Mumbai : Reliance Industries Ltd, India's biggest company by market value, posted its highest profit since 2007 after it increased natural gas output at home and acquired overseas energy assets.
Net income in the three months ended September 30 rose 28 per cent from a year earlier to Rs49.2 billion (Dh4.03 billion), or Rs15.1 a share, the Mumbai-based energy explorer and refiner said in a statement to the Bombay Stock Exchange yesterday.
The average profit estimate of 16 analysts surveyed by Bloomberg was Rs48.9 billion.
Reliance boosted output from India's largest gas field and increased refining earnings as economic growth spurred demand for fuels. Chairman Mukesh Ambani spent almost $1 billion buying shale-gas assets in the US and plans to use Reliance's oil and gas profits to fund investments in telecommunications and power plants.
"Gas production has increased from last year and refinery profits have also grown as demand increased," Deepak Pareek, a Mumbai-based analyst with Angel Broking Ltd, said before the earnings announcement. "They are expanding operations in the US and other businesses in India, and higher profit helps fund these ventures."
Safety review
The KG-D6 field in the Bay of Bengal, off India's east coast, started in April last year and reached 40 million cubic metres a day in six months, helping India increase output of the cleaner-burning fuel at the fastest pace in the world last year. Output has remained static at 60 million cubic metres this year because a review of the reservoir and safety procedures forced Reliance to delay a planned increase to 80 million cubic metres.
Reliance, which has the biggest weighting in India's benchmark Sensitive Index, rose 1.3 per cent to Rs1,096.25 in Mumbai trading Friday, valuing the company at $81 billion. The stock has gained one per cent this year, trailing the 15 per cent increase in the index.
Reliance cut crude oil output in the MA field in the KG-D6 area by 29 per cent since April after wells were unable to sustain higher production rates, a person familiar with the matter said October 1.
The explorer also operates the world's largest oil-refining complex and chemical plants and owns fuel outlets and a retail- store chain. The 1.24 million barrel-a-day refining complex consists of two adjacent plants at Jamnagar in the western state of Gujarat.
Diversifying business
Global refining margins, or earnings from processing oil into fuel, fell to $4.53 a barrel in the three-month period from $5.49 a barrel in the quarter ended June 30, according to data compiled by BP Plc. The margin was $3.42 a year earlier.
Crude oil in New York gained 12 per cent to an average $76.20 a barrel in the quarter, boosted by demand from India and China, Asia's two fastest growing economies. Crude oil for December delivery fell 75 cents to settle at $81.43 a barrel on the New York Mercantile Exchange on Friday.
Reliance's net sales rose 23 per cent to Rs574.8 billion, the company said.
With gas production stagnant in India, Reliance is diversifying from its core energy business at home. The explorer said it plans to spend at least $5 billion over the next five years to develop shale-gas areas in the US.
Reliance paid $943 million to buy three shale-gas assets in the US this year and agreed to spend $2.5 billion in future drilling costs on behalf of its partners.
Reliance bought a 14.8 per cent stake in EIH Ltd., owner of India's luxury Oberoi hotel chain, in August. The group includes a Mumbai hotel that was damaged in the November 2008 terror attack.
India's economy expanded 8.8 per cent, the fastest pace in two-and-half years, in the three months ended June 30, bolstering demand for services and providing alternative sources of revenue for Reliance.