OGDC Reports 7% Decline in Quarterly Earnings Amid Lower Production and Rising Costs

Related Articles

PSX Witnesses Bullish Trend Today After US-Iran Ceasefire

April 8, 2026

SIFC Playing Key Role in Promoting Industrial Growth in Pakistan

April 1, 2026

Karachi: Oil and Gas Development Company (OGDC) has reported a decline in its financial performance for the first quarter of the fiscal year 2026, with earnings per share (EPS) falling to Rs8.91. This marks a 7% year-on-year decrease and a 5% drop from the previous quarter.

The company’s net sales for the quarter stood at Rs96.2 billion, representing a 9% decrease from the previous year, though showing a 7% rise sequentially. The annual decline in sales is attributed to reduced oil and gas production following curtailment measures. However, the quarterly growth was supported by an increase in crude oil prices, which rose from US$69 per barrel in the last quarter of FY25 to US$71 per barrel in 1QFY26.

Exploration costs experienced a significant reduction, falling by 20% year-on-year and 25% quarter-on-quarter to Rs3.08 billion. This decrease is largely due to the absence of dry wells and a reduction in seismic activities during the reported period.

The company also noted a decline in royalty charges by 19% year-on-year, which is linked to the decrease in sales. The ratio of royalty to sales increased to 11% in 1QFY26 from 8% in the previous quarter.

Operating expenses were reported at Rs28.8 billion in the first quarter, up 10% from the previous year but down 18% from the previous quarter. The operating expense per barrel of oil equivalent (BOE) was reported at US$7.4, compared to US$6.4 in the same period last year and US$10.0 in the preceding quarter.

Finance and other income witnessed a significant drop, recording Rs12.2 billion, which is a 53% year-on-year decline and a 29% drop from the previous quarter. This decrease is likely due to lower interest rates and exchange losses following the appreciation of the Pakistani Rupee.

OGDC’s effective tax rate for the quarter stood at 38%, a decrease from 51% in the same quarter last year but an increase from 28% in the previous quarter.

Despite the challenges, OGDC declared a cash dividend of Rs3.5 per share, translating to a payout ratio of 39%, compared to 42% in the same period last year.

Investment analysts maintain a positive outlook on OGDC, recommending a “BUY” stance. The company is currently trading at a projected price-to-earnings ratio of 5.7 for FY26 and 5.5 for FY27.