Pakistan Oilfields Reports 38% Decline in Annual Earnings Amid Increased Exploration Costs

Islamabad: Pakistan Oilfields Limited (POL) reported a significant decline in its annual earnings for the fiscal year 2025, marking a 38% year-on-year decrease to Rs85.19 per share. However, the company experienced a 9% quarter-on-quarter growth in earnings, reaching Rs26.19 per share in the fourth quarter.

The reported earnings surpassed expectations due to a lower effective tax rate, which fell to 25% in the fourth quarter from 28% in the previous quarter and the same period last year. Exploration costs surged sixfold, amounting to Rs11 billion, largely due to the recognition of a dry well, Balkassar Deep-1, in the first quarter. The company also intensified its exploration with seismic acquisitions in the Kirthar South and Ikhlas EL blocks.

The decline in royalty expenses by 22% year-on-year in the fourth quarter was attributed to a decrease in net sales, although the royalty charges as a percentage of sales remained constant at 11%. Operating expenditures were reported at Rs1.4 billion, down 59% year-on-year, reflecting lower sales volumes due to reduced supply of regasified liquefied natural gas (RLNG).

Other income decreased by 31% year-on-year in the fourth quarter, primarily due to a fall in interest rates affecting income from marketable securities. However, on a quarter-on-quarter basis, other income rose by 16% to Rs3.3 billion, driven by exchange gains amid the depreciation of the Pakistani rupee.

POL declared a cash dividend of Rs50 per share in the fourth quarter, bringing the total payout for the year to Rs75 per share, equivalent to an 88% payout ratio, compared to 69% in the previous year. The company continues to be viewed favorably, with a maintained “buy” stance and is currently trading at a price-to-earnings ratio of 7.5x for FY25A and 8.0x for FY26F.