1QFY25: Oil and gas production down 8% and 7% YoY

During 1QFY25, Pakistan’s oil and gas production witnessed a decline of 8% and 7% YoY, respectively, amid annual turnarounds (ATAs) and forced curtailments at major fields. In terms of oil production, a major decline was reported in Nashpa, Mela, Dhok Sultan, Adhi, Makori East, Maramzai, Mardenkhel, and Pasakhi. Meanwhile, a reduction in gas production is attributable to a decline in output from fields such as Sui, Qadirpur, Uch, Nashpa, Maramzai, Kandhkot, and Naimat West.

Drilling Activity

During the 1QFY25, a total of 6 exploratory wells and 9 appraisal/development wells were spud by E&P companies operating in Pakistan against FY25 target of 27 exploratory wells and 40 appraisal/development wells.

Discoveries

Local E&P companies’ exploration efforts yielded nine discoveries during 1QFY25, including wells such as Razgir and Chak202-1.Baloch-2, and Akhiro-1.

Result Previews:

POL: Net profit to settle at PKR 14.70/share in 1QFY25

Pakistan Oilfields Limited (POL) is expected to announce financial results for 1QFY25 on 18th Oct’24, where we project the company to post earnings of PKR 4,172mn (EPS: PKR 14.70), down 57% YoY. The decline in the bottom line is expected to come amid i) a reduction in oil and gas production by 6% and 4% YoY, respectively, ii) a 6% YoY decline in average realized oil prices, iii) an appreciation of the Pak Rupee by 5% YoY against the greenback, and iv) hefty exploration cost. We project exploration costs to depict a massive jump of 9x YoY to PKR 6,535mn due to the higher cost of dry well Balkassar Deep-1A during the period. Other income is expected to reduce by 6% YoY due to lower income from cash and cash balances.

OGDC: Earnings of PKR 10.57/share expected during 1QFY25

Oil & Gas Development Company Limited (OGDC) is expected to disclose its financial result for 1QFY25 soon, where we project earnings to arrive at PKR 45,466mn (EPS: PKR 10.57), down 7% YoY. The decrease in revenues is expected because i) 3% and 13% YoY decline in oil and gas production, ii) 10% YoY fall in oil price, and iii) depreciation of USD against PKR. The exploration cost is anticipated to expand by 57% YoY, settling at PKR 4,136mn in 1QFY25 because of the dry well Tando Allahyar NE-1 reported during the quarter. Meanwhile, the other income is expected to decrease by 1% YoY based on the expected decline in interest income. Alongside the result, we anticipate the announcement of an interim cash dividend of PKR 5.00/share.

PPL: Bottom line to clock in at PKR 7.42/share during 1QFY25

In the 1QFY25’s financial result, we project the net profit of Pakistan Petroleum Limited (PPL) to arrive at PKR 20,196mn (EPS: PKR 7.42) compared to PKR 29,626mn (EPS: PKR 10.89) in 1QFY24, down 32% YoY. The decline in earnings comes on the back of i) a contraction in oil and gas production by 11% and 7% YoY, respectively, and ii) a 10% YoY descend in oil price. The exploration expenses are projected to surge by 2x YoY in 1QFY25 owing to dry well Rizq-5 reported during the quarter. The other income is estimated to swell up by 41% YoY, given the anticipation of higher income from short-term investments.

MARI: Profitability to arrive at PKR 18.31/share in 1QFY25

We expect Mari Petroleum Company Limited (MARI) to announce a profit after tax of PKR 21,979mn (EPS: PKR 18.31) in 1QFY25 against PKR 19,143mn (EPS: PKR 15.94) in 1QFY24, up by 15% YoY. The growth in profitability comes on the back of 11% YoY growth in gas production. Meanwhile, the wellhead price of Mari Gas Field plummeted by 5% YoY while PKR strengthened against USD. The exploration cost is anticipated to decline by 20% YoY, settling at PKR 1,438mn in 4QFY24 amid lower seismic activity during the quarter compared to the prior year. In the previous quarter, the company reported a reversal in exploration cost due to the reversal of impairment loss booked during 4QFY24. The finance income is expected to climb up by 35% YoY amid higher income on cash and cash balances.

Courtesy – AHL Research