Oil India Ltd., the state-owned explorer headquartered in Assam, said on Thursday that consolidated net profit rose 53% from a year earlier to 2,521 crore rupees (25.21 billion rupees) in the quarter ended Sept. 30, as it produced 20% more oil and sold each barrel for about $24 more.

For investors in India's government-controlled oil companies, the numbers show both the size of this year's windfall and its limits. Profit fell 37% from the June quarter, when the group earned 4,027 crore rupees, as the price it received for crude slipped, margins at its refinery narrowed and exploration write-offs jumped.

Total consolidated income rose about 27% from a year earlier to 12,304 crore rupees, the company's filing showed. The board declared an interim dividend of 7 rupees a share at its meeting on Thursday.

Oil India's crude output and prices

The upstream business did most of the work. Oil India produced 1.021 million tonnes of crude in the quarter, up from 0.848 million tonnes a year earlier, according to the company's financial analysis. Its average realisation rose 35% to $92.24 a barrel from $68.19. That was below the $98.73 it received in the June quarter.

Revenue from crude sales in the parent company's accounts climbed 75% to 6,134 crore rupees. Standalone net profit, which excludes subsidiaries, more than doubled to 2,259 crore rupees from 1,044 crore rupees, a 116% increase.

The company said it reached its highest daily crude production in a decade on Sept. 29, at 11,300 tonnes, Business Standard reported. Trade publication Indian PSU, citing the company, said Oil India drilled 42 wells in the six months to September, a record for a half year.

Gas was weaker. Natural gas output slipped to 0.786 billion cubic meters from 0.804 billion a year earlier, while the price realised edged up to $7.19 per million British thermal units from $6.78.

Higher revenue also meant a larger bill from the government. Statutory levies, almost all of it royalty and cess, rose to 1,954 crore rupees from 1,271 crore rupees a year earlier.

Write-offs and a narrower Numaligarh margin

Two items explain why the quarter fell short of the one before it. The first was a 1,485 crore rupee charge in the parent's accounts for exploration costs written off, provisions and impairments, up from 983 crore rupees a year earlier and 252 crore rupees in the June quarter. The financial analysis does not break the charge down by project.

The second was Numaligarh Refinery Ltd., the refiner that Oil India counts as its material subsidiary. Its gross refining margin, the difference between the value of the fuels it sells and the cost of its crude, was $20.71 a barrel in the quarter. That was nearly double the $10.56 of a year earlier but well below the $35.95 recorded in the June quarter.

Numaligarh's net profit slipped 3% from a year earlier to 702 crore rupees and was little more than half the June quarter's 1,305 crore rupees, even though it processed more crude: 802.67 thousand tonnes, against 752.87 thousand tonnes a year earlier. The refinery ran at 106.26% of capacity in the first half, Business Standard reported.

Other state-run oil companies have also reported sharply higher profits this season. Indian Oil Corp., the country's largest oil marketing company, reported consolidated net profit of 22,503 crore rupees for the same quarter, up 174.7% from a year earlier, according to Indian Chemical News. Capital Times has separately covered Saudi Aramco's third-quarter results.

Half-year profit up 77%

For the six months to September, Oil India's consolidated net profit was 6,548 crore rupees, up 77% from 3,690 crore rupees a year earlier. Standalone profit for the half reached 5,130 crore rupees, compared with 1,857 crore rupees.

Numaligarh's margin averaged $28.24 a barrel across the half, against $7.73 a year earlier. The slide from the first quarter to the second suggests the second-half comparison will be less flattering if margins keep narrowing.

The realisation figures tell a similar story for the upstream business. Oil India's average crude price fell $6.49 a barrel between the June and September quarters, and every dollar matters more now that volumes are higher. The company's half-year crude output of 1.971 million tonnes was 16% above the 1.701 million tonnes of the same period last year.

The next set of numbers, for the quarter ending Dec. 31, will show whether the production gains from the record drilling program can offset softer prices, and whether the 1,485 crore rupee charge was a one-off.