Pakistan Petroleum Limited (PPL) reported its 2QFY23 earnings earlier today, wherein the company posted Profit After Tax (PAT) of PkR 22.17bn (EPS: PkR8.15) for the quarter, lower by 16%QoQ and although higher by 55%YoY—largely in-line with our estimate of PkR8.41/sh.

· Company posted its highest ever half-yearly topline, clocking in at PkR138.2bn (up 53%YoY), majorly driven by an appreciating US$ dollar (↑31%YoY) alongside higher crude prices (↑28%YoY), which averaged at US$98/bbl during the period

· Exploration expenses clocked in at PkR7.79bn during the quarter (up 3.5x QoQ), however it is to be seen what these costs consist of. Aside from routine seismic activities, company tested and drilled one development well (Shahpur Chakar North X-1) with proven production capability of 15.2 mmcfd and 321bbd during the quarter

· Other income for the quarter clocked in at PkR1.95bn (down 60%QoQ) possibly due to minimal exchange gains compared to 1QFY23.

· Along with the result, company also announced an interim cash dividend of PkR1.0/sh (vs. our expectation of PkR2.0/sh), taking total 1HFY23 dividend paid to PkR1.0/sh. We have a Buy rating on the stock, with a Dec’23 TP of PkR117/sh, representing an upside potential of 78% from last close.

Courtesy – AKD Research