POL posted Profit After Tax (PAT) of PkR 5.95bn

Pakistan Oilfields Ltd (POL) reported its 2QFY23 earnings earlier today, wherein the company posted Profit After Tax (PAT) of PkR 5.95bn (EPS: PkR20.97) for the quarter, lower by 29%QoQ—lower than our estimate of PkR24.30/sh

·         Net sales clocked in at PkR14.02bn for the period, down by 12% on a QoQ basis, majorly on the back of declining oil prices (down 15%QoQ) during the period. Overall, total hydrocarbon production remained flat QoQ, but is estimated to have declined by 12%YoY during 1HFY23 period.

·         Exploration expenses clocked in at PkR0.95bn (down 117%QoQ), on account of no significant dry wells costs during the period. To recall, the company posted PkR4.35bn in dry well costs during the 1QFY23, on account of DGK-1 (DG Khan Block), taking total exploration expenses to PkR4.53bn for the period

·         Other income for the period clocked in at PkR2.1bn, down 68%QoQ, possibly due to minimal exchange gains during the period. Finance costs also recorded a reversal of PkR486mn during the period, possibly due to exchange gains on ‘provision for decommissioning costs’

·                   Along with the result, company also announced an interim cash dividend of PkR20.0/ sh, well below our expectations of PkR45/sh. We have a Buy rating on the stock, with a Dec’23 TP of PkR600/sh, representing an upside potential of 36% from last close.

Courtesy – AKD Research

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