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Company Analysis of ONGC

Company Analysis of ONGC

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Published by suvajit das
This company analysis is being done in aug, 2008 for a MBA college project
This company analysis is being done in aug, 2008 for a MBA college project

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Published by: suvajit das on Dec 16, 2009
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06/22/2013

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COMPANY ANAlYSISAbout ONGC:Oil and Natural Gas Corporation Limited
(
ONGC
)(incorporated on June 23,1993) is anIndian public sector  petroleum company. It is aFortune Global 500company ranked335th, and contributes 77% of India's crude oil production and81% of India'snatural gasproduction. It is the highest profitmaking corporation in India. It was set up as acommissiononAugust 14,1956. Indian government holds 74.14% equity stake in this company.ONGC is the flagship company of India; and making this possibleis a dedicated team of nearly 40,000 professionals who toilround the clock. It is this toil which amply reflects in theperformance figures and aspirations of ONGC. The company hasadapted progressive policies in scientific planning, acquisition,utilization, training and motivation of the team. At ONGCeverybody matters, every soul counts. Over 18,000 experiencedand technically competent executives mostly scientists andengineers from distinguished Universities / Institutions of Indiaand abroad form the core of our manpower. They includegeologists, geophysicists, geochemists, drilling engineers,reservoir engineers, petroleum engineers, production engineers,engineering & technical service providers, financial and humanresource experts, IT professionals and so on.ONGC PERFORMANCE IN LAST TWO YEARStheCompany has been the first and only Indian company to beenlisted in Fortunes Most Admired Companies 2008. The FortuneGlobal 500, 2008 list has ranked your Company at 335, 34notches higher than the previous year. The fiscal 2008-09 was yet another year of growth and successfor your Company, which along with other group companies,excelled in all its endeavours; particularly in the core activity of Exploration and Production (E&P) of Crude Oil and Natural Gas.the Company maintained
 
a Reserve Replacement Ratio (RRR) of more than one, for thefourth consecutive year. During the year, your Companyregistered RRR at 1.32, with Ultimate reserve accretion (3Preserves) of 63.82 Million Metric Tonnes (MMT) against productionof 48.28 MMT of Oil & Oil EquivalentGas (0+OEG). ONGC has accreted 182.23 MMT of Initial In-place reserves, thehighest in last decade and 7% more than the last years accretionof169.52 MMT, with 33 discoveries (Oil: 13, Gas: 20) spreadacross Indian sedimentary basins against 22 discoveries during2006-07. Exploratory performance during ensuing fiscal 2008-09also started on a high note with 11 discoveries in the first quarterof current fiscal.During the year, O+OEG production of the Company, includingthe production from domestic joint ventures and overseas assets,was the highest-ever at 61.85 MMT, 1.84% more than theprevious year. ONGC maintained the O+OEG production level at48.28 MMT, marginally (0.4%)lower than last year, against the natural decline of mature fields.However, the oil and gas production from overseas assetsincreased by 10.7% and O+OEG production from domestic jointventures also increased by 11.2%.  The augmenting and enhancing efforts taken up by the Company,through Improved Oil Recovery and Enhanced Oil Recovery(IOR/EOR) schemes, implemented since 2001, have helped toarrest production decline in the mature fields. Twelve IOR/ EORschemes have been completed and six projects are underimplementation with an investment of Rs. 85,630 million. Out of the 165 marginal fields, 143 are either monetized or underdelineation or under monetization on service contract.Remaining22 fields will be put on production by offer under new
 
marginal field policy. The new field Vasai East discovered inWestern Offshore has commenced production from 7th July, 2008.ongc is setting up a 50 MW Wind Farm in Gujarat consisting of 34wheeling units with an investment of Rs. 3,070 million. Power willbe utilized in nearby ONGC installations. All 34 units have beenerected, 10 have started wheeling power. The first CBMdevelopment well for CBM was spudded in Parbatpur pilot area on1st December, 2007 near Bokaro Steel City of Jharkhand;production has commence from April 2009.
PORTERS 5 FORCE MODELThreat of new entrants
:Due mostly to the industry that ONGC is in, it’s hard for there tobe many new entrants. The only real threat that might arisewould be another government funded Oil and Gas company. Thereason for this is that a government would not have as hard atime raising funds and gaining access to resources. This isassuming that the company would be researching and developingon domestic soil. The only other threat may not be from newentrants but from smaller competitors who already have accessto resources and distribution channels. There is really not muchof a threat because there are two main
barriers to entry 
thatwould be stopping potential threats. These would be very high
capital requirements
as well as access to
Cost disadvantages independent of scale
.

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