Pakistan Petroleum Limited (PPL) reported 1QFY26 financial results earlier today, with consolidated earnings clocking in at PkR20bn for the first quarter (EPS: PkR7.36), down 12% YoY — in-line with expectations. Alongside the earnings, the company also announced a final cash dividend of PkR2.0/sh (payout ratio: 27%), says a report from AKD Research.

·        Net Sales stood at PkR57.4bn during 1QFY26, down 14%YoY, largely led by reduced hydrocarbon production alongside lower average oil prices (Arab light: US$71.5/bbl during 4Q, down 11%YoY).

·        Regarding hydrocarbon production, PPL’s estimated oil and gas output fell by 4%/11% YoY during 1QFY26, reaching 10.3k bpd of oil and 530mmcfd of gas, respectively.

·        However, hydrocarbon production jumped up compared to the previous quarter by 7%/7%QoQ for both oil and gas as per PPIS,  respectively.

·        Operating expenses for the quarter amounted PkR14.1bn, marking a 7%YoY decline. Additionally, exploration expenses totaled PkR664mn for 1Q (down 59%YoY).

·        Other income declined to PkR2.1bn, down 68%YoY. The decline is possibly due to lower investment yields alongside reduced cash and short-term investment balances during the outgoing quarter (PkR96.5bn/PkR37 per sh during 1QFY26, down 35%YoY), as the company paid off the lease extension bonus on Sui D&PL (PkR50bn as of Mar’25) during the previous quarter.

·        Effective tax rate for 1QFY26 stood at 35%, compared to 40%/33% in SPLY/4QFY25, respectively.

·        We reiterate our ‘BUY’ stance on PPL with a Dec’25 target price of PkR281/sh, alongside a DY of 6.5% during the same period. Our outlook is strengthened on the back of: i) higher future exploration prospects given the improving liquidity situation, ii) 8.33% stake in the highly prospective Reko Diq Mining Project, iii) offshore working interests in Abu Dhabi Block-5, along with consortium partners, and iv) improvement in cash payouts.

 https://research.akdsl.com/638973414853351316.pdf

AKD Research