According to a report from Topline Pakistan Research, Pakistan Oil & Gas Exploration – Profitability likely to decline by 15% YoY and 7% QoQ in 2QFY26; Low oil prices to weigh on earnings; Overweight stance maintained.
- We expect the Topline E&P universe to post a 15% YoY decline in earnings in 2QFY26, primarily due to a decline in gas production and oil prices.
- Oil production averaged 64.7k bpd during the quarter, reflecting a 2% YoY increase, while gas production fell 4% to around 2,732 mmcfd. The impact of this decline in gas volumes was compounded by a 13% YoY decrease in Arab Light crude prices, which averaged USD65.37/barrel in 2QFY26. In addition, a 48% YoY decline in other income, driven by the absence of one-off gains and a lower interest rate, is likely to further weigh on profitability.
- On a sequential basis, sector earnings are expected to decline by 7%, despite a 4% improvement in oil volumes during the quarter, as the decline in gas production, combined with weaker oil prices, is likely to more than offset the gains.
- OGDC: We expect OGDC to report EPS of Rs7.83/share, down 19% YoY and 12% QoQ. The decline in earnings is primarily driven by 2 dry wells (Khatian and Jakhro North) during the quarter, along with lower production, mainly from Uch, where output fell 13% YoY and 23% QoQ due to Annual Turnaround Activity (ATA). We expect OGDC to announce a cash dividend of Rs3.5/share in 2QFY26.
- PPL: We expect PPL’s EPS to clock in at Rs7.44/share, down 26% YoY and up 1% QoQ. The YoY drop in earnings is largely attributable to the absence of one-off gains recorded in 2QFY25, such as an insurance claim and reversal of impairment losses, which had inflated other income in the base period. We expect PPL to announce a cash dividend of Rs 2.0/share.
- MARI: MARI is expected to post earnings of Rs12.59/share, up 35% YoY and down 3% QoQ. Earnings are likely to grow YoY due to a decrease in OPEX to US$2.86/boe from US$4.78/boe in 2QFY25. We do not expect MARI to declare any interim dividend in 2QFY26, consistent with the prior year trend.
- POL: POL’s earnings are projected at Rs18.35/share, down 31% YoY and 4% QoQ. The YoY decline is likely to be led by a more than 3x increase in exploration costs, driven by seismic activity in Ikhlas EL and Pariwali D&P. We expect POL to announce a cash dividend of Rs 20/share in 2QFY26.
- We maintain our overweight stance on the Pakistan E&P sector.
