State run-Oil and Natural Gas Corporation Ltd plans a capital expenditure of Rs 30,125 crore in 2023-24 as against a Rs 30,208 crore in the previous year, financed primarily from internal accruals.
The oil exploration company said that in the last five years, it has spent around Rs 1,44,000 crore on capital expenditure.
“One of the greatest things to have happened in the history of ONGC is that the government’s new gas pricing policy pegs the floor at $4/ mmBtu and ceiling at $6.5/mmBtu. Assuming that this price continues at $6.5 for two years and there onwards there is 25 paise increase, and assuming that crude remains above $70 (per barrel)...ONGC’s revenue stream will remain robust," Chairman Arun Kumar Singh told reporters.
“Cash flow wise, I don’t think ONGC will be required to go anywhere to raise funds,” he said.
The administered price mechanism (APM) gas, or gas produced by legacy fields, or nomination fields of ONGC, is now priced at 10 percent of the price of the India crude basket, but capped at $6.5/mmBtu. The floor or base price is $4/mmBtu.
Shares of ONGC declined almost 3 percent on May 29 to end at Rs 158.90 on the BSE, after the company reported a decline in its consolidated net profit, late evening on May 27. The net profit for the fourth quarter of FY23 plummeted to Rs 5,701 crore from Rs 12,061.44 crore in the corresponding period last year after the company made provision of Rs 12,107 crore towards disputed service tax and GST on royalty and interest on it in the period between April 1, 2016 and to March 31, 2023. The company’s consolidated total income in Q4FY23 increased to Rs 166,728.80 crore from Rs 158,660.49 crore in the year-ago quarter.
Output to rise
ONGC, which has witnessed a gradual decline in output for over a decade as its fields are old and aging, closed FY23 with production which was only marginally down by 0.6 percent. But the company expects the trend to reverse and the output to increase, boosted by Block KG-DWN 98/2 in the Bay of Bengal.
In 2023-24, ONGC expects production to grow 11.6 percent year-on-year.
ICICI Securities in a note post the results, said, “Given that KG basin gas would qualify for premium pricing and that international prices would likely remain well above the historical levels, we see net gas realisations at Rs21.7/scm and Rs22.8/scm for FY24E and FY25E vs Rs22.2/scm for FY23. We note that these prices compare favourably with the FY15-FY23 average blended price of Rs10.6/scm.”
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