OGDC posts 25 percent growth in revenues

KARACHI: Oil & Gas Development Company (OGDC) unveiled its quarter ended December 31, 2018 (2QFY19) profit after tax at Rs30.02 billion (EPS – Rs 6.98) versus Rs19.66 billion (EPS – Rs 4.57) registered during the same quarter last year, depicting a rise of 53 percent.

Net earnings of the company arrived in-line with market estimates where the accretion in bottom-line is primarily attributed to hefty growth (25 percent) in net revenues.

With regards to cash payout, OGDC declared an interim cash dividend of Rs 3.0/share, taking the cumulative cash payout for the year to Rs 5.75/share.

Production flows during the half year ended December 31, 2018 comprised of 40,846bpd of crude oil (-1.0 percent YoY), 990MMscfd of gas (-2 percent YoY) and 798 MTPD of LPG (+24 percent YoY) resulting in aggregate production of 19.40 MMBOE (+2 percent YoY). Moreover, the company spudded 6 new wells during the period with 3 exploratory and 3 development wells which resulted in 2 discoveries (Chanda-1 and Mela-5).

Pertaining to lack of growth in company’s oil production, the management, at an analyst briefing, indicated that heavy stockpile of crude oil at refineries impacted production, particularly from Nashpa field. However with the government now employing measures such as allowing export of furnace oil and ban on imported furnace oil, the management is confident that it will not encounter similar issues in the second half of the fiscal year. Moreover, decline in gas production was due to less gas intake at Uch-I field due to extended ATA of UPL-I with effect from October 16, 2018 to December 8, 2018.

OGDC has several new projects in the pipeline which include Dhok Hussain which is expected to be completed by Jun’19 (incremental flows: 20 MMscfd gas, 400 bpd oil), Bitrisim phase-1 to be completed by May’19 (incremental flows: 10 MMscfd gas, 730 bpd oil) & Bitrisim phase-II by Jun’20 (incremental flows: 28 MMscfd gas, 750 bpd oil), Mela by Dec’19 (incremental flows: 35 MTD at the rate of 10 MMscfd gas), Thal West by Jun’19 (incremental flows: 20 MMscfd gas), Thal East by Dec’20 (incremental flows: 40 MMscfd gas), Jhal Magsi by Jun’20 (incremental flows: 15 MMscfd gas) and Khewari by Jun’20 (incremental flows: 24 MMscfd gas).

As regards to offshore exploratory activities (Kekra-1), 70 percent of the drilling has been completed and incase exploratory efforts are successful, the reserves could range between 5-8 Tcf.

With regards to circular debt, majority of OGDC’s overdue receivables are from Sui companies (around Rs 155 billion). The company expects some reduction in these receivables post issuance of Rs 200 billion Sukuk by the government.

In relation to bidding for new blocks, OGDC submitted bids for 5 new blocks out of which it was successful in acquiring 3 new blocks as operator and interest in 1 block as non-operated partner.

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