ONGC Q2 Results Review - Oil Realisation Hit By Windfall Tax; Production Guidance Strong: Motilal Oswal

Motilal Oswal Report

Oil and Natural Gas Corporation Ltd.’s Q2 FY23 Ebitda was in line with our estimate at Rs 188.1 billion (up 42% YoY, down 27% QoQ) with oil realization at $72/barrel of oil (after taking the effect of windfall tax during the quarter).

Crude oil and gas sales both were in line with our estimates at 4.8 million metric tonne and 4.2 billion cubic metre, respectively.

The floating production storage and offloading units for KG Basin would arrive in Jan-Feb-23E with first oil likely in May-23E. Production guidance from KG Basin stands at 1.9 mmt for oil and 2.8 bcm for gas in FY24E; at peak production, the same could be 45 thousands barrel of oil per day and 12 million metric standard cubic metre per day, respectively, in FY25E.

After a long time, the production of oil and gas appears improving.

ONGC's domestic production of oil is expected at 22.8 mmt in FY23, 24.6 mmt in FY24 and 25.7 mmt in FY25. Gas production guidance, on the other hand, stands at 22.1 bcm in FY23, 25.7 bcm in FY24 and 27.5 bcm in FY25.

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