Oil and Gas share price target

Brent crude price slump in past few days has enlivened prospects to some extent for India’s oil marketing companies (OMCs).

As per news reports (ET Now), the draft recommendations of the Kirit Parikh Committee imply: i) Current domestic gas prices for priority segment will be capped at US$6.5-7/mmbtu (current prices at GCV basis of US$8.6/mmbtu, implying a delivered price on NCV of US$9.6/mmbtu).

A series of amendments have been made to pipeline tariff regulations by the Petroleum and Natural Gas Regulatory Board (PNGRB) last week, with changes made to volume, tax rate, opex, capacity etc.

Q2FY23 EBITDA for oil & gas coverage universe declined by a material 44% YoY, with PAT down 85% YoY for the quarter (QoQ EBITDA declined 35%, PAT declined 66%).

The recent dramatic fall in European gas prices (see chart 1 & 2) and the adjacent
softness seen in Asian spot LNG prices (Chart 1) has been driven by i) milder- than-normal weather in Europe at the start of winter.

The OPEC+ decision to cut production by a further 2mb/d in Nov’22 came as a surprise to the markets.