Pakistan Oilfields Ltd. (POL) posted 2QFY26 NPAT of PKR6.3bn (EPS: PKR22.16), down 17% YoY but up 16% QoQ, higher than our estimated EPS of PKR19.06. The deviation mainly stems from higher-than-expected sales and a lower ETR of 26% during the quarter. Profitability fell due to a decline in oil prices (down 9%/13% QoQ/YoY) along with lower production compared to the previous year. However, sequential improvement is due to higher volumes and lower ETR than in the previous quarter. This takes 1HFY26 NPAT to PKR11.7bn (EPS: PKR41.29), up 16% YoY. The company declared a cash dividend of PKR27.50/sh, above our expected DPS of PKR25.0, according to a report released by IMS Research.
Key highlights for 2QFY26 results:
§ Net revenues arrived at PKR14.6bn, up 11% QoQ but down 2% YoY, above our estimate of PKR13.6bn. Sequential improvement is attributable to higher production,n with oil and gas volumes rising 3% and 16% to 4,500 bpd and 56 mmcf/d, respectively.
§ Operating cost rose 7% QoQ but flat YoY at PKR3.4bn, in line with our estimate. The sequential increase in production levels drove OPEX expenses, which rose 3.3x YoY and 81% QoQ to PKR2.0bn, above our expectations of PKR1.2bn. This significant increase likely indicates higher geological activities during the quarter.
§ Other income came in at PKR2.3bn, down 51% YoY, mainly driven by lower interest rates compared to the SPLY. However, on a sequential basis, higher other income is likely due to the absence of exchange losses booked in the previous quarter.
§ POL reported an effective tax rate of 26%, much lower than our expected effective tax rate of 37%. On a PBT level, POL’s profitability is in line with our estimates.
POL posted strong profitability, supported by improved production and a lower tax rate during the quarter. Production during the quarter improved due to the addition of a new field, Razgir, and production optimisation in Makori Deep (Tal block). In the future, we expect production to improve further, supported by the expected diversion of RLNG cargoes. Moreover, POL is also drilling Jhandial-4, and any positive result will further lift POL’s output. We maintain a Buy rating on POL with a TP of PKR671/sh.
