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* Q1 net profit at 53.5 bln rupees vs estimate of 52.7 bln
* Q1 refining margin rises to $8.4 per bbl vs $7.6 year ago
* Company hopes to stabilise D6 production - CFO
By Prashant Mehra
July 19 (Reuters) - Higher margins from its core refiningbusiness helped Indian energy conglomerate Reliance IndustriesLtd post a third consecutive increase in quarterlyprofit, even as revenue from gas sales fell and output continuedto decline.
Average gross refining margin rose to $8.4 per barrel forthe June quarter compared with $7.6 in the same period lastyear, helping boost profits nearly 19 percent to ahigher-than-expected 53.52 billion rupees ($897.91 million).
Net sales fell 4.6 percent to 876.5 billion rupees whilerevenue from its oil and gas business fell 42 percent afterweakening nearly 39 percent in the previous quarter.
Reliance, controlled by Mukesh Ambani, India's richest man,operates the world's biggest refining complex and derives nearly80 percent of its revenue from refining. It was expected to postJune quarter net profit of 52.7 billion rupees, according toThomson Reuters I/B/E/S.
Reliance is poised to benefit from a recent governmentdecision to double domestic gas prices from April 1, 2014, ameasure the company had set as a precondition for any furtherinvestments in gas production.
Falling output at the company's key Krishna Godavari (KG) D6field has capped revenues, but analysts said the price hike waslikely to give Reliance, and partner BP Plc, an incentiveto boost exploration and infrastructure spending.
Reliance said last month it would spend more than $26billion over three years, much of it to bolster its refining,petrochemicals and exploration businesses, after coming underpressure from investors over its drive into telecoms andretail.
"In oil and gas, we have capex approval for 2013/14, whichwill allow us to do everything to stabilise production at D6,"Alok Agarwal, joint chief financial officer told reporters.
"For any new development, it will take us at least threeyears to start production. It's a long cycle," he added.
Refining revenue during the June quarter fell marginally tonearly 816 billion rupees, while revenue from petrochemicals wasalmost flat at 219.5 billion rupees.
Other income, mainly treasury-related gains, accounted for38 percent of pretax profit for the quarter. The company heldcash reserves of $15.7 billion at June-end.
Shares in Reliance, India's second biggest company by marketvalue, rose 0.7 percent ahead of the results. Its shares havegained 7 percent so far this year, outperforming a 2.2 percentrise in the main stock index.
