Pakistan: OGDC Six-Month Profit Declines By 12 Percent

Pakistan’s largest exploration and production (E&P) company, Oil & Gas Development Company Limited (OGDC) has announced its half yearly (1HFY17) financial results. The Board of Directors also approved payment of one Rupee per share interim dividend.

Both the financial results and dividend payout are below expectations.

OGDC has posted a net profit of R15.38 billion (EPS: Rs3.58), down 4%YoY, while up 5%QoQ. The earnings are lower than with major deviation coming from lower topline, higher operating expenses and exploration costs partially compensated by lower effective tax rate.

While the 1HFY17 earnings are down 12%YoY to Rs30.01 billion (EPS: Rs6.98) owing to lower realized gas prices (result of lagged oil price linkage). The earnings are expected to increase onwards due to improvement in realized gas prices and significant addition in flows from KPD-TAY, Sinjhoro and TAL Block.

The major takeaways are:  1) Topline remained flat on quarterly basis at Rs41.52 billion, however, it improved by 5%QoQ owing to improved oil production and higher oil price, 2) operating expenses increased to Rs15.28 billion in 2QFY17, 3) exploration expense increased 33%YoY due to relative differential in dry wells’ expenses, 4) though other income was relatively flat at Rs4.25 billion and 5) tax expenses declined by 27% to Rs4.29 billion due to lower effective tax rate.

OGDC: Income Statement
(Rs million)

2QFY17

2QFY16

YoY

1HFY17

1HFY16

YoY

Net Sales

41,516

41,673

0.0%

81,081

86,186

-6.0%

Royalty

-4,521

-4,680

-3.0%

-8,828

-9,694

-9.0%

Operating expenses

-15,277

-13,934

10.0%

-28,356

-26,568

7.0%

Transportation charges

-426

-401

6.0%

-836

-869

-4.0%

Gross profit

21,291

22,659

-6.0%

43,061

49,055

-12.0%

Other Income

4,248

4,305

-1.0%

9,309

8,295

12.0%

Share of profit

369

246

50.0%

922

615

50.0%

Exploration expense

-3,868

-2,906

33.0%

-8,189

-4,713

74.0%

Admin expense

-925

-897

3.0%

-1,653

-1,812

-9.0%

Finance cost

-412

-408

1.0%

-815

-833

-2.0%

WPPF

-1,035

-1,150

-10.0%

-2,132

-2530.32

-16.0%

PBT

19,668

21,848

-10.0%

40,503

48,076

-16.0%

Tax

-4,291

-5,902

-27.0%

-10,494

-13,870

-24.0%

NPAT

15,377

15,946

-4.0%

30,008

34,206

-12.0%

EPS

3.58

3.71

-4.0%

6.98

7.95

-12.0%

DPS

1.0

1.2

-17.0%

2.5

2.7

-7.0%

ETR

-22.0%

-27.0%

-26.0%

-29.0%

Shabbir H. Kazmi

Shabbir H. Kazmi

Shabbir H. Kazmi is an economic analyst from Pakistan. He has been writing for local and foreign publications for about quarter of a century. He maintains the blog ‘Geo Politics in South Asia and MENA’. He can be contacted at [email protected]

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