Visit http://indiaer.blogspot.com/ for complete details Oil & Gas – Sep10 preview: APM price hike to aid upstream PSUs
n OMCs still await compensation from government. We expect OMCs to report losses as the government has yet to announce compensation for the 1HFY11 losses. We expect a qoq fall in under-recoveries to `113bn in 2Q, due to the domestic price hike and petrol de-regulation. We assume that upstream companies would bear 33% of the under-recoveries, with the remaining absorbed by OMCs.
n Upstream PSUs to report significant growth. We expect ONGC and Oil India to register significant profit growth owing to: i) increase in APM gas price to US$4.2/m btu from US$1.8 and ii) increase in net crude realisations to US$61 and US$64 a barrel respectively due to the lower subsidy burden. Further, Oil India’s profits would jump sequentially as they were hit by lower production induced by the NRL shutdown in 1QFY11. GAIL’s net profit would increase qoq due to lower subsidy burden and higher gas-trading margins as the government has allowed it to levy a marketing margin on APM gas. GAIL’s transmission volume growth is expected to be subdued qoq due to the PMT shutdown.
n RIL to post strong profit yoy, but decline a tad qoq. RIL would register 25% yoy net-profit growth in 2Q to `48bn, on higher D6 gas production. Profit would slip 1% qoq due to production shutdown at the PMT field and a slight decline (3%) in petchem margins, albeit offset by better refining margins (GRM: US$7.7/bbl, up US$0.4 qoq). Management guidance on the D6 gas ramp-up would be key to watch.
n PLNG to benefit from PMT shutdown. PLNG would see rise in profit as we expect re-gas volumes to be up 10% qoq on higher import of spot LNG meeting the excess (due to PMT shutting down) gas demand. Cairn India would see its profits spike up as crude production from the Rajasthan field has increased on commissioning of the pipeline.
No comments:
Post a Comment