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State-run Oil and Natural Gas Corporation (ONGC) has posted a pre-tax loss of Rs 10,529 crore for Q4FY20 owing to a drop in crude oil prices, the impact of lockdown and exchange loss. This is the first ever quarterly loss for ONGC, one of the government's largest companies. It earned a profit before tax (PBT) of Rs 11,691 crore during Q4FY19.
The company's revenue from operations declined by 7 per cent to Rs 104,489 crore for the period under review, compared to Rs 112,539 crore in Q4FY19.
"This is one of the first times in recent years that we are posting a loss. The combined impact of reduced demand, Covid, reduced offtake and lower crude prices had an impact on our numbers to the tune of Rs 4,900 crore. Another major factor was foreign exchange losses. The rupee had depreciated heavily during the quarter resulting in a loss of Rs 1,113 crore on exchange rate variation, as against a gain of over Rs 200 crore during the same time last year," said Subhash Kumar, director finance of ONGC.
During the quarter under review, the company's net realisation on crude was seen at $49.01 a barrel as against $61.93 a barrel in Q4FY19. Gas price for the quarter was also lower at $3.23 per million metric British thermal unit (mmBtu), compared to $3.36 a mmBtu during the same period in 2019.
"ONGC had recognised an exceptional Item towards impairment loss of Rs 4,899 crore in Q4 to factor into estimated future crude oil and natural gas prices," the company said. This has adversely impacted its financial numbers.
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For FY20, the company's PBT was seen down by 65 per cent to Rs 19,068 crore as against Rs 54,846 crore during FY19. On the other hand, the revenue from operations during the financial year saw a drop of 6 per cent from Rs 453,683 crore in FY19 to Rs 425,001 crore in FY20.
During the quarter under review, the company's total crude oil production dropped by 1.4 per cent to 5.8 million tonne (MT), compared to 5.9 MT in Q4FY19. Total gas production, too, saw a decline of 7.9 per cent to 6.04 billion cubic meter (bcm) during the quarter under review compared to 6.56 bcm during the corresponding quarter last year.
"Our cost of production on gas is around $3.7 per mBtu, while we are realising only $2.39 a unit from April 1 this year. We expect some support from the government, that may boost gas production in long run," Kumar added.
Citing the drop in oil prices, ONGC had sought a price assurance of $45 a barrel from the government, in addition to a waiver on payment of cess and royalty.
ONGC’s overseas arm, ONGC Videsh, registered an increase in production of oil and gas by 1 per cent with net production of 14.981 million metric tonne of oil equivalent (MMToE) in 2019-20, compared to 14.833 MMTOE in FY’19. ONGC has lined up a capital expenditure of Rs 1.5 trillion for the next five years, indicating that there will some marginal impact on capex due to lockdown and Covid situation.
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