Oil & Natural Gas Corp Ltd (BOM:500312) (Q1 2027) Earnings Call Highlights: Record PBT and ...

This article first appeared on GuruFocus.

• Standalone Gross Revenue: INR46,460 crores, up over 45% year over year.

• Standalone Profit After Tax: INR17,034 crores, up over 112% year over year.

• Standalone Profit Before Tax: INR22,848 crores, the highest ever quarterly figure.

• Average Crude Price Realization: USD99.45 per barrel.

• Consolidated Profit After Tax: INR6,554 crores for the quarter.

• HPCL Net Loss: INR12,265 crores, impacting consolidated results.

• New Well Gas Revenue: Nearly INR4,000 crores, with an incremental realization of about INR1,900 crores over administered pricing.

• New Well Gas Contribution: Approximately 38% of revenue from the nomination gas portfolio.

• Gas Contribution to Standalone Revenue: Increased from around 25% in FY25 to 28% in FY26.

• Mumbai High TSP Production: Oil production at around 107% of contractual baseline; gas production at around 113% of baseline.

• Renewable Energy Portfolio: Reached 2.853 gigawatts through OGL.

Release Date: August 05, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Standalone gross revenue surged 45% YoY to INR46,460 crores, with PAT up 112% to INR17,034 crores, marking the highest-ever quarterly PBT of INR22,848 crores.

• New well gas revenue reached nearly INR4,000 crores, contributing 38% of nomination gas revenue and boosting gas’s share of standalone revenue to 28%.

• Mumbai High TSP partnership with bp exceeded contractual baselines, with oil at 107% and gas at 113% of baseline, and the model is expanding across Western Offshore.

• Government’s Samudra Manthan scheme (INR84,084 crores) supports deepwater exploration, with ONGC already drilling its first well in Mahanadi, reducing exploration cost risk.

• OVL’s return of Sakhalin asset and Mozambique force majeure lift have restored profitability, with OVL contributing ~INR1,000 crores per quarter.

• Renewable energy portfolio via OGL reached 2.853 GW, with new solar and wind projects awarded, supporting green energy diversification.

Negative Points

• Consolidated PAT fell to INR6,554 crores due to HPCL’s net loss of INR12,265 crores from under-recoveries amid the West Asia crisis.

• KG-DWN-98/2 oil production dropped to ~21,000 bpd due to reservoir complexities, requiring costly well re-entries (over INR500 crores each) and delaying peak output.

• Overall production remained broadly flat YoY, impacted by temporary operational issues like pre-monsoon swells, pipeline replacements, and customer offtake disruptions.

• OPaL posted negative EBITDA of INR57 crores in Q1, hurt by feedstock cost spikes (naphtha up to $1,000) and halted gaseous feed due to the Hormuz crisis.

• Contingent liability for Panna-Mukta-Tapti arbitration has accumulated to ~INR16,000 crores, with ONGC not participating as a claimant, relying on JV outcome applicability.

• Gas sales-to-production ratio declined to 75-76% due to lower offtake from isolated fields, reflecting customer-side disruptions and pricing challenges.

Q & A Highlights

Q: Can you provide guidance on oil and gas production for FY27 and FY28?A: Anupam Agarwal, Director Finance, guided for total standalone oil and gas production of approximately 39 MMT for FY27 and 40 MMT for FY28. The upside will be driven mainly by gas, with projects like DUDP, CPP commissioning, and TSP expansions contributing. He noted an expected increase of about 1 BCM of gas per year from new developments in the current year.

Q: What is the current production rate at KG-DWN-98/2, and what are the challenges and future peak production expectations?A: Ajay Kumar Singh, President — Planning and Transformation, stated that oil production is around 21,000 barrels per day from all 13 wells, while gas is at 1.5 MMSCMD. The field faces reservoir complexity and interconnection issues, which are being studied by world-renowned geological centers. Gas production is expected to reach 3 MMSCMD by Q4 FY27 after commissioning the CPP and opening the remaining 3 wells, with a further increase to 6-7 MMSCMD targeted by Q4 FY28.

Q: How is ONGC’s role defined in the Samudra Manthan deepwater exploration scheme, and what is the financial impact?A: Arun Singh, Chairman and CEO, confirmed ONGC will play a major role in the INR84,084 crore national mission. The government will fund a significant portion of the exploration costs, reducing ONGC’s financial burden and improving project economics. ONGC has already spudded its first deepwater well in the Mahanadi basin under this program, with results expected by September end. The company will retain ownership of any discoveries in blocks it operates alone.

Q: What is the status of the Panna-Mukta-Tapti arbitration, and how are ONGC’s economic interests protected?A: Anupam Agarwal explained that ONGC, as a government arm, follows the understanding not to pursue arbitration against the government. However, since it is a joint venture case, the arbitration outcome will be applicable to the entire JV consortium, including ONGC. This ensures the company’s and minority shareholders’ interests are protected without being in direct dispute with the government.

Q: Can you elaborate on the results of the TSP partnership with bp and the production gains?A: Anupam Agarwal detailed that the TSP-1 program in Mumbai High has exceeded contractual baselines, with oil production at 107% and gas at 113% of baseline. This represents a 1-2% absolute increase in oil and 5-6% in gas, over and above the natural decline rate of 5-6%. The success has led to expanding the TSP model across the entire Western Offshore portfolio.

Q: What is the current status of ONGC Videsh Ltd’s (OVL) key international assets?A: Anupam Agarwal provided a comprehensive update: Sakhalin has been successfully brought back into the portfolio since December 2025, contributing significantly to OVL’s robust quarterly profit of ~INR1,000 crores. Mozambique’s force majeure has been lifted, with production expected by end-2028/early-2029. Brazil’s BM-SEAL-4 project is on track for first oil in 2030. Venezuela is an evolving story with a new OFAC license, and ONGC is upbeat about taking over operatorship of some projects.

Q: What are the reasons for the operational challenges impacting production, and what is the recovery plan?A: Anupam Agarwal attributed the challenges to temporary factors like pre-monsoon swells impacting offshore installations, pipeline replacements, and reservoir complexities in KG. He clarified that well closures during project execution are normal. The company expects production to recover post-monsoon, with oil production reaching last year’s levels and gas production increasing by 1 BCM by year-end.

Q: Why did the sales-to-production ratio for gas decline this quarter?A: Anupam Agarwal explained that the decline to 75-76% was due to customers in some isolated areas being unable to take gas because of pricing challenges or operational disruptions. This was a temporary issue, and sales are expected to catch up with production.

Q: Can you provide an update on OPaL’s performance and its outlook?A: Anupam Agarwal noted that OPaL’s Q1 FY27 EBITDA was INR57 crores negative, impacted by the Hormuz crisis which spiked naphtha prices and halted gaseous feed. However, the company expects significant improvement from exiting the SEZ (adding ~INR1,000 crores to EBITDA) and plans to import ethane to reduce feedstock costs.

Q: Why was the crude price realization higher than Brent this quarter?A: Anupam Agarwal clarified that the higher realization of ~USD99.45 per barrel was purely due to market volatility post-Hormuz, not any formula-driven change. The standard arrangement is Brent plus 1%, with a 5% accounting adjustment, and the company expects realizations to normalize.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.