(Bloomberg) -- India’s state-run Oil and Natural Gas Corp. posted better-than-expected quarterly profits as lower operating costs and increased oil production helped offset a decline in gas prices and output.

The company’s net income jumped to 98.69 billion rupees ($1.2 billion) in the three months ended March 31 from 5.3 billion rupees a year earlier, according to a stock exchange filing. 

A Bloomberg survey of analysts had estimated an average net income of 87.64 billion rupees. Quarterly earnings in the previous year had been impacted by higher taxes. 

Global explorers benefited from higher oil prices during the last quarter, but their Indian counterparts saw their profits capped by the government through a windfall tax. ONGC, which accounts for 67% of India’s oil output and 53% of its gas production, is betting billions of dollars on deepwater and ultra-deepwater exploration, to help the country reduce its heavy reliance on overseas supplies.

Revenue for the quarter declined 4.6% on year to 346.37 billion rupees. Its capital expenditure during the fiscal year ended March 31 surged 22.5% to 370 billion rupees after drilling a record 541 wells.

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