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% |
– |
