ONGC Q Earnings Call 12 Aug 13

Transcription

1 ONGC Q Earnings Call 12 Aug 13 Operator Good day, ladies and gentlemen. I am Souradeep Sarkar the moderator of this call. Thank you for standing by and welcome to the First Quarter Financial Year 2014 Earnings Conference Call. For the duration of presentation, all participants' line will be in listen only mode. And we will have a Q&A session after the presentation. So now without further delay, I would like to hand over the conference to Mr. A. K. Srinivasan, he is Chief Corporate Finance. Thank you and over to you sir. Yeah. Good evening, ladies and gentlemen, I'm A. K. Srinivasan, Chief Corporate Finance from ONGC and on behalf of ONGC I welcome you all in this ONGC earning call for Q1 FY '14. Thank you all for joining us on the call. I'm also joined here by my colleagues Mr. Vijay Kumar Sanjeev Kumar; Mr. K. S. Pandey from OVL; and Mr. Ranganathan from IRC. The financial results for the results of the Q1 FY '14 have been taken on record by the ONGC Board of Directors today, that is August 12th, 2013, just a couple of hours before. The results have been released through a press note and sent to the stock exchanges. This has also been sent to the analysts who are there on our mailing list. Let me give a synopsis of the results. The company has earned a profit after tax of INR4,016 crores during this quarter as against INR6,078 crore during the corresponding quarter of fiscal 2013, a decrease of INR2,062 crore which amounts to a decrease of 33.9%, one. The decrease in PAT was mainly due to lower crude sales realization, INR740 crores and VAP INR186 crores. Increase in statutory levies INR300 crores mainly due to royalty, increase in operating expenditure INR1,701 core, mainly due to provision made towards post retirement benefit scheme for employees, increase in exploration cost written off mainly due to the higher survey expenditure INR308 crores and higher dry well written off INR60 crore. Increase in DDI cost by INR335 crores mainly due to increased depletion and depreciation and increase in provisions and write off by INR26 crore. Decrease in PAT was partly number two, decrease in PAT was partly offset by increase in higher sales, realization of gas INR39 crore, increase in non operating income INR25 crore, increase in interest and dividend income INR133 crore, decrease in government share of profit petroleum INR23 crore, decrease in exchange variation loss INR96 crores, decrease in interest payment INR28 crore, and finally via decrease in income tax provision of INR1,096 crore. Our share of subsidiary towards under recoveries of oil marketing companies during Q1 FY '14 stood at INR12,622 crore as against INR12,346 crore in Q1 FY '13. This has adversely impacted our PAT by INR7,131 crores but for the under recovery adjustment, the PAT for the Q1 FY '14 would have been INR11,147 crore as against INR13,227 crore in the corresponding quarter previous year. The sales revenue for Q1 FY '14 was lower by INR866 crore, that is 4.3% at INR19,283 crores as against 20,149 crore in the corresponding quarter of previous year, mainly due to negative price variance of crude INR792 crore and VAP INR221 crore, and negative quantity variance of gas INR151 crore being offset by a favorable price variance of gas INR190 crore. And favorable quantity variance in respect of crude INR52 crore and VAP INR35 crore. And further offset by a decrease amount of profit petroleum share with government of India as for the PSE in respect of JVs for Q1 FY '14 by INR23 crores. Gross billing for crude oil Q1 FY '14 was at US$ per barrel, as against US$ barrel in the same period last year, a decrease of 5.75%. The post discount realizations of crude oil in this quarter was US$40.17 per barrel as against rupee $45.91 per barrel in the same period of last year, a decrease of 12.5%. The average exchange rate of INR versus the US dollar stood at INR55.95, vis a vis, INR54.22 in the first quarter of 2012, Though the net realization in terms of US dollar has dropped by 12.5%, the post discount realization of for crude oil in terms of INR stood at INR2,247 per barrel in FY '14 versus INR2,489 per barrel in Q1 of FY '13, a decrease of 9.72% only because of weakening of rupees by 1.73% per dollar. That is, in percentage terms it is 3.2% during the current quarter. Interest and dividend income has increased by INR134 crore from INR822 crore in Q1 FY '13 to 956 crore in Q1 FY '14. The increase is mainly due to receipt of interest income of IT results of INR240 crore on completion of our assessment of assessment year '94, '95 and '95, 96. This increase was offset by a decrease in interest on bank/psu deposits by INR139 crores due to decrease in weighted average investable surplus funds and also decrease in the average rate of interest and deposits from 10.21% in FY '13 to 9.03 in FY '14 first quarter. Then the marginal increase in interest on SRF [ph] deposits by INR16 crore mainly

2 due to fresh investments of INR100 crores made during the year FY '13 in SRF accounts. Non operating income in FY '14 Q1 has increased by INR25 crores as compared to Q1 FY '13, that is INR216 crore to INR241 crore, mainly due to write back of certain excess liability in the current quarter. The operating expenses in Q1 FY '14 has increased by INR1,701 crore to INR4,628 crores from 2,927 crore. The increase is mainly in manpower expenditure, INR260 crores, work over expenditures INR146 crores, pollution control expenditure 557 crores, repair and maintenance expenditure is INR99 crore, contractual payment INR178 core, R&D expenditure INR88 crore, administrative expenses 874 crore et cetera. The increase in these expenditures is mainly attributable to allocated portion of provision amounting to INR1,611 crores made towards one time grant to the post retirement benefit scheme for converting the defined benefit scheme to defined contribution scheme and INR106 crore towards the employer contribution in superannuation benefit in FY '14 in terms of the guidelines issued by the department of public enterprises. These provisions are being significantly increased because of various activities where manpower cost is allocated like delay in production, work over, water injection, transportation of oil and gas, R&D, pollution control and administrative expenses and overheads. DDI cost for FY '14 for the first quarter stood at INR2,333 crores as against INR1,998 crores in Q1 FY '13, that is an increase of INR335 crores, that is while in percentage terms it is 16.7%. The increase is mainly on account of depletion expense expenditure by INR177 crore due to additional capitalization of facilities and also because of additional depletion during FY '14 Q1 as a result of implementation of the revised guidance note of oil and gas producing properties issued by ICAI. The increase is also attributable to increase in depreciation by INR120 crores due to capitalization of additional capitalization of MNC process (inaudible) in Q3 FY '13. The exploration cost written off has increased in FY '14 Q1 to INR1,568 crores as compared to INR1,201 crore in Q1 of FY '13, an increase of INR367 crores which is mainly on account of increase in survey expenditure due to increased 3D activity and also due to increase in expenditure on unsuccessful wells by 60 crores from 933 crores to 993 crores in FY '14 Q1. During FY '14 Q1 the statutory levies stood at 5,632 crores as against INR5,332 crores in Q1 FY '13, an increase of INR300 crore. The increase is mainly attributable to royalty on crude oil by 255 crore due to reversal of liability of royalty on closing stocks during FY '13 Q1 on account of heavy subsidy on crude oil during that quarter. Provisions and write off has increased by INR26 crore during Q1 FY '14 from INR438 crore to INR464 crores in Q1 FY '13. This is mainly due to increase in provision towards octroi, VAT, CST deductions by refineries on account of crude oil from ONGC. Provisions made in Q1 FY '13 and Q1 FY '14 is INR340 crore and 436 crore respectively. In terms of physical performance there is a marginal reduction of 0.79% in oil production at MMT in the first quarter of this fiscal as against MMT in the same quarter last year. Gas production was also lower by 3.69% at BCM in this quarter vis a vis BCM in corresponding quarter of the previous year. With this I finish my briefing of the first quarter results for the financial year FY '14. We will be very happy to take questions from you. I and my team members would try to answer your questions to the best of our satisfaction. Thank you. Questions And Answers Operator Thank you so much sir. With this we are going to start the Q&A interactive session.. And the first question is from Mr. Neeraj Man Singh from Edelweiss Capital. The line has been unmuted, you may go ahead and ask your questions please. Yes sir, hi, good evening. Good evening. Two, three questions. One is on the Rajasthan production and revenues, how much revenues was built in because of royalty and

3 how much was because of the your entitlement interest? Yeah, we'll just look at the number. And same thing with the production number as well for the Rajasthan. Yeah, we'll give you. No, there has been a slight increase in our production, it is 0.91 MMT for the Rajasthan JV. This is based on the TI, right? Yeah, it's on the TI. And TI would be how much? Sorry, it is I stand connected, it is for the Rajasthan JV per se. And how much has been booked for the royalty in terms of rupees crore? The royalty amount The excess that you have built in because of the way the PSU is structured? Yeah. So basically the entire royalty which ONGC bears immediately, it is (Technical Difficulty) reimbursement through the participating interest. The total royalty is 1,305 crores. Right.

4 Right. And the TI, the TI has been at sorry EI. Okay. And sir there has been a quiet fall in the value added production products, the production of those any specific reason for that because the gas production has not fallen as much as the VAP production has fallen? No basically the VAP is a part of our condensate and my volumes of condensate has slightly decreased and that has impacted my value added products. Actually this quarter the total VAP production has been tonnes and (inaudible) is at in the FY '13. Yeah, yeah, I got it, I got it. And anything, any specific thought process you had on the discounts which is Nigerian Bonny Light because what we see from our numbers that the discount on the Nigerian Bonny Light crude has slightly gone up. So any specific thoughts that you had on this or is that from quality change and what sort of Yeah, I will explain you. The subsidy was at the same methodology what it was done in the Q1 FY '13. But there has been a slight decrease of about 1% decrease in the volume of production and appreciation of the rupee I mean the depreciation of the rupee has contributed about 3.2%. So the net impact of 2.2% over the previous production numbers, that remains at same level. Okay, thanks a lot. You just multiply with that 2.2 of that 12,350, it was then same number. Okay that's all, thank you. Operator Thank you so much. Moving on to the next question, we have Mr. Amit Shah from BNP Paribas. The line has been unmuted you may go ahead and ask your question please. Amit Shah, Analyst Hi sir, can you just talk a little bit more on couple of things, first one is this expiration write off, because we are seeing these write offs on a quarterly basis and they are fairly volatile so how should we look at it? And second if you can just give me an update on the G1 and GS 15 fields?

5 Okay. Actually this survey expenditure which was earlier at the 1,201 crore in the quarter of '13 that has gone up by 1,568, primarily the increase has because the survey activities have been augmented in the first quarter and which has gone up by about 307 crores and about dry well charge which has increased from the previous quarter is by 60 crores, so it adds up to 367 crores. So survey is normally charge off in the period of incurrence. So it is a normal practice of accounting which continually (inaudible) but survey is going on increasing because we are carrying out 3D surveys so that is the reason behind. Amit Shah, Analyst Okay sir, and also can you give me a update on few of the fields like on the production front are you seeing any development on the G1 and GS 15 fields or can you just give us run us through the timeline? No actually the guidance, guidance was of FY '14. There is going through the marginal fields which are on implementation primarily there will be B 193, B22, WO 16, Cluster 7. And all these are likely to come up in the second quarter onwards. Basically now in the monsoon period these projects are not getting completed, the drilling activities are on an once they start get connected the production will start out of that so we expect the production numbers to increase in the coming quarters. Amit Shah, Analyst Okay, so by latest by third quarter we should see all these fields come up and? The third quarter fourth quarter you will get some increase yeah, my colleague from the planning will tell the answer. For the G1 and GS 15 fields are concerned, actually we have to complete four wells and we have completed all those four wells. Amit Shah, Analyst Okay. And but the production at present is around 32.4 [ph] mmscmd. But it is expected to increase to from 4 mmscmd in another six or seven months when our new terminal comes on stream. Amit Shah, Analyst Okay. So G1 field which was to be put on production, it will be put on production from September this year. Amit Shah, Analyst Okay. And what about the B 22 cluster, that will still be for December 2015?

6 No, B 22 or B 12. Amit Shah, Analyst B 22 cluster. B 22 will be, already producing gas. Amit Shah, Analyst Okay. And there were some geological surprises where we anticipated to get some oil but those oils could not be taken but the wells are getting relocated and we'll start the licensing. 10 wells have already been (Technical Difficulty). And the gas is coming as of now. Amit Shah, Analyst What is the current level of production if you don't mind? B 22? Amit Shah, Analyst B 22. Sure. We'll just give you, one minute. Amit Shah, Analyst Thank you. At present it is around mmscmd.

7 Amit Shah, Analyst Okay. And that will ramp up, right, over the? No basically the process complexion [ph] and all which is (inaudible) get commissioned B 193 then the volumes are likely to increase in that. Amit Shah, Analyst Got it. And just last question from my side, sir. On the OVL front, when do we expect any development on Syria or is it it's still shutdown, right? It is, yeah, it is under shut down and so far as you all know there is a disturbance and we are not having any information, there is no communication basically from the Syria region. Amit Shah, Analyst Okay, thank you so much sir. Operator Thank you so much. The next question is from Mr. Sanjay from Credit Suisse. The line has been unmuted, you may go ahead and ask your question please. Sanjay Mookim, Analyst Good evening sir, thank you for taking my question. I have a couple of questions, first sir, what was the incentives of taking this employee charge. Is this voluntary on the behalf of ONGC or has there been the general accounting change please? No, it is voluntary on the part of the company. There is a post retirement benefit scheme which is in the company and in order to make, convert this total scheme into defined contributing scheme, there was some corpus [ph] to be built in where ONGC has taken a Board decision for revamping about 1,624 crores into the corpus and which was approved in the month of May of which this was accounted for. Sanjay Mookim, Analyst Yeah. So can we expect further employee related charges or large charges? No there will be (Technical Difficulty). No as for the DP [ph] guidelines on the pay revisions that affected from 1/1/2007 and as was that there was about 15% to be deposited for the superannuation benefit for all the employees. That is 30% out of which 12% is contributed to the provident fund, 3% is towards the medical and leave encashment and 15% is to the defined contribution scheme. So that total requirement as per the DP guidelines are being met and the recurring cost which was booked in the first last quarter of FY '13 was 1,850 crores. Against that our recurring expenditure in the first quarter is 106 crores. Sanjay Mookim, Analyst So here on we could expect that 106 crores to recover but largely.

8 (Technical Difficulty) 400 crores will be an annual expenditure on this account. Sanjay Mookim, Analyst Okay, thank you. Sir, secondly the production guidance for FY '15 domestic oil and gas could you please remind us. Yeah, my colleague will share on that. Like crude oil production from ONGC operated fields, it is expected to be around in FY '15 and our JV share may be around 3.78, that works out to total of MMT of crude oil. As far as gas is concerned, ONGC operated fields, it may be around and from our JV share, it will decrease to 1.40 BCM, making it total of 36.5 BCM for the FY '15. Sanjay Mookim, Analyst That's it thank you. And all the projects that comprise this growth or that this growth is based on, are they on track or do you see any risk of slippage? No actually seven actually we are implementing 13 projects, out of that the five projects are already producing but there are some wells remain to be built in those under those schemes. Seven projects will be brought to stream this year itself, this financial year, balance will be in the following year. Sanjay Mookim, Analyst Okay, so okay. And in terms of the overseas production sir, similarly could you give us the guidance again. Yeah my colleague (Technical Difficulty). Yeah, you go ahead. You raised the question, what it was? Sanjay Mookim, Analyst The OVL production guidance for FY '15, sir? FY '15? Sanjay Mookim, Analyst Yes, sir.

9 For the next year, it is a little bit because we are also in the process of acquisitions. It depends on any new acquisitions. Figure it is very difficult to say, but roughly I can say it will be above the 8 MMT. Sanjay Mookim, Analyst 8 MMT oil equivalent or Yeah, yeah. Yes. Sanjay Mookim, Analyst Okay, thank you very much. Operator Thank you so much. The next question is from Mr. Amit Rustagi from Antique Stock Broking. The line has been unmuted. You may go ahead and ask your questions, please. Amit Rustagi, Analyst Yeah, good evening, sir. Sir, now we have acquired this Mozambique state, could you give us the CapEx apart from the 2.47 billion which we have paid. So if you can give us a yearly CapEx number from here till 2018, '19? '18, '19? Amit Rustagi, Analyst Yeah, because you would have done some studies based on certain CapEx and what is the CapEx requirement in this still. That's still work in progress. Amit Rustagi, Analyst The expectation? Yeah, I understood your question. This work is still in progress. And every year, we are working out on that part. And then it depends on the annual declares from fiscal year. So at this juncture, it is very difficult to communicate. Amit Rustagi, Analyst Okay. But, sir, we would have done some studies, like we would have anticipated certain CapEx over the life of the field before we have taken this decision. So if we can get that broader number not annually, but what is a broadly the CapEx number which you are looking at for the fields.

10 Actually if you see the area is still under present stage. It will be very difficult to come out with the concrete field development programs in a short span of time, say, maybe one year what I'm talking about. Subsequent to that, field development plan is linked with your packages like LNG and other things. So for each space, we need to work out exact what the CapEx will be and it will be decided once the partners are confident that (Technical Difficulty) program of the area has been completed. So we make sure for any gas. Amit Rustagi, Analyst Okay. And, sir, what about our Carabobo project? I understand that we are running much behind the schedule on that project because I think by this year, we should have substantial production from that. Yeah, Mr. Amit, presently we are having the four wells which are flowing, from that we are producing around 2,300 BOPD. By the year end we are expecting to reach 8,000 to 10,000. And already six rigs are in place in the two clusters. So this production totally depends on the outcome of the wells basically. So there is a slow progress, no doubt, on the drilling part, but we are expecting 8,000 to 10,000 this production by the year end. Amit Rustagi, Analyst Sir, I think the numbers which were there were 4,50,000 barrel per day, right? That is the plateau for us. It may reach in the year of 2018 '17 '18, what you are talking it is a plateau production, that is the peak production when the field will fully develop and initially now with the temporary arrangements, we have started early production. Amit Rustagi, Analyst So, sir, can you give us the expected production ramp up from here that from like 2013 calendar, 2014 calendar what will be the expected average production? Yeah. That's what I told, in this year we are going to reach 8,000 to 10,000. Then again it depends on the number of wells, how much we are going to aid the wells. So it is like 20,000 and once our facility will come, then we'll consult it only for drilling the development wells, basically. Amit Rustagi, Analyst So next year what is the number which we can expect next year, next two years? 20,000 BOPD. Amit Rustagi, Analyst 20,000 BOD, okay. That is the full field, so our share is 11% in that.

11 Yes, yes, yes. Amit Rustagi, Analyst Okay. Right, sir. Thanks a lot, sir. Thanks from my side. Operator Thank you. Moving on to the next question from Mr. Avadhoot Sabnis from CIMB. The line has been unmuted. Your may go ahead and ask your question. Avadhoot Sabnis, Analyst Yeah, just wanted to clarify. This 1,611 crore that has been provided for post retirement benefits scheme, you said you have allocated different activities. Can you clarify as to how much has exactly hit the P&L out of this 1,611? It is about 1,200 crores. Avadhoot Sabnis, Analyst 1,200 crores. Okay. And did I get the numbers right? You had given the forecast for crude production from your own fields of for current year and 25.1 for FY '15. Have I got it right? Just clarify it for the FY '15. Avadhoot Sabnis, Analyst ' for FY '15 from the Domestic, ONGC operated fields. Avadhoot Sabnis, Analyst Sir, what is that for the current year? Current year it was

12 Avadhoot Sabnis, Analyst Yeah, that is for FY '14. Avadhoot Sabnis, Analyst Okay, and sorry. FY '15 is Avadhoot Sabnis, Analyst Okay and so this 25.1 was the similar number for gas, is it? is including JV for gas for FY '14. Avadhoot Sabnis, Analyst And just wanted to understand the big jump in gas production that we have been expecting coming from the KG block, what is the current timeline for that big jump in production? KG block actually, as you may be knowing, that we have requested for a government approval to drill eight more wells, six is on the Northern development area and two in the Southern development area. Out of that five wells we have, rather six wells we have already drilled and we expect to complete the appraisal program by December. At that point of time we will be actually steadily revisiting our DOC and going for this field development program as well. So Northern development area it is expected to start contributing from year 2016, Avadhoot Sabnis, Analyst Okay, now when you are assuming that would start production from 2016, 2017, what is the assumption on when the field development plan for this would be cleared by the government? See once we submit our DOC say by January 2014 also. Avadhoot Sabnis, Analyst Yeah. So, maybe around three to four months because this will be a revised DOC. So the government should not take much time in clearing that. After the approval of the DOC we are given one year's time to prepare the field development program.

13 Avadhoot Sabnis, Analyst Yes. As we want to squeeze that period of one year. And finally we are planning to go for the consulting, the engagement of consultant for preparation of field development plan. Avadhoot Sabnis, Analyst Okay. So by when do you expect, I mean when you are saying that you expect production to start in FY '17 what is implicit in terms of when the FDP would be cleared by the government? FDP says there will be, we assume suppose from March 2015 by 2015 March FDP may be ready. So after that it depends on government how much it would take. Avadhoot Sabnis, Analyst Okay so basically from the time FDP is cleared you would need less than two years to basically to put it on stream. Yes. Not that actually two of the (Technical Difficulty) may be, they may come on stream within two years but other fields they may take three to five years time. Avadhoot Sabnis, Analyst Okay, okay. Thank you, sir. Thank you. I'll come back with more questions. Thank you. Operator Thank you so much. The next question is from Mr. Mayur Patel from Spark Capital. The line has been unmuted, Mr. Patel. You may go ahead and ask your questions. Sir, I have couple of questions. First, on the revenue front. Sir, if I take your net realizations reported in the presentation and apply it on the sales volumes, we are getting around 8,000 crores as compared to the ONGC revenues of 8,800 crore. Can you explain where from this additional 800 crores, is there any other miscellaneous or any other adjustment item in the revenues? Well, for the FY '14 I mean the first quarter? First quarter nominated blocks crude oil revenues is 8,850 crores reported by you.

14 Yeah. But if I take the net realizations reported by you, which is around 100 and on this slide, ? No, Yeah. If I apply this on the sales volume of ONGC, it comes to around 800 crores revenue. So just want to understand, what is this item of 800 crore adding to the revenue of ONGC. No, I'm not talking about JV, purely ONGC revenues reported is 8,800 crores, whereas if I apply the net realizations given by you on sales volume, I'm getting only 800 crores 8,000 crores. So where is this differential 850 crores coming from, just wanted to understand. You have just applied on the production volume, but some inventories are also there. We are closing stock, which we are selling it in the current quarter, right. So my 800 crore comes there. No, I'm checking on the sales volumes reported by you. Sales volumes comes in inventory also. That is forward inventory. Fine, sir. I'll take this offline. Yeah, we will get back to you.

15 No, we will get back to you. Next, I have one more question. Sir, we are guiding about, say, million tonne in the FY '15 from ONGC, normally oilfields. Yeah. Which is sir, if I look at the current run rate, which is around 2.5 to 3 million tonne incremental delta on a annualized basis, which is pretty big. Can you give us some idea we know there are cluster fields and but say 2.5 to 3 million tonne, where from it will come or next six months at least it should start contributing to have this kind of number in FY '15. So at least, the bigger ones if you can just tell me the status of, say, B 22 cluster. B 22, B 193, Cluster 7, WO 16 all are under drilling activity now and they will be getting connected in the third quarter and fourth quarter of this year. So these will all add up to the extra volumes which we have projected for FY '15. Apart from that there is a D1 field which is also going to be the extra (inaudible) which we have to start. That will also contribute to the production. The present exit rate for the current FY for D1 is 35,000 and by next year we are expecting it to touch around 40,000 barrels to 50,000 barrels. All will add up to about 1 MMT of oil in D1 itself. Sir, just want to confirm apart from D1, 193 No, B 193 will add to production volumes of oil. Is it fair to assume something around 30,000 barrels can come from My colleague will share you share the numbers of other fields. Other fields are like Cluster 7, then D1 is there, C series, B series, WO series, BHE and B 193 plus B 22 and SB 14. All these fields actually, they will be contributing around 4 to 5 MMT of crude oil in FY '15 and around 12 to 13 mmscmd of gas. So we have factored these and with that actually we have also factored the natural decline in our existing fields. So making that as the sum, the total number comes to comes to the 4.95 in FY '15. Okay. So you think these fields are on track to

16 Yeah, yeah, already drilling is going on in this fields now. Okay. Sir, last thing on OVL. Sir, just it would be nice if you can comment on the ramp up in Sudan and what we should expect going forward. Yeah, yeah. In the South Sudan, basically, already in the GPOC we are producing 27,000 to 28,000 bopd and we are expecting, if everything goes normal because it depends on the government to government and both government have is talking on certain issues. So we are expecting 30,000 bopd from GPOC and 5,000 from SPOC, that is (inaudible) in South Sudan. So 5,000 from SPOC? Yeah. Okay. This is purely South Sudan? Yes. GPOC and SPOC purely South Sudan and the North Sudan there is a normal production, almost we have reached to the 60,000 bopd. This is GNPOC includes. Yes, GNPOC, again they are producing 60,000 which is in the Sudan, you can say North Sudan. In the South Sudan there is GPOC and SPOC. Okay. And slowly So it can ramp up from 27 to 35?

17 Yeah 30,000. Right now I can say 30,000. And sir, SPOC, how much it is producing currently? Currently it is in between 4,000 to 4,500 because there is a restriction, 5% only. This is allowed for export volume and limiting up to 11%. So considering that we will be able to produce 5000 (Technical Difficulty). Okay and GNPOC is there any further upside beyond the 60,000 level? It depends on the new wells and the delivery of the new wells basically. So I can say it is a, we are not going to ramp up much. It is 60,000 on average. Fine sir. Thanks a lot for taking my questions. Okay. Operator Thank you so much. The next question is from Mr. Probal Sen from IDFC Securities. The line has been unmuted, you may go ahead and ask your question. Probal Sen, Analyst Yeah. Just one clarification, you already mentioned this. To confirm that out of the 1,600 odd crores for the change in retirement scheme, 1,200 is factored in P&L. Yeah. Probal Sen, Analyst And the impact going forward will be 400 crores on a yearly basis now, that's the recurring impact which we will see in the other OpEx? No, no, actually what happens, out of the 1,611, there are many direct costs which go into the activities.

18 Probal Sen, Analyst Okay. Like drilling, work over, well services, all these are manpower related, or are loaded into these activities and then they get accounted into the respective groups, then the manpower cost is ultimately going in back again to the activities. So P&L cost is directly which is hitting my P&L accounts and rest of the things are coming through the activity route, again this out of that 1,611. Probal Sen, Analyst Yeah I got that sir. So just And on the account of defined contribution of 15% which we had done in the Q4 of last year. That is having a recurring cost on an annualized basis of 400 crores. Probal Sen, Analyst Yes, sir. So that's what I was asking that the 1,600 crores does have a retrospective element to it, it is a one time adjustment, correct? It is one time, right. Probal Sen, Analyst The 13% the 15% will be the. (Technical Difficulty) continue on that. Probal Sen, Analyst And that will reflect in the employee cost or in the other operating expenditures? No, no it will go to the employee cost. Probal Sen, Analyst Employee cost. Some portion will go into the direct operating cost, some will go into the P&L cost.

19 Probal Sen, Analyst Okay fair enough, sir. Thank you. That's all from my side. Thank you very much. Operator Thank you so much. The next question is from Mr. Harshad Borawake from Motilal Oswal Securities. The line has been unmuted, you may go ahead and ask your questions please. Harshad Borawake, Analyst Thank you, thanks for the opportunity. Sir, I have two questions, one is on this, what is your planned exit production rate for FY '14 for ONGC stand alone? FY '14, actually ONGC stand alone crude oil production, our target is 24.08, and VAT production, it is Harshad Borawake, Analyst And what will be exit rate in the last quarter? We will just give you. Fourth quarter actually ONGC stand alone crude oil production was (Technical Difficulty) exit rate for the current year. Harshad Borawake, Analyst No, for the FY '14 fourth quarter I am saying. Harshad we will come back to you on. We will come back, basically the numbers are not readily available with us. Harshad Borawake, Analyst Sure. But we have. Harshad Borawake, Analyst Thanks. The second question is on the planned deepwater exploration wells, what is the number in FY '14 and what it was in FY '13? Thank you.

20 Deepwater. Harshad Borawake, Analyst Exploration, yeah. Yeah in FY '13 we had 15 wells. Harshad Borawake, Analyst Okay. And in '14 we have deepwater we have 17 as plan out of which three have been completed in Q1. Harshad Borawake, Analyst Okay. Thank you, thanks a lot. Okay. Operator Thank you so much. The next question is from Mr. (inaudible). The line has been unmuted, you may go ahead and ask your question. Yeah, good evening. Just wanted to conform to start with that is post retirement benefit scheme that's 1,200 crore which is in the P&L is the prior period numbers? Not prior period, we have taken in the current year. No, no. That's right. But it effectively relates to the past. No. It is a one time infusion of funds into the PRBS account, only to make this scheme which was in existence as the viability amount is required to make the scheme continuing. Okay.

21 See, we have two schemes running the PRBS scheme which was already in existence and as per the DP guidelines, we have a superannuation benefits to the employees to be implemented from 01/01/2007. Now the entire scheme which is in existence is getting converted into a defined scheme into a defined contribution scheme with effect from 01/01/2007. And this amount, which has been pumped in is against the PRBS as a one time measure into the accounts to Yeah, so basically To make that scheme workable. So basically, if this is what, to which you are moving to now. If it was the contributory scheme, if it had been from 2007 to now, you had to make good [ph] the shortfall of 1,600 crores? No. We have already, So that is what you have made accounted in 1Q? Yeah. The recurring impact relating to the current year is as you said 100 crores per so that is (inaudible)? (inaudible). Yeah. So the 1,600 crores includes 100 crores, which relates to this year? No. That 1,611 plus 100. Okay, okay, okay, okay. So 1,611 is to make up for the shortfall for the past?

22 Absolutely. And this 100 crores which is going to, is it a hit to the P&L or that P&L, it will be slightly lower? Some portion, this is, this 106 is a hit to the P&L and is the total and some portion, I will say about 60% will hit to the P&L and 40% will come through the activity route. Okay, okay. Two other questions. One is on OVL, when are you likely to announce the first quarter profits? This board meeting it is ruled on 21. So exactly, I do not know, the agenda is there but most likely 21st August. Okay. Thanks. Second one is on, you seem to change your accounting of the gross oil price because even the number for last year 1Q FY '13 has been stated downwards. No, I couldn't get your question. See last year, when you sent us the details, the number for 1Q FY '13 was whereas the number which you have given us today for 1Q last year, I think, is about I think, there has been some change in octroi accounting or something? Yeah, (Technical Difficulty). Gross price is Is , What was the last quarter?

23 Yeah, correct. So you knocked off some 70 60, 70 sales compared to what you had, so this year after making that octroi or whatever related change you come to So if you had accounted like you were accounting last year, what would this gross oil price number be, it would have been higher by a dollar or two. This will be and That big a difference, is it? Yeah, it's almost $ would have been this year's number. Yeah. Okay. Thanks a lot. Last question. I didn't catch the what was mentioned in these new oil and gas fields which will come through. They will I think it was mentioned that they will add some 12, 13 mmscmd of gas production. And how much is the oil production rise that these new fields will contribute, can you give that number please again? It will be in '13 for FY '14 it will be around 4.5 MMT and in FY '15 around 4.8 to 4.9. Okay, okay. Thanks a lot. That's it from me. Thank you.

24 Operator Thank you so much. The next question is from Mr. Rohit Ahuja from ICICI Securities. The line has been unmuted. You may go ahead and ask your question. Rohit Ahuja, Analyst Hi, sir. Good evening, sir. Sir, can you clarify something on the gas pricing formula? Finally, has there been any formal measures from the government or you received any formal intimation on that? As of now, there is nothing except the Cabinet approval which has been talked about. There's no formal papers given to the companies. Rohit Ahuja, Analyst Right, right. So (Technical Difficulty). Hello? Hello? Rohit Ahuja, Analyst Yeah. When do you expect that to be issued? No, we don't know exactly. As you are reading through the media, there are lot of controversies coming in. So what's exactly the government plans, we are not aware about it. Rohit Ahuja, Analyst Sir, this should if you increase the cost of gas assumptions, should it lead to any change in your reserve estimates next year or any change in your 3P number or 2P number? No. Basically, as ONGC is concern, we would have also gone for development of the results which are available. It is not related what the price I'm going to get from the government, because as a government PSU we are focused just to produce as much as oil and gas. Rohit Ahuja, Analyst Right.

25 So it has nothing with the price relation. Right, right. Okay, okay, thanks a lot sir. Operator Thank you so much. The next question is from Mr. Alok Deshpande from HSBC Securities. The line has been unmuted. Alok Deshpande, Analyst Thank you sir. Thanks for taking my question, my question is about CapEx, what is the CapEx guidance for this year sir? It is [ph]. Alok Deshpande, Analyst Okay and sir how much of that would be dollar denominated? You can put, see all my capital schemes are more dollar denominated and they are in the range of about 14,000 crores. Alok Deshpande, Analyst Okay. And all other active balance of that is all activity which is about 60% is dollar denominated on account of the hiring of utilities. Alok Deshpande, Analyst Okay, right. So broadly speaking, is it fair to assume that more than 60% to 70% is dollar denominated sir? Absolutely. Alok Deshpande, Analyst Okay sir and this number of 35,000 crores is the number you had given in our Q4 analyst meet also. Now since then if you see the rupee has wakened from 55 to 60. So would it be fair to assume that this overall number would also go up by 10%? Basically what are the terms, we will have to relook at our total planning process in the current year. But we will be in and around 35,000 only taking care some slippage of some projects may happen due to the extra impact on our depreciation of rupee.

26 Alok Deshpande, Analyst Okay, okay. We will maintain around 35,000. Alok Deshpande, Analyst Right, right. Sir and just if you could just broadly classify this capital expenditure into what, how much you are spending on to, on the current producing projects and how much on the new fields or the new or exploration? One survey is going to be there about how much? 1,260 crores. Yeah, survey will be about 1,200 crores. Alok Deshpande, Analyst Okay. And my expected drilling will be around 9,300 9,300 crores. Development billing will be around 8,000 crore. 8,000 crore and capital is 14,000. Alok Deshpande, Analyst Right. And sir just one last question. I missed the gas production guidance you had given for FY '15. If you could just

27 That is FY ' Alok Deshpande, Analyst you said? Yeah. From ONGC operated segment. Alok Deshpande, Analyst Yeah. Okay, thank you so much. Yeah. Operator. On behalf, Mr. Paresh Jain from IIFL. The line has been unmuted, you may go ahead and ask your question. Paresh Jain, Analyst Good evening, sir. Just wanted to check on the subsidy sharing mechanism for the rest of FY '14. Is it going to be at $56 per barrel or because of rupee depreciation, the numbers could change or how does this go about? Presently, in the first quarter, whatever we got the numbers are based on $56 per barrel on our production of crude oil as well as condensate. Paresh Jain, Analyst Okay. So, we presume that $56 will continue and the multiplier of the exchange rate of that quarter will have the impact around. Paresh Jain, Analyst Okay. All right. Thank you. Operator Thank you so much. The next question is from Mr. Ashutosh Bhardwaj from Nirmal Bang. The line has been unmuted, you may go and ask your question. Ashutosh Bhardwaj, Analyst

28 Sir, can you help me just to find out, how you have arrived to this $62 for the discount as like what quantum of the condensate do you take to arrive to this $62 of the subsidy? Actually, the subsidy number, which is worked out is $56. They consider my volume of condensate in calculating the subsidy but the sales realization is actually on my production of crude oil. So, I applying the entire subsidy element on to the sale volume and based on which I get this 62. Ashutosh Bhardwaj, Analyst So which you are thinking that sales volume plus your condensate production is Subsidy calculation by the government but whereas I don't get the condensate as a crude oil value. So that goes into the value added products. Ashutosh Bhardwaj, Analyst When we calculate reverse I think that gets 62 figure actually because, whether we need to take this 0.48 No. Actually, it won't take. There is a slight connection which we carry out when we actually calculate the subsidy, we take it to the, as value added products of LPG and SKO. But when we are depicting the figures they are totally depicting on the crude oil, the entire volumes. If we really distribute it into the LPG and the SKO, my subsidy will be $60, not $62. Ashutosh Bhardwaj, Analyst Okay, okay. And secondly sir, could you please give me a update on this FY '14, crude oil as well as gas numbers of the targeted numbers? Yeah. Our ONGC operated, we target for the crude oil. Ashutosh Bhardwaj, Analyst Yeah. And for JV? For JV, it is Ashutosh Bhardwaj, Analyst And for gas (inaudible) it would be 23.44? Yeah

29 Ashutosh Bhardwaj, Analyst And for JV? It is Ashutosh Bhardwaj, Analyst Sir just last conference call I believe that you have given a nominated fields could be 25.78, some kind of a revision that have been happening on a downward side? Yes because the schemes which we are talking about for the development of the field. Some of the actually field's development was delayed. Ashutosh Bhardwaj, Analyst Okay. That's why we have revised the profile for FY '14 and FY '15. Ashutosh Bhardwaj, Analyst Okay. There are some delays in implementation of the fields because of the terrain [ph]. Ashutosh Bhardwaj, Analyst Okay sir, thanks a lot, thanks, that's it from my side. Thank you. Operator Thank you so much. Now we have Rajesh from MetLife Insurance. The line has been unmuted, you may go ahead and ask your question. Rajesh Aynor, Analyst Sir my question is regarding cost element, we are almost 10,000 crore odd cost per quarter which you spend on statutory levies and your further expenses operating in nature. So how much of these costs, what percentage on these cost element is actually linked to dollar and what is how much is the rupee cost?

30 See my entire operating expenditure is on more denominated on the rupee front, except over 30,000 to 40,000 will be on foreign exchange impact. Rajesh Aynor, Analyst That is other expenses. It's the direct operating cost and the planned expenditures is primarily predominantly with the dollar currently. Rajesh Aynor, Analyst Okay so out of these 10,000 odd, you are saying almost 70% will be rupee denominated? Yeah. Rajesh Aynor, Analyst And 30% odd, it should be dollar. Yeah, the realization of rest of entire manpower cost and the consumables all are more Indian (inaudible). We don't have them on the operating expenditure more impact of exchange. Rajesh Aynor, Analyst And the levies, they are also more in rupees per tonne. Levies are totally as per the current prices it is based on the ad valorem workings. Rajesh Aynor, Analyst Okay, so it is a percentage. Percentage of Rajesh Aynor, Analyst Basically dollar linked, hello? Yeah, it is dollar linked.

31 Rajesh Aynor, Analyst Okay, okay sure. Thanks a lot sir. Bye. Operator Thank you so much. The next question is from Mr. Miten Lathia from HDFC Mutual Fund. The line has been unmuted, you may go ahead and ask your question. Miten Lathia, Analyst Sir, if you look at your other expenditure on a year on year basis from 3,178 to 4,580. Would that difference largely be on account of this employee provision that you have made which is flowing through various items of cost or is it something else? It is only on account of manpower expenditure. That TRB [ph] is a one time expenditure which we have got. Miten Lathia, Analyst That is flowing through other expenditure your are saying. The 1,200 crores that you mentioned is going through the P&L is? One second, I'll just clarify. That is some under recoverable rig cost and down time. Basically down time and rig cost. Under recoverable rig cost and down time, other expenses. The number which you are sharing, from where which table you are referring to? Miten Lathia, Analyst Sir your results release that you give to the stock exchanges, the last year other expenditure number is 3,178 which has gone up to 4,580 this time around and the release that you sent out does not have a break up of what the components of these expenditure are. Okay, okay. Miten Lathia, Analyst So I am asking what would be the major constituents of that increase.

32 That is total operating expenditures, it includes work over expenditure, water injection, pollution control. Miten Lathia, Analyst Are there any large items sir within that? Large items you mean in. Miten Lathia, Analyst Contributing for the increase on a year on year basis? So basically, again what happens is whatever is this manpower which we have provided (inaudible). See these are basically the, primarily it is work over expenditures which are a regular activity of our business which we incur year on year basis. So these are the major basically what happens when we give the results we cannot segregate or elaborate our column, so that's why we don't give it as a separate item. Other expenditure has been shown as per the (inaudible) format. We cannot change that. Miten Lathia, Analyst Okay sir. If you could share any large increases that you've seen in any of the components of that other expenditure? No, no, there is only work over expenditure which is increased by 146 crores for this quarter and TRB is the major expenditure which (inaudible). Miten Lathia, Analyst So within that other expenditure how much is the peer base? There is one more expenditure on account of this FPSO (inaudible) of about 105 crores which has just been incurred in this quarter and which will be a recurring cost in the every quarter. Miten Lathia, Analyst Okay.

33 For the production facility at D1. Miten Lathia, Analyst So you mentioned the PRBS, what would be the year on year increase before the PRBS on? It's a one time expenditure which has been of Q1 and the recurring cost of the defined benefit contribution is only 106 crores. Miten Lathia, Analyst So within the 4,580 only 106 crores is included or what is the number that is included in the 4,580 is the question. That is 1,200 plus 100 that is that is 1,000 crore 1,100 crore 1300 crores has been booked on that. 1,100 crore. 1,300 crore is been that. Miten Lathia, Analyst Okay sir. Thank you that answers my question, thank you very much. Operator Thank you so much. So we have the last question in the queue. It's from Mr. Neeraj Man Singh from Edelweiss Capital. The line has been unmuted you may go ahead and ask your question. Sir, can you repeat what is the octroi when you actually had your realization would have been $105 plus and can you share more details on that and how? After the adjustment of the octroi and VAT? Right. So it has come down to

34 So is it right to assume that almost $2.5 per barrel would be the net reduction in realization of ONGC on a perpetual scale because of this octroi? Yes, that is what has been taken for this quarter, maybe going forward yes, it will be figure that would come out. And ONGC seems to be pursuing that octroi. We are still pursuing with the government of India, the ministry of petroleum that concession which they have levied they should withdraw. So we are taking up and unfortunately that is going to be a recurring effect of $2.5 $2 basically Okay. And sir one similar related question, when you have calculated $40 a barrel of net realization, is the calculation different from what you have been doing giving us earlier because if you see against either revenues there is a quite difference, I think one of the earlier speaker also questioned the same thing. So is it because of that octroi adjustment that you have given the net realization number quite that's why lower than what the reported revenues show? What I told you, the calculation what we gave, it is the similar pattern which we have been doing, the entire value added products were LPG and SKO, we while calculating the entire impact of the JV. No sir that's not my question. My question is you reported revenues in excess [ph] of tax, nominated crude is INR88.51 billion. Yeah. And you have a 4.8 million tonne of sales of crude. Yeah.