India's Reliance first quarter profit down 21 percent

India's largest private firm, Reliance Industries, on July 20 reported a drop in quarterly net profit - its third straight fall - hurt by declining gas output from its offshore fields. The energy giant, controlled by India's wealthiest man Mukesh Ambani, said consolidated net profit fell 21 percent to 44.73 billion rupees ($813 million) in the three months ended June, from 56.61 billion rupees a year ago.
Turnover rose 13 percent to 949 billion rupees. The earnings marginally beat analysts' expectations of a 43-billion-rupee profit. Analysts have been concerned in recent months about Reliance's ability to boost gas production from its oil blocks off India's east coast.
Crude oil production from Reliance's main oil field KG-D6 fell 37 percent year-on-year to just under a million barrels of crude oil, a company statement said. Natural gas production slid 33.1 percent to 104.4 billion cubic feet (BCF), over levels a year earlier. "The reduction in production was due to reservoir complexity and natural decline," the company statement said.
Last year, British energy giant BP paid $7.2 billion to acquire a 30 percent stake in 21 of Reliance's oil and gas fields.
Reliance hopes that BP's deep water drilling expertise will hand the Indian giant the skills to develop hard-to-exploit reserves and find more oil. "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," Ambani, chairman of Reliance, said.
Reliance's full year gross refining margins (GRMs) slid to $7.6 a barrel, against $10.3 levels a year earlier. Reliance operates the world's largest oil-processing complex in Jamnagar, where two adjacent refineries have a combined capacity to process 1.24 million barrels of oil a day. The company said it was still expanding its retail operations and now operates more than 1,300 stores in 120 cities across the country.
Reliance has built up a war chest for acquisitions, generating $2 billion through stock sales in 2009, and has cash reserves of more than 707 billion rupees ($12.7 billion), as of the June-end quarter.
The oil and energy giant has been scouting for acquisitions and looking to diversify its revenue sources by expanding into financial services, retailing, hotels and communications. Ambani has also announced a foray into the Indian media sector as well as media and telecom.