March 04, 2019 (MLN): With rising demand in energy, Pakistan has witnessed an extraordinary growth in Oil and Gas exploration and production sector which has made remarkable progress in Oil and Gas discoveries in different parts of the country during the last year.
The cumulative earnings of Oil and Gas Exploration companies listed in KSE-100 share index namely OGDC, MARI Petroleum, PPL and POL remained impressive as the sector’s profit surged by 50 percent for the half year ended on December 2018 as compared to same period last year.
The sector’s notable performance is attributable to higher average oil prices tagged with incremental oil and gas production and Rupee devaluation during the period. Since the international oil prices are directly linked to the local prices, oil and gas exploration sector in general benefits from devaluation and higher oil prices.
Higher oil prices during the period continued to complement Sector’s financial performance as the topline earnings of the sector witnessed a growth of 36% YoY.
The sector’s profits before tax were affected by the cost inlcuding royalty and other levies which was up by 39% and exploration expenses, as it was up by 16% YoY during 1HFY19. This was a result of growing exploration activities during the period.
Moreover, higher effective tax rate played a major role in dragging down the net profit margins of the sector.
|
Cumulative earnings of Oil & Gas Exploration Sector for the half year ended on December 2018 |
|||
|---|---|---|---|
|
(Rupees in thousands) |
1HFY19 (‘000 Rupees) |
1HFY18 (‘000 Rupees) |
YoY % Change |
|
Total Net Sales |
257,384,371 |
188,594,871 |
36% |
|
Total cost including Royalties and other levies |
-34,556,093 |
-24,795,966 |
39% |
|
Operating expenses |
-60,843,576 |
-53,458,740 |
14% |
|
Total Gross Profit |
167,887,745 |
115,209,436 |
46% |
|
Exploration expenses |
-16,127,098 |
-13,931,257 |
16% |
|
Finance cost |
-4,154,825 |
-3,552,788 |
17% |
|
Profit before Taxation |
153,585,664 |
100,361,173 |
53% |
|
Taxation |
-47,600,104 |
-29,731,990 |
60% |
|
Profit after taxation |
105,985,560 |
70,629,183 |
50% |
Based on individual assessment, POL outperformed the rest of the companies as its net profits increased by 65% followed by MARI (62%), OGDC (55%) and PPL (36%).
However, compared to rest of the companies’ net profits earned during the period, OGDC emerged as the key player in the country's oil and gas E&P sector as its net income clocked in at Rs.56.75 billion. During the period, the company was able to make 2 oil and gas discoveries in the KPK province. OGDCL has also ventured into offshore drilling along with PPL, ENI and ExxonMobil.
Moreover, in 1HFY19 OGDC spud six wells comprising three exploratory wells, and three development wells.
|
Oil & Gas Exploration Companies |
Net profit 1HFY19 (‘000 Rupees) |
Net profit 1HFY18 (‘000 Rupees) |
YoY % Change |
|---|---|---|---|
|
OGDC |
56,756,358 |
36,671,577 |
55% |
|
POL |
7,903,551 |
4,782,258 |
65% |
|
PPL |
30,267,529 |
22,359,930 |
35% |
|
MARI |
11,058,122 |
6,815,418 |
62% |
Based on market capitalization as of today, OGDC represents around 48% of the whole sector followed by PPL (30.63%), MARI (11.75%) and POL ((9.76%) respectively.
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