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RIL's revenue from Oil and Gas Business declines to Rs. 790 crore in Q2

Posted On: 2019-10-20 09:50:13


2Q FY20, revenue for the Oil & Gas segment decreased by 40.2% Y-o-Y to Rs. 790 crore. Segment EBIT at Rs. (306) crore as against Rs. (480) crore in the corresponding period of the previous year. The segment performance continued to be impacted by declining volume. Domestic production was lower at 11.9 BCFe, down 22 % Y-o-Y and production in US Shale operations also declined by 25% to 17.8 BCFe Y-o-Y.

RIL Oil and Gas Business - Exploration and Production - Q2 FY 2019-20

Domestic Operations

2Q FY20 revenues for domestic E&P operations stood at Rs. 447 crore reflecting a decrease by 39.3% Y-o-Y mainly due to natural decline in production in D1-D3 field of KGD6 and impact of cessation of production from MA field. Revenue declined by 8.8% on Q-o-Q basis due to lower commodity price realization and deferment of oil sales due to weather conditions in the west coast of India. The segment EBIT was Rs. 60 crore for the quarter.

KG-D6

KGD6 block produced 5.45 BCF of natural gas in 2Q FY 20, lower by 51.6% Y-o-Y and 3.7% Q-o-Q

KG-D6 Project update

R-Cluster development project remains on-track for first gas by mid-2020. Key development activities are expected to commence during 3Q FY20. These include second campaign for installation of subsea production system (SPS), XMT installation and upper completion of wells and tie in of 6 wells.

In Satellite Cluster - Top hole drilling completed for 3 out of 5 wells and Engineering & fabrication for SPS is underway. In MJ project, Engineering is ongoing for Floating Production Storage Offload (FPSO), SPS and Subsea Installation.

During the quarter, assignment of NIKO's PI to RIL & BP was approved by GoI.

Panna-Mukta and Tapti

Panna-Mukta fields produced 0.96 MMBBL of crude oil and 11.7 BCF of natural gas in 2Q FY20. There is an increase of 14.6% in oil and 4.4% in gas volumes on Q-o-Q basis. The increase in volumes is primarily due to better uptime of facilities as compared to 1Q FY20.

Panna-Mukta Production Sharing Contract (PSC) is expiring on 21st December 2019 and handover process is currently in progress.

Tapti decommissioning is in progress as per schedule with expected completion by end FY22.

CBM

During the quarter, the CBM field produced 3.03 BCF of gas as compared to 3.0 BCF during 1Q FY20. Average production during the quarter was at 0.93 MMSCMD.

Additional 67 wells will be put on production progressively from 3Q FY20 post commissioning of additional Gas Gathering Station (GGS) which is expected in 3Q FY20.

Other Updates

Petroleum Exploration License (PEL) for OALP block KG-UDWHP-2018/1 has been issued by GoI.

Oil & Gas (US Shale)

Price trend mixed with improved realization for oil but lower realizations for gas and NGLs during 2Q CY2019 (consolidated with 2Q FY20). WTI oil prices averaged higher by 9%, NGL realization dropped by 17% and HH gas prices declined by 16%. Volumes were 6% lower Q-o-Q. This resulted in revenues being lower Q-o-Q. Opex remained comparable to last quarter.

Review of US Shale Operations (3Q CY 19)

US commodity prices declined for both oil and gas during 3Q CY2019. WTI oil prices averaged lower by ~6% Q-o-Q. NGL basket price was down 13% Q-o-Q at $16.0/bbl, due to ample supplies of NGLs. HH Gas prices averaged lower by 16% Q-o-Q. Marcellus differentials (discount) to HH also increased to ($0.46)/MMBtu, deteriorating 7% Q-o-Q.

Development momentum continued at both Chevron and Ensign JVs. In Chevron JV, 8 wells were drilled in JV operated areas during the quarter. 6 new wells were also put on production, which are the 1st set of wells to be TIL'ed after a 2-year hiatus. In Ensign JV, 6 wells were drilled and 8 wells were Put on production.

Overall production was 11% higher at 19.9 bcfe. New volumes during second half of the quarter mitigated the natural decline of wells across both the JVs. Production expected to increase further during 4QCY19.

Shares of RELIANCE INDUSTRIES LTD. was last trading in BSE at Rs.1415.3 as compared to the previous close of Rs. 1396.15. The total number of shares traded during the day was 629451 in over 20580 trades.

The stock hit an intraday high of Rs. 1428 and intraday low of 1399.7. The net turnover during the day was Rs. 891730305.


Source: Equity Bulls

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