ONGC Profit Rises 71%, Beating Estimates, on Higher Oil Prices

Oil & Natural Gas Corp., India’s biggest energy explorer, posted a 71 percent increase in fourth- quarter profit, beating estimates, as crude oil prices rose.

Net income climbed to 37.8 billion rupees ($815 million) in the three months ended March 31 from 22.1 billion rupees a year earlier, the New Delhi-based company said in a statement to the Bombay Stock Exchange today. The median of 19 analysts estimates compiled by Bloomberg was a profit of 34.8 billion rupees.

 
Higher profit will help state-owned ONGC invest in aging fields in India and buy assets overseas as it seeks to offset diminishing production at home. The explorer may add $1 billion in revenue annually after the government more than doubled the price of natural gas sold from fields awarded before 1999.

 
“The primary reason for higher profit is the higher realization from crude sales,” Niraj Mansingka, a Mumbai-based analyst with Edelweiss Capital Ltd., said before the earnings were announced. “This and with higher gas prices, they will be able to invest more in older fields.”

 
The explorer sold crude oil at $51.42 a barrel in the quarter, compared with $43.40 a year earlier, ONGC said in a statement.

 
Oil averaged $80.61 in New York trading in the three months ended March 2010, compared with $58.88 a barrel a year earlier as demand for energy picked up after economies recovered from the recession.

 
ONGC gained 0.8 percent to 1,132.05 rupees in Mumbai trading, the highest level since Feb. 4, compared with a 1.2 percent increase in the benchmark Sensitive Index. The earnings were announced after the markets closed.