Oil & Gas - Q1FY21 Result Preview - ICICI Securities

Global crude oil prices remained volatile in Q1FY21E. Brent crude oil prices fell up to ~US$17/bbl while WTI oil prices traded in the negative for the first time in April. A sharp reduction in oil demand owing to Covid-19 outbreak led storage capacities in the US to become almost full. With demand increasing following a resumption of economic activities & Opec output cuts, Brent oil prices recovered in May and June. As a result, Brent crude oil prices on a closing basis increased by US$19.4/bbl QoQ to US$40.9/bbl at end of Q1FY21. However, average Brent crude oil prices remained lower at US$31.4/bbl, a decline of US$19.2/bbl QoQ. Hence, net realisations of upstream companies are expected to decline considerably QoQ.

City gas distribution sales hit by lockdown

City gas distribution (CGD) companies' sales volume will take a big hit during the quarter (down 50-55%) on account of the extended lockdown in April. The restrictions imposed on travel and operations of commercial establishments affected CNG & Industrial/commercial PNG sales. Domestic PNG sales volume will remain steady. Although gross margins will remain healthy, EBITDA/scm is expected to decline QoQ due to negative operating leverage. For large gas utility companies also, volumes are expected to decline due to lower demand.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_OilGas_Q1Y21.pdf

Source : Equity Bulls

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