According to the Ministry of Petroleum & Natural Gas, India’s Oil Exploration and Production (E&P) industry is poised for significant growth, with investment opportunities projected at $100 billion by 2030. Currently, only 10% of the country’s 3.4 million sq. km sedimentary basins are explored, which is expected to increase to 16% by the end of 2024.
With a market capitalization of Rs 3.76 lakh crore, the shares of Oil and Natural Gas Corporation Ltd were trading at Rs 299.15 per share, decreasing around 0.10 percent as compared to the previous closing price of Rs 299.45 apiece.
Brokrage Reccomdation:-
Morgan Stanley, one of the well-known brokerages globally, gave a ‘Buy’ call on the oil stock with a target price of Rs 430 apiece, indicating a potential upside of 44 percent from Wednesday’s price of Rs 299.15 per share.
Target Rational:-
Morgan Stanley believes that Azerbaijan has the potential for reserve accretion. The partnership intends to monetize non-associated gross natural gas reserves of 4 trillion cubic feet (tcf). However, the brokerage warned that ONGC’s worldwide activities have historically dragged down its results. Nonetheless, production and reserve accretion rates have been improving.
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Recent Accomplishments:-
Recently, ONGC Videsh, together with the State Oil Company of Azerbaijan (SOCAR), bp, MOL, INPEX, Equinor, ExxonMobil, TPAO, and ITOCHU, have signed an addendum to the existing Production Sharing Agreement (PSA).
Moreover, the addendum amends the ACG PSA enabling the parties to progress the exploration, appraisal, development, and production from the Non-Associated Natural Gas (NAG) reservoirs of the ACG field and is effective till the end of the existing ACG PSA in 2049.
Financial Condition:-
Looking forward to the company’s financial performance, revenue magnified by 2 percent from Rs 163,824 crore in Q1FY24 to Rs 166,577 crore in Q1FY25, but during the same period, net profit dipped by 43 percent from Rs 17,893 crore to Rs 10,236 crore.
Capex plan:-
ONGC has guided for standalone capex of ₹320-330 billion ($4 billion) each for FY25 and FY26, down from ₹37,000 crore in FY24 due to prior project adjustments and pipeline replacements. The company will spend ₹10,000 crore annually over 3 years on exploratory drilling
Production expansion plan:-
ONGC plans to increase its crude oil and natural gas production by 20% by FY27, targeting a total of 47 million metric tons of oil equivalent (MMtoe), which includes 21.8 MMT of crude oil and 25.5 BCM of gas.
The company aims to ramp up production from the KG-98/2 block to 20,000 barrels per day (bpd) by Q3 FY25 and reach 45,000 bpd by Q4 FY25, with gas production expected to hit 10 million metric standard cubic meters per day (mmscmd) by the end of FY25.
Company Profile:-
Oil and Natural Gas Corporation Limited explores, develops, and produces crude oil, natural gas, and value-added products in India, as well as acquires oil and gas acreages outside of India for exploration, development, and production, downstream (refining and marketing petroleum products), petrochemicals and power generation.
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Written by:- Abhishek Singh
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