Oil & Gas Development Company Ltd (OGDC) reported its 2QFY24 earnings today, wherein the company posted its highest ever quarterly Profit After Tax (PAT) of PkR74.25bn (EPS: PkR17.27), higher by 52%/78% QoQ/YoY—significantly above our estimate of PkR10.51/ sh for the quarter.

The notable improvement in the bottom line is primarily due to taxation reversal, clocking in at PkR2.12bn during the quarter. The aforementioned reversal charge led to an effective tax rate of –ve 3% during the period, compared to a normalized tax rate of 43%/35% during 1QFY24/2QFY23, respectively. Further clarity in this regard may be required on this abrupt dip in taxation, as the company presently holds deferred taxation liabilities of PkR86.2bn.

On the topline front, revenues stood at PkR115.2bn, changing by –4%/+19% QoQ/ YoY, as oil and gas production changed by +2%/-13%QoQ during the period.

·         On the opex front, expenses clocked in at PkR33.2bn during the quarter, higher by 17%/55% QoQ/YoY. This may possibly due completion of several development projects i.e. Khewari Processing Plant alongside discoveries at existing fields (KPD-TAY and Khewari Block).

·         Exploration expenses clocked in at PkR2.39bn (down 14%QoQ), relatively stable amidst routine geophysical survey activities during the quarter.

·         Along with the result, company also announced a cash dividend of PkR2.50/sh, taking total payout during the half year to PkR4.0/sh (vs. PkR4.0/sh during SPLY).

 Courtesy – AKD Research