PPL’s profit jumps 47% to Rs11.07b during January-March

Increase mainly led by surge in sales and other income

KARACHI: Pakistan Petroleum Limited’s (PPL) consolidated profit increased 47% to Rs11.07 billion in the quarter ended March 31 due to a notable surge in sales and other income.

Although the company suffered a slight drop of 5% in volumetric sales, value remained higher due to increase in price of the benchmark Arab light oil and devaluation of the rupee, Topline Securities’ analyst Nabeel Khursheed said.

The company booked a profit of Rs7.1 billion in the same quarter last year, according to the profit or loss accounts sent to the Pakistan Stock Exchange (PSX).

Accordingly, earnings per share increased to Rs5.61 in the quarter compared to Rs3.61 in the corresponding quarter. PPL’s share price improved 0.88% or Rs1.9 to close at Rs217.32 with 696,900 shares changing hands on Tuesday.

Net sales of oil and gas exploration and production firm rose 29% to Rs30.95 billion in the quarter compared to Rs24.05 billion in the same quarter last year. Analyst said revenues grew on accounts of higher Arab light oil prices (up 24% year-on-year basis) to $65.6 per barrel, currency devaluation providing support to dollar-linked revenues and upward revision in Sui field’s wellhead gas pricing.

“While revenues were up during the outgoing quarter, PPL’s hydrocarbon production declined by 5%, mainly on the back of lower gas production, we estimate,” he said. The company in the quarter reported drop in its oil production by around 10%. “Oil production declined on account of lower flows from Nashpa and Makori East, down 24% and 19% year-on-year, respectively,” he said.

Other factors playing important role in realising higher profit were including significant surge in other income, drop in operating expenses.

PPL reported other income of Rs2.1 billion, up significantly by 74% compared to Rs1.21 billion in the corresponding quarter. “This growth was supported by gain on foreign currency deposit on the back of rupee devaluation against the US dollar during the outgoing quarter. To mention, PPL has foreign currency deposits of over $300 million as of December 2017,” Khursheed added.

Operating expenses slashed 9% to Rs8.54 billion compared to Rs9.29 billion.

On the flip side, the oil and gas exploration’s royalty payment to the Balochistan government, exploration expenses and administrative expensive also surged notably.

Royalties and other levies increased 59% (increasing 279 basis points to 14.6% of net sales) to Rs4.52 billion from Rs2.84 billion, “attributable to royalties paid to Balochistan government as part of the agreement of Sui field price revision,” he said. The exploration expenses rose 44% to Rs2.94 billion from Rs2.04 billion “mainly owing to dry well costs, we believe,” he said. 

Published in The Express Tribune, April 25^th, 2018.

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