OGDCL: Higher oil prices drive earnings

October 29, 2021 (MLN): Oil and Gas Development Company Limited (OGDCL), the largest E&P Company in Pakistan, has reported net profits of Rs33.63 billion during the first quarter of the current fiscal year, demonstrating the growth of 44.06% YoY on the back of a colossal increase in oil prices and an uptick in oil production during 1QFY22.

This has translated into earnings per share (EPS)-basic and diluted of Rs7.82 during 1QFY22, up by around 44% YoY against the EPS of Rs5.43 stated in the same period last fiscal year.

In conjunction with financial results, the company also announced an interim cash dividend of Rs1.75 per share i.e., 17.5% for the quarter ended September 30. 2021.

Looking at the company’s financial performance, the oil and gas E&P giant's revenues grew by 27% YoY to Rs71.53bn in 1QFY22. This increase in revenues has come largely from a 70% YoY increase in oil prices along with an increase in oil production by 4% YoY. However, gas production plummeted by 10% YoY during the quarter.

Resultantly, the gross margins of OGDC swelled by 7.06ppt to clock in at 64.74%.

Notably, the finance and other income that surged by 83% YoY to Rs10.88bn also strengthened the financial health of the company.

On the exploration front, the company’s exploration and prospecting expenditures came down by 23% YoY to stand at Rs2.28bn given one dry well (Bago Phulphoto) reported during the quarter against three dry wells (Jun-01, Umair North West and Jatoi-01) in SPLY, a report by Arif Habib highlighted.

However, the company saw an upsurge in general and administrative expenses, and workers’ profit participation fund by 6% and 54.2% YoY respectively, while finance cost declined marginally by 0.22% YoY to Rs563mn during the said period.

On the tax front, the company paid taxes worth Rs18.64bn, showing a whopping increase of around 77% YoY during 1QFY22.

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