AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Islamabad: Pakistan Oilfields Limited (POL) disclosed a noteworthy financial upturn for the first quarter of the fiscal year 2026, with earnings per share climbing to Rs19.13, marking a 2.1 times increase compared to the same period last year. However, this profit surge contrasts with a 27% decline in profits from the previous quarter.
The company’s net sales for 1QFY26 saw a 15% year-on-year decline, amounting to Rs13.1 billion. This downturn was largely attributed to reduced oil and gas production volumes coupled with a 14% drop in average crude oil prices. Despite this, quarter-on-quarter sales grew by 7%, bolstered by a modest recovery in volumes and an increase in average oil prices from US$69 per barrel in the previous quarter to US$71 per barrel.
Royalty expenses mirrored the decline in net sales, decreasing by 15% year-on-year, while the percentage of sales allocated to royalty charges maintained stability at 11%.
Operating expenses were trimmed by 14% compared to the previous year, totaling Rs3.2 billion. The reduction was linked to lower hydrocarbon production and sales due to curtailment. The operating expense per barrel of oil equivalent rose to US$1.29, contrasting with US$0.64 in the preceding quarter, which benefitted from reversals in amortization.
A significant reduction in exploration costs was reported, plummeting by 85% year-on-year to Rs1.1 billion, following elevated expenses from a dry well recognition in 1QFY25. The company continues seismic activities in the Ikhlas EL and Pariwali D and P lease.
Other income decreased by 50% year-on-year, primarily due to a dip in interest rates affecting returns from marketable securities. This was compounded by a 44% drop in other income quarter-on-quarter, influenced by an exchange loss amid PKR appreciation.
The effective tax rate for the quarter stood at 33%, showing a decrease from 45% in 1QFY25 but an increase from 25% in the previous quarter.
Analysts remain optimistic about POL’s prospects, maintaining a “BUY” recommendation. The company’s current trading evaluation stands at a projected PE of 7.6x for FY26 and 5.4x for FY76, as per JS Global’s analysis.