The latest financial accounts of Oil & Gas Development Company Limited and Pakistan Petroleum Limited depict stellar improvement in gas sales collection, which is owed to the timely revision of consumer gas prices.

OGDC

• According to the Jun’24 financials, OGDC’s overdue trade debt related to the circular debt has witnessed a slowdown (revenue collection of 93%), settling at PKR 561bn compared to PKR 559bn in Mar’24.
• In addition, the OGDC’s cash sales increased by 10% year over year and 22% quarter over quarter in 4QFY24.
• OGDC’s cash and cash balances have climbed up to PKR 259bn (PKR 177bn excluding encashed TFCs) compared to PKR 129bn in Mar’24.
• On a 5-year average, gas sales represent ~42% of the total revenue of OGDC.
• Moreover, OGDC has ~28% market share in local gas production.

PPL

• Per the Jun’24 account, PPL witnessed 100% collection from gas sales in 4QFY24. In addition, the company recovered PKR 1.7bn of pending receivables, arriving at PKR 535bn from PKR 536bn in Mar’24.
• Furthermore, cash sales improved 45% YoY | 27% QoQ.
• Hence, the company’s cash and cash balances have climbed to PKR 112bn from PKR 79bn in March ’24.
• PPL’s gas revenue contributes ~64% (5-year average) to the revenues generated.
• Regarding market share, PPL has a 17% share in the local gas production.

Outlook

• With the higher gas revenue collection, the liquidity position of OGDC and PPL is expected to remain strong.
• Hence, we expect both companies to have better payouts in FY25: OGDC PKR 20/share and PPL PKR 15/share.
• In addition, both companies will consider venturing into capital-intensive projects such as offshore drilling, as we expect.   

Courtesy – AHL Research