Oil & Gas stocks results preview for Q3FY12: Angel Broking

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Oil & Gas stocks results preview for Q3FY12: Angel Broking

Angel Broking has come with its December quarterly earning estimates for Oil and Gas sector. According to the research firm, during 3QFY2012, Brent crude oil price decreased by 3.2% qoq on the expectation of increased supply and weaker macro-economic environment.

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Angel Broking has come with its December quarterly earning estimates for Oil and Gas sector. According to the research firm, during 3QFY2012, Brent crude oil price decreased by 3.2% qoq on the expectation of increased supply and weaker macro-economic environment.

During 3QFY2012, Brent crude oil price decreased by 3.2% qoq on the expectation of increased supply and weaker macro-economic environment. However, Indian crude oil basket increased as INR depreciation against the USD offsetted the decline in crude oil price. During December 2011, oil marketing companies (OMCs) continued to lose `388cr per day on account of selling diesel, kerosene and domestic LPG at subsidized rates. During December 2011, OMCs continued to lose Rs 11.5/liter, Rs 28.6/liter and `287/cylinder on diesel, kerosene and domestic LPG, respectively. WTI crude oil price rose by 5.1% on the back of lower inventory levels in the US. Henry Hub natural gas price declined by 19.2% qoq on the back of weak macro-economic environment in the US. Similarly, prices of petrochemical products declined during November-December 2011 after rising in October 2011. During December 2011, IEA cut its CY2011 and CY2012 projections for global oil demand. It also lowered global oil demand forecast for CY2011 and CY2012 by 160,000/bpd and 200,000/bpd, respectively. IEA now projects global oil demand to average 89.0mnbpd in CY2011 and 90.3mnbpd in CY2012.

Brent crude remains steady in 3QFY2012:

Brent crude oil price average stood at US$110/bbl in 3QFY2012 compared to US$114/bbl in 2QFY2012. WTI crude increased to average US$94/bbl in 3QFY2012 compared to US$90/bbl in 2QFY2012 on the back of a decline in US inventory. Weaker macro-economic environment coupled with rising supply from OPEC muted the rise in Brent crude oil price in 3QFY2012.

3QFY2012 expectations:

For 3QFY2012, we expect RIL and GAIL's net sales to increase by 15-31% yoy mainly on the back of higher prices coupled with volume growth. However, we expect ONGC's net sales to decline by 17.3% yoy.

For RIL, we expect top-line to grow by 31.0% on the back of rise in prices of petrochemical products. RIL's bottom line is expected to increase by 22.2% yoy.

GAIL is expected to report steady growth of 14.6% yoy in its net sales on the back of higher volumes, while its net profit is expected to increase by 5.2% yoy.

Cairn India's net sales are expected to decline by 5.8% yoy, although its bottom line is expected to increase by 0.6% yoy.

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