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MOSL: ONGC (Buy)-Gas production to grow ~5-6%-Oil likely to remain flat

ONGC: Gas production to grow ~5-6%; Oil likely to remain flat

(ONGC IN, Mkt Cap USD24.3b, CMP INR135, TP INR182, 35% Upside, Buy)

 

• Net operating income increased to INR277b, as against our est. of INR268b (+20% YoY, -1% QoQ). Lower expenditure on account of forex gains resulted in higher EBITDA of INR166b, as against our est. of INR150b (+32% YoY, +5% QoQ). Despite higher-than-expected EBITDA, higher depreciation (including write-offs) dented PAT, which stood at INR82.6b as against our est. of INR80.7b (+65% YoY, flat QoQ). Depreciation including write-offs came in at INR61.5b (+5% YoY, +27% QoQ), due to more-than-double cost (YoY and QoQ) of exploration well write-offs at INR23.9b.
• Oil realization: Crude oil realization stood at USD66.4/bbl v/s USD60.6/bbl in 3QFY18 and at USD73.1/bbl in 2QFY19. There was no subsidy burden in the quarter.
• Sales volumes: Oil sold stood at 5.4mmt (-9% YoY, flat QoQ). Gas sold stood at 5.3bcm (+6% YoY, +5% QoQ), with increased production from Daman, Mumbai and Eastern offshore. Total VAP sold stood at 920tmt (+1% YoY and QoQ).
• Lower DDA at USD9.1/boe: DDA stood at USD9.1/boe v/s USD9.8/boe in 3QFY18 and USD7.6/boe in 2QFY19.