED applicability on new KG production and cost inflation from rig rates.
ONGC ने तीसरी तिमाही में 9,536 करोड़ रुपये का शुद्ध लाभ कमाया, जो पिछले साल की तुलना में 13.7% कम है। इसकी वजह कच्चे तेल और गैस की कम कीमतें और जीएसटी पर रॉयल्टी का प्रावधान है। कच्चे तेल की कीमत 87.13 डॉलर प्रति बैरल से घटकर 81.59 डॉलर हो गई। केजी-डीडब्ल्यूएन-98/2 परियोजना से तेल और गैस का उत्पादन शुरू हो गया है, जो 2026 तक अपने चरम पर पहुंच जाएगा। कंपनी अगले तीन सालों में उत्पादन में 15% बढ़ोतरी की उम्मीद कर रही है, जिसके लिए 60,000 करोड़ रुपये खर्च होंगे। खर्च में थोड़ी बढ़ोतरी हुई है, लेकिन यह एक बार के कारणों से है। जोखिमों में नए उत्पादन पर टैक्स लगना और लागत बढ़ना शामिल है।
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Crude oil realization (Q3 FY24)
$81.59/bbl
-$5.54/bbl YoY
Lower international crude prices drove realization down from $87.13/bbl in Q3 FY23.
KG-DWN-98/2 oil production (current)
12,000 bbl/day
New production
First oil commenced from KG 98/2; plateau of ~40,000 bbl/day expected by FY26.
Gas premium pricing contribution (current)
3-4% of gas production
Expected to reach 20% in 3 years
New wells in nomination fields eligible for 20% premium over APM price.
New jackup rig day rate
$70,000-$90,000/day
+~60% vs COVID lows
Rig rates have risen from $45,000-$50,000/day during COVID; management expects cooling.
What Changed vs Last Quarter
NEW
Production growth of ~15% over next 3 years
Management expects total oil and gas production to increase by ~15% by FY26-27, driven by KG 98/2, Daman Upside, and other projects.
NEW
Gas price realization of $9-$10/MMBTU for incremental production
Incremental gas from new wells will fetch $9-$10/MMBTU under the premium pricing mechanism, improving realizations.
NEW
Dividend payout of ~40%
Management indicated continued dividend payout of around 40%, with INR 9.75 per share already paid in 9M FY24.
UPDATED
Standalone CapEx of INR 33,000-35,000 crore in FY25
CFO guided standalone CapEx of INR 33,000 crore in FY24 and INR 33,000-35,000 crore in FY25, with ~60% on development projects.
DROPPED
Production growth of ~1% in FY24 and 4-5% in FY25
ONGC standalone production expected to be flat to slightly up in FY24, with 4-5% growth in FY25 driven by KG 98/2 ramp-up.
DROPPED
OPaL turnaround by FY25
OPaL is expected to become profitable by FY25 after equity infusion of INR 18,365 crore and use of new gas for feedstock.
DROPPED
Renewable energy target of 10 GW by 2030
ONGC aims to build a renewable energy portfolio of 10 GW by 2030, with initial acquisition of PTC Energy (288 MW) expected by end of FY24.
NEW RISK
SAED applicability on KG 98/2 crude
Management is reviewing whether the windfall tax (SAED) applies to new KG production; if imposed, it could reduce realizations.
NEW RISK
Rising rig day rates
New jackup rig rates have risen to $70,000-$90,000/day from COVID lows, potentially increasing drilling costs.
NEW RISK
OVL dividend repatriation from Russia
Dividends from Russian operations remain stuck due to sanctions; management is pursuing a share swap to resolve.
NEW RISK
OpEx increase from one-off items
Nine-month OpEx rose 25% YoY partly due to one-off items (water injection, LD payments); if these recur, margins could be pressured.
RISK GONE
Windfall tax volatility
The Special Additional Excise Duty (SAED) on crude oil is revised every fortnight, creating uncertainty in realizations and impacting profitability.
RISK GONE
OPaL continued losses and equity dilution
OPaL is expected to report negative EBITDA and PAT in FY24, and the proposed equity infusion of INR 18,365 crore may dilute minority shareholders.
RISK GONE
Russian asset dividend repatriation
Dividends of RUB 16 billion from Vankor are locked up in Russia due to sanctions, with no clear timeline for repatriation.
RISK GONE
KG 98/2 production ramp-up delays
While first oil is expected imminently, gas ramp-up to 10 MMSCMD depends on process platform installation by April 2024, which could face delays.
Fast read
Guidance and risk preview
Management expects total oil and gas production to increase by ~15% by FY26-27, driven by KG 98/2, Daman Upside, and other projects.
Management is reviewing whether the windfall tax (SAED) applies to new KG production; if imposed, it could reduce realizations.
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