PPL declares 19% higher profits, payouts of Rs1.5/sh

February 25, 2022 (MLN): Pakistan Petroleum Limited (PPL), has disclosed its financial performance for 1HFY22 today where the company reported a profit after tax of Rs31bn (EPS: Rs11.44) which was 19% YoY higher than the net profits of Rs26bn (EPS: Rs9.59) reported in the same period last fiscal year.

Alongside financial results, the company also announced a cash dividend of Rs1.5 per share i.e., 15% for the year ending 30th June 2022.

The company has benefitted from 71% YoY increase in crude oil prices to $73.4/bl along with around 8% YoY depreciation in PKR against USD during 1HFY22 which helped mask a hefty decline in the company’s production of both gas and oil.

The company saw its revenues grow by 19% YoY to Rs90.4bn in 1HFY22. The increase in revenues was due to higher international oil prices led by the resurgence of oil demand international and an increase in Sui wellhead price by 5% YoY. However, a dip in oil and gas production by 15% and 10% YoY respectively kept the company’s revenues in check. 

The decline in the production of oil was owing to limited off-take from oil refineries and the overall depletion of mature fields.

The gross margin of the company came in at 63% compared to 56% in 1HFY21.

On the expense side, general and administrative expenses increased by 9% YoY, other charges soared by 45% YoY, while finance costs inched up slightly by 0.8% YoY. Operating expenses that account for over 22% of net sales declined by 10% YoY to Rs19.9bn, while royalties and other levies rose by 17% YoY to Rs13.37bn.

The company also booked a reversal of provision for doubtful debt worth Rs41.9 million.

On the exploration front, PPL has incurred an exploration cost of Rs9bn, swelling up by 2.8x YoY amid the higher cost of dry wells.

The booked share of loss worth Rs2.4 billion due to the cost incurred by the associate company Pakistan International Oil Limited (PIOL), which is the offshore E&P in Abu Dhabi and has recently begun exploration.  

To recall, during 1QFY22, the OGDCL, along with other consortium members i.e., Mari Petroleum Company Limited (MPCL), Pakistan Petroleum Limited (PPL) and Government Holdings (Private) Limited (GHPL) has been awarded Offshore Block 5 in Abu Dhabi's second competitive exploration block bid round. The consortium companies have established an independent company PIOL at Abu Dhabi Global Market with each consortium company having a 25% equity stake in PIOL.

The loss incurred due to the associate company was offset by a massive 3.9x increase in PPL’s other income, mainly attributable to higher exchange gain during the review period.

On the taxation front, the effective tax rate came in at 30% compared to 24% in 1HFY21.

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