Top Indian Oil Producer’s Profit Falls on Lower Prices, Output

Lower crude prices and aging oil fields dragged down quarterly earnings for India’s state-controlled driller.

(Bloomberg) — Lower crude prices and aging oil fields dragged down quarterly earnings for India’s state-controlled driller.

Oil & Natural Gas Corp.’s net income tumbled 34% in the three months ended June 30, while revenues fell 20%, according to a stock exchange filing Friday.

Behind the fall was a more than 3% drop in both crude oil and gas output from its own fields. At the same time, the oil it drilled garnered lower prices when it hit the market. In the quarter, the New Delhi-based company’s crude averaged $76.49 a barrel, nearly 30% below the $108.55 a barrel its oil fetched a year ago, even as gas prices rose 10%.

ONGC’s softer results come on the heels of similar reports from global oil giants like Exxon Mobil Corp. and BP Plc, which also saw profits sink in the latest quarter.

Aging oil fields have made it harder for the Indian explorer to boost its production, which is around its lowest in several years. ONGC, which accounts for two-thirds of India’s oil and more than half of its gas output, is working to open new production areas and realize reserves from unconventional reservoirs in hopes of stemming the decline.

Eroding profits could push ONGC to borrow more to fund its expansion plans. India, with its fast-growing demand for oil, has been eager to reduce its reliance on imports.