E and P Sector Faces Profit Declines in 1QFY25 Amid Production Challenges and Lower Oil Prices

Islamabad: Leading companies in Pakistan’s exploration and production sector reported significant declines in profitability for the first quarter of FY25. Oil and Gas Development Company Ltd (OGDC), Pakistan Petroleum Ltd (PPL), Mari Petroleum Company Ltd (MARI), and Pakistan Oilfields Ltd (POL) all recorded lower earnings due to decreased hydrocarbon production and unfavorable market conditions.

According to AKD Securities Limited, OGDC is expected to announce its 1QFY25 results soon, projecting a net profit after tax (NPAT) of PKR 43.3 billion, a decrease of 12% year-over-year, primarily due to reduced hydrocarbon output and lower average oil prices. Specifically, oil and gas production decreased by 2% and 6% respectively, with significant declines noted in major fields such as Nashpa and Maramzai. Despite these challenges, OGDC is anticipated to declare an interim cash dividend of PKR 2.50 per share.

PPL’s earnings are also expected to decline, with an estimated NPAT of PKR 20.7 billion, down 31% from the previous year, attributed to an 11% and 12% decrease in oil and gas production, respectively. Factors such as reduced offtakes from GENCO-II and performance issues in partner-operated fields like Nashpa significantly impacted outputs. Moreover, PPL plans to issue an interim dividend of PKR 1.00 per share.

MARI’s financial performance reflected a 7% year-over-year decrease in earnings, with expected NPAT of PKR 17.7 billion. The decline was partly due to an appreciating domestic exchange rate affecting wellhead gas prices, although gas production remained stable. MARI’s overall net revenue is projected to decrease by 4% year-over-year.

POL is slated to release its 1QFY25 earnings, with expectations of a drastic 67% drop in profits to PKR 3.2 billion. The significant decline is largely due to a dry well in the wholly-owned Balkassar block and a 7% decrease in crude output. Additionally, exploration charges are anticipated to surge, contributing further to the financial downturn.

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