Reliance Q1 runs out of gas, profit dips 21%

Reliance Industries today posted its third consecutive drop in quarterly profit on declining natural gas output and reduced earnings from fuel sales, but beat street expectations.

Net profit fell 21 per cent to Rs 4,473 crore, or Rs 13.70 per share, in April-June quarter from Rs 5,661 crore, or Rs 17.30, a year earlier, the company said in a press statement.

It, however, beat street expectations as operating profit rose for the first time in three quarters.

"RIL has improved its earnings profile as profits from operations were higher on a sequential basis on the back of volume growth in the refining business," company Chairman and Managing Director Mukesh Ambani said.

"We have commenced our next phase of capital investments in the refining and petrochemical segments to enhance earnings and value of our core energy businesses," he said.

RIL is investing USD 12 billion in new projects and is returning cash to its shareholders through the nation's largest-ever share buyback programme.

The company posted a better-than-expected gross refining margin of USD 7.6 per barrel in the first quarter ended June, 30. It had earned USD 10.3 on turning every barrel of crude oil into products in Q1 of 2011-12 fiscal.

Gas production at its flagship KG-D6 field dropped 33.1 per cent to 104.40 billion cubic feet or a little less than 33 million standard cubic meters per day. RIL had produced an average of 49 mmscmd of gas in April-June last year.

"The reduction in production was due to reservoir complexity and natural decline," RIL said.

Production at Krishna Godavari basin fields has since dropped below 30 mmscmd this month. Sequentially, the company's performance looked better with a 5.6 per cent increase in net profit over Rs 4,236 crore profit in January-March quarter.

RIL said it had cash balance worth Rs 70,732 crore at the end of the June quarter, up from Rs 70,252 crore at the end of March.

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