New Delhi: S&P Global Ratings said increased exposure to Oil & Natural Gas Corp (ONGC) will slow its deleveraging over the next 12-24 months, leading to a 'BBB+' stand-alone credit profile for the state-owned company. The scope will be reduced. Oh Monday.
Saying that ONGC's financial results for the financial year ending March 31, 2024, were in line with expectations, S&P said the company's domestic oil and gas production volumes declined by 2-3 per cent despite lower realizations in FY24. , EBITDA increased from Rs 93,600 crore to Rs 1.1 lakh crore in FY23.
“We attribute the higher EBITDA to the strong performance of downstream subsidiaries – Mangalore Refinery and Petrochemicals Limited (MRPL) and Hindustan Petroleum Corp Limited (HPCL), which together accounted for about 30 per cent of the group's EBITDA during the year. It is estimated that EBITDA will be around Rs 1 lakh crore in financial years 2025 and 2026.,
ONGC's integrated operations will support earnings flexibility.
The company's production volumes should gradually increase during FY2022 (April 2024 to March 2025) and FY2026 as the company increases oil and gas production from its blocks in the Krishna Godavari (KG) basin in India.
"We expect the group's international assets through ONG Videsh Limited (OVL) to grow by 2-5 per cent during the period," S&P said.
Higher production should mitigate the impact of softening oil prices based on S&P Global Ratings' forecast of Brent crude oil prices at US$85 per barrel for the rest of 2024 and US$80 per barrel for 2025 and 2026 .
“Our base case also assumes that the company's average realization on domestic gas production will be US$9.5 per metric million British thermal units (MMBtu) for the next two years.It is given a mix of nomination area and hard acres and production from the administered area of India. Gas price formula,” the Retin agency said.
It is estimated that over the next 12-24 months, ONGC's annual capital expenditure will increase to Rs 57,000-58,00 crore annually from about Rs 52,000 crore in FY 2024 (April 2023 to March 2024).
Of this, the company is likely to spend Rs 33,000-35,000 crore annually mainly to arrest declining production from its mature fields in India. The remaining amount will be spent on enhancing refining and petrochemical capacities in its downstream subsidiaries, MRPL and HPCL.“ONGC's planned capital investments are likely to consume about 60 per cent of the company's operating cash flows. This, and ONGC's announced financial policy regarding shareholder distributions, in our view, make it possible for the company to make large-scale additional investments. Will leave limited scope for.
“We expect ONGC's funds-from-operations (FFO)-to-debt ratio to be 45-55 per cent in FY2025 and 2026, assuming the acquisition of ONGC Petro Addition Limited (OPAL), while in FY2024 it will be around 45-55 per cent. 55 per cent will be completed in FY 2025. This leaves limited scope for our downside of 40 per cent FFO-to-date.,
S&P said its rating on ONGC (BBB-/Stable) is constrained by India's sovereign credit rating (BBB-/Stable/A-3).
Saying that ONGC's financial results for the financial year ending March 31, 2024, were in line with expectations, S&P said the company's domestic oil and gas production volumes declined by 2-3 per cent despite lower realizations in FY24. , EBITDA increased from Rs 93,600 crore to Rs 1.1 lakh crore in FY23.
“We attribute the higher EBITDA to the strong performance of downstream subsidiaries – Mangalore Refinery and Petrochemicals Limited (MRPL) and Hindustan Petroleum Corp Limited (HPCL), which together accounted for about 30 per cent of the group's EBITDA during the year. It is estimated that EBITDA will be around Rs 1 lakh crore in financial years 2025 and 2026.,
ONGC's integrated operations will support earnings flexibility.
The company's production volumes should gradually increase during FY2022 (April 2024 to March 2025) and FY2026 as the company increases oil and gas production from its blocks in the Krishna Godavari (KG) basin in India.
"We expect the group's international assets through ONG Videsh Limited (OVL) to grow by 2-5 per cent during the period," S&P said.
Higher production should mitigate the impact of softening oil prices based on S&P Global Ratings' forecast of Brent crude oil prices at US$85 per barrel for the rest of 2024 and US$80 per barrel for 2025 and 2026 .
“Our base case also assumes that the company's average realization on domestic gas production will be US$9.5 per metric million British thermal units (MMBtu) for the next two years.It is given a mix of nomination area and hard acres and production from the administered area of India. Gas price formula,” the Retin agency said.
It is estimated that over the next 12-24 months, ONGC's annual capital expenditure will increase to Rs 57,000-58,00 crore annually from about Rs 52,000 crore in FY 2024 (April 2023 to March 2024).
Of this, the company is likely to spend Rs 33,000-35,000 crore annually mainly to arrest declining production from its mature fields in India. The remaining amount will be spent on enhancing refining and petrochemical capacities in its downstream subsidiaries, MRPL and HPCL.“ONGC's planned capital investments are likely to consume about 60 per cent of the company's operating cash flows. This, and ONGC's announced financial policy regarding shareholder distributions, in our view, make it possible for the company to make large-scale additional investments. Will leave limited scope for.
“We expect ONGC's funds-from-operations (FFO)-to-debt ratio to be 45-55 per cent in FY2025 and 2026, assuming the acquisition of ONGC Petro Addition Limited (OPAL), while in FY2024 it will be around 45-55 per cent. 55 per cent will be completed in FY 2025. This leaves limited scope for our downside of 40 per cent FFO-to-date.,
S&P said its rating on ONGC (BBB-/Stable) is constrained by India's sovereign credit rating (BBB-/Stable/A-3).