Earnings weakness persists for Oil India in the third quarter as the company reports an EBITDA loss of Rs 6 crore led by oil and gas losses and higher operational expenses.
Harish Madhav, Director-finance of Oil India said, “The crude prices in Q3 improved from Q2 but still they were just around $44 per barrel realization, but the other thing which affected very negatively was the fall in the natural gas prices. As against last year’s Q3, the price has fallen by almost 45 percent so fall in natural price has affected the profitability very negatively.”
On other expenses, he said, “We have in fact made provisions for a write off of two wells which have been finally turned out to be non-commercial, so total write off for these two wells is close to about Rs 550 crore that has increased the other expenses. Almost every year if we see past history on an average Rs 600-700 crore well write off or provisions are taking place on a year-on-year basis.”
On crude prices, Madhav said, “As far as crude prices are concerned we are much better placed, as of today we are realizing close to around $56-57 per barrel so far from January 1 onwards the average prices is about $ 55-56 but if we consider crude to remain around $60 for the remaining period till March then our realization will improve maybe around $57-58 per barrel in the fourth quarter. Overall year basis we will still be around $43-44 per barrel realization for the whole year which will be significantly lower than last year.”
He added, “Gas prices are revised once in six months so the gas price of 1.79 which is applicable today will continue till March and the new gas price will be known only on April 1”
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