Oil & Natural Gas Corpn Ltd (ONGC) Q2 FY27 Earnings Call: PAT Jumps 57%, Holds 39 MMT Output Guidance

Oil & Natural Gas Corpn Ltd held its Q2 FY27 earnings call on November 05, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Profitability Despite Operational Headwinds

• Standalone gross revenue of Rs.43,875 crore — up over 33% YoY in Q2 FY 2026-2027, with average nomination-field crude realization at US$92.33/bbl.
• Standalone PAT of Rs.15,489 crore — up over 57% YoY; H1 FY 2026-2027 standalone PAT of Rs.32,522 crore is the highest-ever for the half-year.
• Group consolidated PAT of Rs.18,535 crore — HPCL rebounded strongly on improved GRMs, while ONGC Videsh and MRPL delivered notable performances.
• Other expenses rose a net ~Rs.600 crore — driven by a conservative Rs.1,861 crore provision against the terminal excise duty receivable from DGFT (under litigation at the high court; management is confident of winning but provided for it as the court decision is pending), partly offset by Rs.609 crore lower OpEx and Rs.625 crore lower exchange loss.
• Cost environment remained challenging — inflation and exchange-rate volatility persisted in Q2 FY 2026-2027; opex stayed well controlled on efficiency initiatives and disciplined controllable-cost management.
• Output broadly stable QoQ but marginally lower YoY — impacted by Hormuz-region geopolitical disruptions delaying strategic projects including DUDP, offshore weather challenges, and temporary offtake constraints including the OTPC Tripura shutdown; management expects gradual improvement and is confident of recovering lost ground in subsequent quarters.

39 MMT Guidance Held; Bombay High Green Shoots, KG-98/2 Complexity

• FY 2026-2027 production guidance maintained at ~39 MMT — oil and oil equivalent of gas; FY 2027-2028 guided 0.5 to 1 million tonne higher; management stated this guidance "remains."
• Bombay High improved ~2% on oil and 7-8% on gas — on a per-day basis since the uptick began in Q2 FY 2026-2027; management cautioned several factors must stabilize before gains can be attributed to specific events long-term.
• KG-DWN-98/2 oil at ~19 kb/d — the reservoir is "much more complex" than originally envisaged, contributing to the recent production dip; management is working on several concepts but could not give a timeline for a clearer ramp-up path.
• KG-98/2 gas at ~2 MMSCMD in Q2 FY 2026-2027 — 3 wells planned for connection in Q4 FY 2026-2027, expected to add ~1.5 MMSCMD; wells slated for Q2 connection were delayed by monsoon conditions, with completion now expected by Q3 FY 2026-2027. Director Production Bhaskar Choudhary expects startup adding 2 million (MMSCMD) towards end of FY 2026-2027.
• Field decline rates of ~6-8% on average — versus industry-standard natural decline of 5-9% (4% to 9% depending on geology); management hopes upcoming projects including DUDP will arrest part of this decline (timeline unspecified).
• Daman/DUDP ~50% of wells complete — a few more under drilling at monsoon locations, with volumes expected to increment and then stabilize (period unspecified); DSF-2 construction in progress, with volumes expected at least towards end of FY 2026-2027.
• TSP-1 (Mumbai High, with BP) is a 10-year contract — interventions are giving good early results but are difficult to quantify at a point in time; management declined to share baseline decline rates or the FY 2027-2028 onwards sharing mechanism.

Rs.11,800 Cr Offshore Awards; Samudra Manthan Wells Scale-Up

• Two major western offshore projects awarded — MBOSN 2051, SD4 and BS17, plus additional development of Ratna 1 and Neelam 14, with combined investment of ~Rs.11,800 crore and estimated hydrocarbon potential of 22 million MT oil equivalent; expected completion over the next 2 to 2.5 years.
• Samudra Manthan drilling plan: 4 wells in FY 2026-2027 — scaling to up to 13 wells in FY 2027-2028, contingent on rig availability; 2 rigs already on hire, with the deepwater rig market tight and additional hires dependent on acceptable rates. Management stated benefits cannot be quantified given the exploratory nature of the blocks.
• Gas encountered in Mahanadi offshore basin — under the Government of India's Samudra Manthan initiative; management is optimistic on emerging prospects in Utkal, Konark and Mahanadi areas; detailed operational guidelines for the Samudra Manthan National Offshore Exploration Scheme were issued in Q2 FY 2026-2027.
• Capex of $3.5-4 billion per year planned — Director Finance Anupam Agarwal said ONGC plans to continue at this level (period unspecified) and is evaluating diversification opportunities, though nothing has materialized yet.
• Deepwater capability scaling — one deepwater rig already operational in the Mahanadi basin, with a second expected to be mobilized during FY 2026-2027; Silchar-region gas discoveries expected to be monetized with commissioning and expansion of the IGGL pipeline network.
• Higher Q2 FY 2026-2027 depreciation and exploration charge — includes impairment on exploitative wells carried for longer periods and wells pending re-entry, taken based on audit advice; no single significant well was written off in FY 2026-2027, and ONGC will revisit the provision once field development plans are firmed up.

Mozambique Unblocked; Venezuela Re-Operatorship Within 3-6 Months

• Mozambique force majeure lifted after ~4 years — ~$7 billion invested to date, ~49% project completion achieved; financing tie-up complete and the Mozambique government's cabinet has approved the sovereign guarantee, with drawdowns expected from December 2026 onward.
• Venezuela agreements expected within the next 3-6 months — i.e., by around Q1 FY 2027-2028, after which ONGC is set to become sole operator of San Cristobal (with PDVSA) and joint operator of Petro Parabapo (with partners including Repsol); necessary approvals and OFAC clearances already received. Management cannot share Venezuela capex numbers until agreements are signed and partner shares finalized.
• ~US$500 million dividend remains stuck in Venezuela — not received as of Q2 FY 2026-2027; under the earlier structure ONGC had no offtake rights (crude sale rights rested with Venezuela's national oil company). Under the new arrangement ONGC will operate with offtake rights, discharge fiscal-regime responsibilities to the Government of Venezuela, and retain the remainder.
• No profits repatriated from Russia or Venezuela to date — as of Q2 FY 2026-2027; the stuck Russia dividend related to the Vankorneft project and has been utilized to meet the Sakhalin abandonment fund liability — no amount is stuck in Russia today.
• Sakhalin production at 183,000 barrels per day (H1 FY 2026-2027 average) — nearly back to pre-2022-crisis levels; ONGC re-entered the project in December 2025, with accounts being consolidated into OVL and group accounts. The last Sakhalin dividend was received in December 2025 (FY 2025-2026); there is no restriction today on repatriation once the next dividend is declared.

OPaL EBITDA Positive; Integrated Marketing JV Formed

• OPaL Q2 FY 2026-2027 EBITDA positive at Rs.147 crore — H1 FY 2026-2027 EBITDA of Rs.90 crore; Q2 PAT was negative Rs.494 crore and H1 PAT negative Rs.1,100 crore.
• OPaL interest cost of ~Rs.2,000 crore in FY 2025-2026 — coming down in FY 2026-2027; ONGC group infused Rs.18,000 crore over the past two years (through FY 2025-2026), retired costly debt, is helping secure viable-rate loans, and is tying up ethane-route feedstock.
• 2 ethane carriers contracted from the USA — under construction with delivery by early 2029; ONGC group is in talks with US companies to tie up long-term ethane prices; management said OPAL will see much better days once ethane is tied up as feedstock (period unspecified).
• Joint petrochemical marketing company with OPAL and MRPL — the three currently sell the same products in the same market under different brands at different prices, causing significant losses via marketing discounts; the JV is expected to reduce marketing and supply chain costs and hold prices better, with synergy benefits "difficult to quantify at this stage" (period unspecified).
• ONGC Petrochemicals Marketing Limited incorporated on 7 October 2026 — a single integrated market-facing platform for marketing and trading of petrochemicals, chemicals and related products across the ONGC group.
• Hormuz situation pushed OPAL feedstock prices up in Q2 FY 2026-2027 — management expects OPAL to be in a much better position as feedstock prices stabilize, citing developments in the USA.

Record 160% Interim Dividend; Payout Policy Unchanged

• Highest-ever interim dividend of 160% (Rs.8/share) declared — total outgo Rs.10,064 crore in FY 2026-2027.
• Dividend policy unchanged at ~40% payout — management explicitly stated "there is no change in the dividend policy," rejecting the analyst's suggestion that current windfall-like earnings justify a higher payout (>50%) instead of building cash.
• ~Rs.1 lakh crore annual operating cash flow run-rate — cited by analyst Sabri Hazarika for FY 2026-2027; management is evaluating diversification opportunities but nothing has materialized yet.
• New well gas revenue of Rs.7,050 crore in H1 FY 2026-2027 — an incremental Rs.2,859 crore versus the APM gas pricing regime, accounting for over 34% of nomination gas revenues.
• Lower corporate tax in Q2 FY 2026-2027 — reflects higher dividend earnings this quarter, which attract a tax benefit (ATM benefit).