• Oil and Gas Development Company (OGDC) announced its financial results for 1QFY26 today, reporting a 7% YoY decline in earnings to PKR 38.3bn (EPS: PKR 8.91), compared to PKR 41.0bn (EPS: PKR 9.54) in the same period last year. YoY earnings decline is due to lower Net Sales and lower Other Income. Alongside the result, OGDC announced a 1QFY26 DPS of PKR 3.50. This shows a higher payout ratio of 39% in 1QFY26, up from 31% in 1QFY25, according to a report by AHL Research.

 Result Highlights

• In 1QFY26, OGDC’s sales stood at PKR 96.2bn, down 9% YoY, mainly due to a 1% decline in oil production to 31,915 bopd, and 11% decline in gas production to 587 mmcfd. Sales are also down due to lower oil prices. To recall, the average Arab Light price stood at USD 71.48/bbl in 1QFY26, down from USD 80.58/bbl in 1QFY25.
• Gross margins for 1QFY26 stood at 58.5% compared to 62.1% in 1QFY25.
• Exploration costs decreased by 20% YoY in 1QFY26, amounting to PKR 3.08bn. To recall, Tando Allah Yaar NE-1 dry well was recorded in 1QFY25.
• Other income decreased by 53% YoY, totaling PKR 12.2bn in 1QFY26, reflecting higher income from TFCs in 1QFY25 and lower finance income in 1QFY26 due to lower interest rates.
• Trade Debts of OGDC remained almost unchanged at PKR 612.8bn in Sep’25 as in Jun’25.
• The company’s cash and short-term investment position stood at PKR 288bn in Sep’25, compared to PKR 290bn in Jun’25.
• The effective tax rate in 1QFY26 stood at 38.2%, compared to 50.6% in 1QFY25.

Recommendation

• We reiterate our “BUY” stance on OGDC, with a Jun’26 target price of PKR 312/share. The stock is trading at FY26e PE of 6.5x.