Net realisation comes down

DD&A to be higher in H2FY13: DD&A charge for H2 could be higher than H1, as ONGC charges well writeoffs at the year-end, when it reviews its exploration performance. ONGC's DD&A expenses for Q2FY13 were R32 bn, up 14% y-o-y and 17% q-o-q. The increase was driven by higher dry well expenses.

Production growth from FY15: ONGC expects its oil production to average 23.6 million metric tonnes oil equivalent (mmtoe) and 25.8 mmtoe in FY13 and FY14, and expect meaningful jump in FY15 driven by contribution from its IOR/EOR (improved/enhanced oil recovery) projects and additional production from the D1 field in Mumbai High. Earlier, ONGC had guided increase in D1 field production from the current 12,500 barrels per day (bpd) to 36,000 bpd by February 2013 and 60,000 bpd by January 2014.

Update on ONGC Videsh: In H1FY13, OVL's production was 3.39 mmtoe (6.7 mmtoe annualised). OVL's production is impacted by lower production in Sudan and Imperial Energy in Russia. ONGC has stopped recognising any production from Syria due to ongoing conflict in the country. OVL expects its FY13/FY14 production to average 7 mmtoe.

Motilal Oswal

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