Pakistan Oilfields’ profit increases 33.8% to Rs9.67b

Results below expectations, share price drops 3.1% on Monday

KARACHI: Pakistan Oilfields’ (POL) profit increased 33.8% to Rs9.67 billion in fiscal year 2016-17 (FY17), according to a bourse filing on Monday.

Despite increasing year-on-year, earnings are still below market expectations due to reportedly high exploration costs and unimpressive sales.

The oil exploration and production firm had booked a profit of Rs7.23 billion in the preceding fiscal year.

Earnings per share (EPS) increased to Rs40.92 from Rs30.58, slightly lower than the street consensus which predicted a higher EPS for the company’s shareholders.

The company’s board of directors also recommended a final cash dividend of Rs25 per share, an amount Elixir Securities, in its report, considered below the expected pay-out. Its share price dropped 3.1%, or Rs14.95, to Rs464.49 with a turnover of 204,400 on Monday.

The company’s oil sales increased 9.13% to Rs29.871 billion in FY17, up from Rs27.37 billion last year.

“On a quarterly basis, earnings grew by 59% year-on-year led by improved oil prices,” the Elixir report said. “However, they fell 21% quarter-on-quarter due to 10% quarter-on-quarter dip in topline and 4.2 times quarter-on-quarter increase in exploration cost.

“POL reported consolidated earnings of Rs18.3, up 1% year-on-year in 4th quarter of FY17, better than our estimates,” brokerage house Topline Securities reported. “This was mainly on the back of reversal of impairment on investment in associated companies.”

They credited higher Arab Light crude prices and improved oil and gas production for the increase in profit.

“Oil sales increased to average 7,100 barrels per day (bpd) thanks to 14% addition from Mardan Khel which added around 953 bpd of oil,” the Topline Research report added, crediting the Mardan Khel field for contributing a 13.5% increase in gas production as well.

“Year-on-year increase in earnings is attributable to 28% year-on-year decline in exploration costs, lower financial charges and 9% increase in share of profit from associates.

“We flag lower than anticipated international oil prices, significant exploration and development costs and unexpected field shutdowns as key risks for POL,” Elixir stated, placing a ‘Hold’ stance on POL shares.

Published in The Express Tribune, September 12^th, 2017.

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