OGDC Fourth Quarter Earnings Exceed Forecasts Despite Drop

Islamabad: Oil and Gas Development Company (OGDC) reported a 15% quarter-over-quarter decline in earnings to Rs9.37 per share in the fourth quarter of fiscal year 2025. This brings the full-year earnings to Rs39.5 per share, a 19% year-over-year decrease. However, the results surpassed market projections, primarily due to reduced exploration expenditures and a lower effective tax rate.

Exploration expenses decreased by 40% quarter-over-quarter to Rs4 billion in the fourth quarter. The full-year exploration expenditure reached Rs18.7 billion, attributed to three dry wells and ongoing seismic surveys. Royalty outlays fell by 46% year-over-year in 4QFY25, primarily due to a decline in net revenue. Royalty fees represented 8% of net revenue during the quarter, compared to 13% in the first nine months of the fiscal year, returning to the standard rate of 12% for the full year.

Operational costs reached Rs35.2 billion in 4QFY25, a 3% year-over-year decline. This reduction is likely linked to lower sales volumes amid reduced liquefied natural gas (RLNG) supply. Finance and other income totaled Rs17 billion in the fourth quarter, pushing the full-year figure to Rs81.8 billion, a significant 98% year-over-year increase. This rise was fueled by higher interest income and currency exchange gains from Pakistani Rupee depreciation.

The effective tax rate for 4QFY25 was 28%, compared to 30% in the same period last year. The full-year tax rate averaged 39%, up from 29% in FY24. OGDC announced a cash dividend of Rs5 per share in 4QFY25, resulting in a full-year dividend of Rs15.05 per share. This represents a 38% payout ratio, the highest in six years. JS Global maintains a “buy” recommendation for OGDC, with the firm currently trading at a price-to-earnings ratio of 6.3x and 6.1x for fiscal years 2026 and 2027, respectively.