October 20, 2020 (MLN): Pakistan Oilfields Limited (POL)’s net profitability for the first quarter ended on September 2020, declined merely by 4.7% YoY to Rs 3.7 billion from Rs 3.9 billion reported in the same quarter last year.
This resulted in company’s earnings per share of Rs 13.05, depicting a decline of 4.6% YoY from Rs 13.68 reported in first quarter of FY20.
The decline in profitability during the quarter was attributed to 31%YoY drop in average oil prices despite 5%YoY PKR depreciation, 3% and 4%YoY drop in oil and gas production respectively and higher operating costs, as per the report by IGI Securities.
Net Sales were down by 9%YoY% mainly on the back of 31%YoY drop in average oil prices and lower oil and gas production.
During the quarter, Company’s oil production was down by 2.1%YoY primarily because of lower production from TAL (down 0.5% YoY) and Jhandial (down 27.3% YoY) block. However, Adhi production is up by 8% YoY during the quarter. Similarly, LPG production was also down by 3.5% YoY primarily because of 11% YoY drop in Adhi field production, while its gas production posted a mere growth of 0.2% YoY, said the report by Foundation Securities.
On the expense side, POL’s exploration expense dipped by 80%YoY to Rs 75.63 million during 1QFY21 compared to Rs 375.8 million in the corresponding period last year possibly owing to lower prospecting expense and no dry well expense incurred.
Moreover, the Other income of the company fell by 35%YoY to Rs 295.6 million during 1QFY21 owing to lower earnings on cash and lack of exchange gains. The latter is corroborated by the 38% YoY decline in Finance cost, stated Intermarket Securities. It further highlighted that due to rise in production (especially in Tal block) without any major change in reserves, POL’s Amortization cost rose 10% YoY.
Lastly, the company witnessed deterioration of 3ppts in effective tax rate from 31% in 1QFY20 to 28%.
|
Consolidated Financial Results for the First Quarter ended September 30, 2020 ('000 Rupees) |
|||
|---|---|---|---|
|
|
Sep-20 |
Sep-19 |
% Change |
|
Sales |
10,334,700 |
11,298,634 |
-8.53% |
|
Sales tax |
(853,467) |
(863,796) |
-1.20% |
|
Excise duty |
(71,265) |
(73,590) |
|
|
Net Sales |
9,409,968 |
10,361,248 |
-9.18% |
|
Operating costs |
(2,545,493) |
(2,431,930) |
4.67% |
|
Royalty |
(997,959) |
(1,118,059) |
-10.74% |
|
Amortization of development and decommissioning costs |
(563,660) |
(513,456) |
9.78% |
|
|
|
|
|
|
Gross Profit |
5,302,856 |
6,297,803 |
-15.80% |
|
Exploration cost |
(75,638) |
(375,831) |
-79.87% |
|
Administrative expenses |
(63,317) |
(60,407) |
4.82% |
|
Finance cost |
(85,944) |
(138,743) |
-38.06% |
|
Other charges |
(354,411) |
(400,582) |
-11.53% |
|
|
|
|
|
|
Other income |
295,621 |
399,495 |
-26.00% |
|
Share in (loss)/profits of associated companies – net of impairment loss |
105,564 |
(82,631) |
|
|
Impairment/ reversal impairment on Investment in associated company |
– |
– |
|
|
Profit before taxation |
5,124,731 |
5,639,104 |
-9.12% |
|
Provision for taxation |
(1,424,747) |
(1,755,531) |
-18.84% |
|
Profit after taxation |
3,699,984 |
3,883,573 |
-4.73% |
|
Earnings per share – basic and diluted (Rupees) |
13.05 |
13.68 |
-4.61% |
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