Oil & Gas Development Company Limited (OGDC) is scheduled to release its 2QFY23 earnings on Wednesday, wherein we expect the company to post NPAT of PkR37.30bn (EPS PkR8.66), changing by -30%/+6% on a QoQ/YoY basis. The said decline in bottom line on a quarterly basis is majorly attributable to slightly lower oil and gas production from Nashapa (↓7%QoQ) due to maintenance job at SNGPL pipeline in Peshawar.

Furthermore, lower oil prices compared to the previous quarter (15%QoQ) and no expectations of exchange gains (previous quarter: PkR11.2bn) has also abetted in a lower bottom line. For this reason, we expect OGDCL’s topline during the quarter to end at PkR101.1bn, changing by -4.7%/+27% on QoQ/YoY basis. Dry well expenses during the quarter are expected to clock in at PkR3.8bn, on account of Shahpurabad-1 (OGDCL stake: 50%) and Sundha Thal-1 (OGDCL stake: 50%), taking total exploration expenses to PkR5.77bn (up 273%/25% on QoQ/YoY) during the period. Alongside the earnings, we expect the company to announce a cash dividend of PkR2.00/sh.

We have a Buy rating on the stock, with a Dec’23 TP of PkR136/sh, representing an upside potential of 44% from last close.

Courtesy- AKD Research