ONGC registers 22% increase in revenue, 11% increase in Net Profit

October 19, 2006 ONGC maintains growth in H1 (FY-07) results, registers 22 % increase in Revenue, 11 % increase in Net Profit, despite 78 % increase in Subsidy Discount.

Oil and Natural Gas Corporation Ltd. (ONGC) reports the H1 and Q2 results after the 160 th meeting of its Board held on 19th October 2006 :

• Crude production (H1, FY-07) up 4.6 % to 12.86 Million Tonnes (MT) from 12.29 MT
• Sales Revenue (H1, FY-07) Rs. 28823 Crore, up 22% from Rs. 23,682 Crore during same period last fiscal;
• Net Profit (H1) Rs. 8293 Crore, up 11% from Rs. 7,457 Crore

Bonus shares

The Board, today, has appointed a Sub-committee of Directors to finalize the allotment of 'Bonus Shares'. 30th October 2006 has been fixed as the 'Record Date' for reckoning the entitlement for Bonus Shares by the Board; BSE and NSE have been advised accordingly. The notice fixing this 'Record Date' was publicized for information of the investors. The shareholders are expected to receive the Bonus Shares by the 2 nd half of November 2006.

Earlier, Shareholders, in their 13th Annual General Meeting held on 19th September 2006, had approved issue of Bonus Shares in the ratio of 1:2 by capitalizing a sum of Rs. 712.958 Crore, comprising of (i) Rs. 172.57 Crore standing to the credit of Share Premium Account and (ii) balance of Rs. 540.39 Crore from the General Reserves.

Capex and XI Plan

Capex for 2006-07: The ONGC Board approved the Revised Capex outlay of Rs. 16,522 Crore for 2006-07 against the approved Budget Estimate of Rs. 14,354 Crore. The capital outlay for Budget Estimate 2007-08 has been further increased to Rs. 18,359 Crore. The increase is mainly due to increased expenditure on Exploration (both Survey and Drilling) and also larger number of schemes.

XI Plan Capex of Rs. 82,670 Crore: The Board also approved a Capex outlay of Rs. 82,670 Crore for the XI Five Year Plan (2007-2012). ONGC has proposed to produce over 140 MT of Crude oil during the XI Plan, an increase of 10 MT over the X Plan. ONGC has proposed to develop marginal fields in Western Offshore Basin . ONGC has plans to commercially produce Coal Bed Methane (CBM) and Gas from Underground Coal Gasification (UCG) Projects, making India only the fourth country in the world after USA, China and Australia to produce CBM Gas commercially (2011-12).

Reserve Replacement Ratio of 1+: The XI Plan projection for Reserve Replacement Ratio for the Exploration and Production (E&P) company is more than 1.

Growth-oriented Initiatives:

The ONGC Board, in today's meeting, has also approved the following initiatives:

Incorporation of ONGC Petro-additions Ltd. (OPaL): Following up on its earlier approval (158th Board meeting on 8th August 2006) to implement a global scale Petrochemicals Complex within Dahej SEZ through a SPV company, the ONGC Board approved the incorporation of the SPV of Dahej Petrochemicals Complex.

The company - named as ONGC Petro-additions Ltd. (OPaL) - will have 26% equity participation of ONGC, 5% by GSPC and balance by strategic investors and Financial Institutions. With this approval, OPaL will embark on a fast-track implementation of the mega Petrochemicals Project involving an estimated investment of Rs. 13,600 Crore along with global scale cracker and downstream polymer plants. This will be commissioned around mid 2010, catalyzing significant economic development in Western India and the country as a whole.

Incorporation of Mangalore Petrochemicals Ltd. (MPL): Pursuant to its earlier approval to develop SEZ and associated projects at Mangalore, ONGC Board, today, approved the incorporation of Mangalore Petrochemicals Ltd. (MPL), with 46% equity participation by ONGC, 3% by MRPL and balance by banks and financial Institutions. This company will implement the Aromatics Petrochemicals Complex within Mangalore SEZ in Karnataka, with an estimated investment of Rs. 4,852 Crore as a value-addition initiative to the Naphtha stream of MRPL, to be commissioned around end 2010.

E.3 ONGC-TERI JV: The Board approved the formation of a Joint Venture (JV) with TERI for oil-field services for monetization of microbial techniques ('Lab to Oil Wells') developed and patented by TERI and ONGC. The Joint Venture - with equal participation by ONGC and TERI - will apply tailor-made bio-technology solutions to improve flow from oil wells of ONGC, OIL and other JV and private Indian players, besides marketing the services in Middle East. While TERI will provide the technology, ONGC will manage field implementation and marketing.

Tripura Power Plant: Board approved ONGC's first mega 'Gas-to-Wire' project in Tripura to monetize significant idle and stranded gas production potential from wells there. ONGC has established a production potential of 4 MMSCMD and will increase it to 5 MMSCMD by boosting exploration. ONGC will implement mega 2X370 MW advanced class combined cycle power plant to be located at Palatana. The generated power will be transmitted by utilizing the services of another SPV company NEPTC (PGCIL and ONGC to take up 26% and 15% equity respectively, and 59% with private partner) for up-linking with PGCIL Grid at Bongaigaon. The Board also decided to review, the transmission SPV structure in order to optimize the transmission risk of the project, through a Sub-committee of the Board.

This project is estimated to cost around Rs. 2087.6 Crore and will be implemented by end 2009. The generated power will cater to the north-east demand and will also be transmitted to Northern Grid to feed demand in north India.

Source : Equity Bulls

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