Oil India makes gas discovery in Assam; Q2 net profit drops by 42% to Rs 381 crore on blowout expenses

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Oil India Ltd, the nation’s second-largest state oil producer declared natural gas discovery at a well drilled in Tinsukia, Assam. “The discovery will open up new areas for further oil and gas exploration in Assam and would help in enhancing the gas production with future appraisal and development activities,” the company said in a statement.

Oil India Ltd (OIL) said well Dinjan-1 in Tinsukia petroleum mining lease (PML) in the upper Assam basin struck hydrocarbons. The well encountered about 10 meters of hydrocarbon-bearing sands, it said. On testing, it produced gas at the rate of 115,000 standard cubic meters per day. OIL, whose majority of operations are concentrated in the north-east, did not indicate the reserves the discovery may hold.

The company also reported a 42 per cent drop in September quarter net profit largely on account of lower oil prices and one-time expense it incurred on controlling a blowout in Assam. Net profit in July-September at Rs 381.75 crore was lower than Rs 661.53 crore net profit in the same period a year back, the company said in a stock exchange filing.

OIL India said a blowout occurred in a producing well (Baghjan#5) in Tinsukia district of Assam on May 27 and the well caught fire on June 9. “To control the blowout, all necessary remedial actions (have) been undertaken by the company,” it said adding the total losses/damages arising out of the blowout can be assessed on successful control of the blowout. The company is currently trying to control the blowout.

“However, as on September 30, 2020 an amount of Rs 227.51 crore has been incurred to control the blowout and the same has been shown as an exceptional item in the statement of profit and loss,” it said. Its turnover fell by 32 per cent to Rs 2,175.87 crore in the second quarter of the current fiscal.

A fall in international oil prices led to revenue from the sale of crude oil slump by 32 per cent and segment pre-tax profit more than halved to Rs 432.27 crore. Lower natural gas prices also saw revenues from its sales slump 41 per cent and pre-tax profit drop to Rs 51.70 crore from Rs 176.93 crore in July-September 2019.

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