ONGC profit surges 17%, boosted by production recovery and major investments

The Oil and Natural Gas Corporation (ONGC) delivered a powerful performance in the second quarter of the fiscal year 2024-25, posting a 17.1% rise in net profit, amounting to ₹11,984 crore, up from ₹10,238 crore in the same quarter last year. The board, which convened on 11 November, approved a dividend of ₹6.00 per share, amounting to a ₹7,548 crore payout, providing a strong return for shareholders.

Production and Revenue: A Turnaround

ONGC’s standalone revenue for the quarter stood at ₹35,162 crore, a slight dip of 3.6% compared to ₹33,881 crore last year. However, a reversal in crude oil production was a highlight, reflecting a 0.7% increase to 4.576 million metric tonnes (MMT), halting the downward trend seen in recent quarters. The company reported that efforts to stabilize and bolster oil and gas production have been met with success, particularly in its deep-water blocks.

The increase in output stems from a strategic focus on efficiency and growth across various assets. ONGC announced that its standalone natural gas production, while still facing a slight decline, has shown signs of stabilization. For Q2 FY25, gas production decreased by 2.1% compared to the same period last year, an improvement from the 3.6% decline reported in the previous quarter.

KG Basin Gains and Exploration Success

Noteworthy among ONGC’s production highlights was the recent success in the KG-DWN-98/2 deepwater block, where three additional oil wells were opened in October. The development boosted the total oil production from Cluster-II to approximately 25,000 barrels of oil per day (BOPD), with further production increases anticipated as additional wells come online in the coming months. This achievement is part of ONGC’s ongoing effort to capitalize on the potential of its offshore assets.

Furthermore, ONGC reported a significant exploration milestone with the discovery of the “Chola” gas field in the Cauvery Basin. The exploratory well Chola-1 yielded positive results, with test flows indicating substantial gas and condensate deposits, fueling optimism for further developments in ultra-deepwater exploration. The company’s commitment to expanding its hydrocarbon reserves is also demonstrated by ongoing drilling operations targeting high-potential Aptian sequences.

Dividend Announcement and Strategic Investments

The ₹7,548 crore dividend payout is a sign of ONGC’s robust financial health, aligning with the company’s policy of rewarding its shareholders amid favorable performance. The interim dividend of ₹6.00 per share, set to be distributed on 20 November, underscores ONGC’s commitment to its stakeholders.

Additionally, ONGC’s strategic initiatives to secure long-term sustainability continue to gather momentum. The company recently received government approval for a fresh capital injection into ONGC Petro-additions Limited (OPaL), an investment that elevates ONGC’s stake from 49.36% to 95.69%. This infusion of ₹18,365 crore will fortify OPaL’s sustainability, ensuring a stable feedstock supply that reinforces ONGC’s position within the petrochemical industry.

Expert Opinion: A Strategic Shift in Production and Revenue Generation

Analysts have viewed ONGC’s recent performance as a positive indicator of its operational resilience. Industry expert noted that the corporation’s focus on stabilizing production and pushing forward with large-scale investments places it in an advantageous position, especially in India’s growing energy market. ONGC’s investments in LNG sourcing and RLNG marketing, combined with its foray into the Indian Gas Exchange, demonstrate a deliberate pivot towards creating an integrated value chain across hydrocarbon products.

ONGC’s contract with Emirates National Oil Company and Gunvor Singapore for LNG Master Sale and Purchase Agreements (MSPAs) marks a significant step in this direction, ensuring that the company can tap into short-term LNG supply markets. The first RLNG sale through the Indian Gas Exchange is seen as a new chapter for ONGC in diversifying revenue streams and securing its market positioning in India’s competitive energy sector.

Awards and Recognition Reflect ONGC’s Commitment to Sustainability

ONGC’s achievements in Q2 were further highlighted by accolades across various categories. The company was honored with the “Global Energy and Environment Award” and several other recognitions for its environmental, safety, and CSR initiatives. These awards underscore ONGC’s commitment to environmental stewardship and best practices in the oil and gas industry.

With new projects in development and strategic shifts enhancing both its operational capabilities and market footprint, ONGC appears well-positioned to sustain this upward trajectory. Investors and stakeholders will be watching closely as ONGC continues to leverage both technological advancements and resource management strategies to strengthen its role as India’s leading oil and gas producer.