Oil & Gas Development Company Limited (OGDC) is scheduled to release its 3QFY23 earnings on 27th April, wherein we expect the company to post NPAT of PkR58.3bn (EPS PkR13.56), up by 40%/35% on a QoQ/YoY basis. The said increase in bottom line is majorly due to sharp currency appreciation during the quarter (USD/PkR: ↑17%), inducing higher topline by 8.3%QoQ/18%YoY to stand at PkR105.3bn for the period (2QFY23: PkR97.2bn).

On the hydrocarbon production front, oil and gas production remained down by 12%/8%YoY, as major fields such as Nashpa (↓13%YoY), Chanda (↓16%YoY), Uch (↓10%YoY) and TAL Block (↓7%YoY) remained down either due to natural depletion or demand constraints on SNGPL/WAPDA’s end.

On the non-operating front, we expect company to incur positive finance income of PkR35.3bn (up 2.8xQoQ) majorly due to exchange gains of PkR24bn (last quarter: -ve PkR1.9bn) and higher income on short term investments during to increased benchmark rates.

Furthermore, we expect company to incur dry well expenses of PkR2.25bn during the period, majorly on account of Bhambhra-2 (OGDCL stake: 100%), taking total exploration expenses to end the quarter at PkR5.4bn (up 7.2%QoQ).

Alongside the earnings, we expect the company to announce a cash dividend of PkR1.75/sh. We have a Buy rating on the stock, with a Dec’23 TP of PkR123/sh, representing an upside potential of 42% from last close.

Courtesy – AKD Research