KARACHI: The exploration and production (E&P) companies listed on Pakistan Stock Exchange (PSX) depicted an increase of a stellar 72 percent in their profitability for the quarter ended March 31, 2017.
The four listed companies including Pakistan Petroleum (PPL), Oil & Gas Development Company (OGDC), Pakistan Oilfields (POL) and Mari Petroleum (MARI) posted a cumulative profit of Rs29.4 billion for the quarter under review.
“The mammoth increase in the earnings is attributable to a combination of higher oil prices and greater hydrocarbon production,” Waleed RAhmani said in a report issued by Arif habib Limited.
To recall, the benchmark average Arab Light prices increased to $52.93/bbl. in the quarter ended March 31, 2017 vis-à-vis $29.92/bbl in the same quarter last year. Arab Light Prices made a decade low of 21.34/bbl in January 2016.
“Furthermore, hydrocarbon production of the E&P companies improved by 9% YoY to 47.8 million bpd in the quarter under review compared to 44 million bpd during the same period of last year.
PPL delivered the best earnings growth of 91 percent given absence of impairment expense during the quarter. OGDC and POL depicted handsome earnings growth of 89.2 percent and 29.6 percent, respectively.
Albeit, MARI remained a laggard with a decline of 7.7 percent displayed in company’s bottom-line primarily due to higher exploration cost.
Total oil and gas production of the E&P sector settled in at 71,316 bpd and 2,601 mmcfd in the quarter, up 13.7 percent and 8.5 percent, respectively.
The upsurge in oil production can be credited to initiation of production from Mardankhel and Adam coupled with improved production flows from Nashpa, Adhi, Makori and Rajian among others. Whereas, the uptick in gas production was the result of augmented production from Kandhkot, Mari and Uch fields.
“Pertinently, MARI showed the highest oil production growth rate of 37.6 percent, while PPL portrayed largest jump in gas production of 13 percent in the quarter under review,” Rahmani added.
Going forward, sector’s profitably is expected to continue its upward trajectory with improving hydrocarbon production and higher average oil prices.
Additionally, the sector could remain under limelight with inclusion of Pakistan in MSCI EM Index (OGDC in large cap and POL in small cap) along with the upcoming OPEC meeting scheduled on May 25, 2017 where an extension in the OPEC production cut could lead to a rally in international oil prices.