PHOTO: REUTERS
KARACHI: Pakistan Oilfields Limited’s (POL) consolidated profit fell 14% to Rs2.13 billion in the quarter ended December 31, after it booked a huge hit to its revenue due to a policy dispute, according to a notice sent to the Pakistan Stock Exchange (PSX).
The oil and gas exploration and production company reversed revenue amounting to Rs2.22 billion after the government ‘unilaterally’ imposed Windfall Levy on Oil/Condensate (WLO), POL reported. Besides, POL also did not book Rs3.4 billion, which it was expected to account in the quarter under review, Topline Securities’ analyst Nabeel Khursheed added.
Its share price hit the lower limit of 5%, or reduced Rs31.40, to close at Rs596.79 with 795,650 shares changing hands at the PSX on Wednesday.
The board of directors recommended an interim cash dividend of Rs17.50 per share. The entitlement will be paid to the shareholders whose names will appear in the register of members on February 13, 2018.
Earlier, according to the notice, the firm had booked additional revenue (Rs2.22 billion) on account of gas price incentive, the government allowed it through conversion of TAL Block Petroleum Concession Agreement (PCA) from Petroleum Policy 1997 to Petroleum (Exploration and Production) Policy 2012 in August 2015.
To document the grant of the incentive, the government inked ‘Supplemental Agreement’ with POL that it later unilaterally amended to impose the levy in December 2017. “The government has no authority to give any law or policy a retrospective effect and the company will challenge the imposition of WLO in the court of law,” POL said in the notice.
It added total benefit of the gas price incentive stands at Rs6.40 billion, which it would realise after resolution of the policy dispute. On the other hand, the impact of the levy is calculated at Rs13.69 billion to date.
The analyst said key risk areas to POL profits include inability to receive higher gas price incentive on TAL Block owing to WLO dispute, lower than anticipated international oil prices, significant exploration and development cost and unexpected field shutdown.
Earnings per share
In the same quarter last year, POL had booked a consolidated profit of Rs2.48 billion.
Accordingly, the earnings per share (EPS) dropped to Rs9.02 from Rs10.42 in the corresponding period.
POL reported it booked net revenue amounting to Rs6.23 billion in the quarter that is 14% lower than Rs7.27 billion in the same quarter under review last year.
The exploration cost for finding new oil and gas deposits in the country increased four-fold to Rs468 million from Rs126 million.
Finance costs increased to Rs487 million from Rs195 million. On the flip side, other income rose to Rs705 million from Rs234 million.
The share in profits of associated companies (net of impairment loss) surged to Rs510.5 million from Rs113 million.
Cumulatively, in the half year of current fiscal year, the profit remained stable at Rs7.78 billion and EPS at Rs20.16.
Published in The Express Tribune, January 25th, 2018.
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