(Bloomberg) -- State-run Oil and Natural Gas Corp.’s quarterly profit declined 15% on year as higher oil prices were offset by low production and an increase in windfall tax.
The New Delhi-based company posted a net income of 89.4 billion rupees ($1.1 billion) in the three months through June 30, which was in-line with analyst estimates.
Explorers globally have benefited during the April-June quarter from an increase in oil prices but earnings of Indian firms like ONGC have been capped by a windfall tax imposed by the government in 2022 to reduce its budget deficit.
The tax is likely to have shaved-off $7.7 from every barrel of crude sold by domestic explorers in the first quarter compared with $2.5 in the year earlier period, according to a JM Financial Institutional Securities Ltd. July 7 note. Before tax, earnings on every barrel of crude sold rose 8.8% on year to $83.05, compared with $76.36 year earlier.
Its gas price realization also declined 3.1% on year. Earnings were further hit by a 1.4% decline in oil and 4.1% fall in gas production during the quarter.
The firm’s output, which has fallen at an average annual rate of 2% since 2011, is expected to modestly rebound through 2027, as ONGC boosts its eastern deep-water offshore field in the Krishna Godavari basin, Fitch Ratings said in a July 15 note.
Its revenue for the quarter rose 4.3% on year to 352.7 billion rupees.
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