RIL comes out in flying colours posting its Q4 results, but domestic revenue from E&P falls

Market index heavyweight, Mukesh Ambani promoted, Reliance Industries Limited posted its last fiscal year's fourth quarter earning number on Monday late afternoon after the markets closed down for the day. While the numbers have been found to be impressive beating the estimates and expectations of the Dalal Street, a significant drop in its revenue from domestic oil and gas exploration & production activities has been noticed. RIL, the number two exploration & production player in the country which also runs one of the largest greenfield refineries at Jamnagar in Gujarat, has blamed it on lower gas price realisation.  In an official communique issued on Monday, RIL said, "4Q FY17 revenues for domestic E&P operations was at Rs 680 crore down 24.5%YoY due to lower gas price realisation and declining volumes. Losses for the domestic upstream operations were lower at Rs 78 crore due to better oil prices and sales volumes during the quarter." The multi-diversified company also said, "KG-D6 field produced 0.28 MMBBL of crude oil and 23.4 BCF of natural gas in 4Q FY17, a reduction of 15% and 25% respectively on a Y-o-Y basis. Condensate production in 4Q FY17 was at 0.06 MMBBL. Fall in oil and gas production was mainly on account of natural decline in the fields coupled with water and sand ingress. The 2 nd Side track well in MA field was completed and was put to production. Currently 8 wells in D1D3 and 4 wells in MA are producing. Efforts are on to keep the wells flowing until production from new projects come on stream."

The media communique also has updated the RIL share-holders on the happenings in the Panna-Mukta exploration blocks.  Talking on the developed in this case, RIL said, "Panna-Mukta fields produced 1.44 MMBBL of crude oil and 14.8 BCF of natural gas in 4Q FY17, a reduction of 20% and 18% respectively on Y-o-Y basis. The fall in production is owing to natural decline of the field and unplanned riser remedial works. The process of handing over Tapti process facilities, consisting of three platforms, to ONGC was completed during the quarter." It also said,"The plug and abandonment of wells and decommissioning of associated facilities are under progress." Updating on CB-10, the communique read, "As part of the Phase II Exploration, 6 wells were drilled. Testing Zones are being identified for better understanding of the prospectivity of the wells. NEC25 – DOC was reviewed by management committee for Discovery D32. The application for assignment of NIKO PI (10%) to BP and RIL has been submitted and same is awaiting GoI approval. Myanmar – As part of the study period, RIL carried out reprocessing and other G&G Studies. Application for extension of Study Period has been submitted to Myanmar Oil & Gas Enterprises (MoGE)."

Lower price realisation of gas has become an issue not only for RIL but also for public-sector enterprise, Oil and Natural Gas Corporation (ONGC). ONGC has been consistently demanding a price revision and also asked the government to look into it. Most of the E&P players in India claim that the gas pricing formula has to be reworked now as some of them are not even been able to realise the cost of exploration and production.