Supported by sales growth, OGDC’s profit surges 55%
Oil, gas exploration firm earns Rs56.75b in Jul-Dec 2018
Oil, gas exploration firm earns Rs56.75b in Jul-Dec 2018. PHOTO: FILE
KARACHI:
Oil and Gas Development Company's (OGDC) profit soared 55% to Rs56.75 billion in the first half ended December 31, 2018 of the current financial year because of a significant growth in sales, higher other income and low expenses.
A surge in the key interest rate, rupee depreciation against the US dollar and higher benchmark Arab Light crude prices in recent months supported OGDC, which recorded an attractive profit in the half year, according to brokerage houses.
The oil and gas exploration company had registered a profit of Rs36.67 billion in the same half of previous year, according to a notification sent by the company to the Pakistan Stock Exchange (PSX) on Friday. Earnings per share (EPS) came in at Rs13.20 for Jul-Dec 2018 compared to Rs8.53 in the same half of previous year.
OGDC board of directors recommended a second interim cash dividend of Rs3 per share in addition to the previous payout of Rs2.75. The latest entitlement will be paid to shareholders whose names appear in the register of members on April 11, 2019.
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OGDC's share price increased 0.77%, or Rs1.18, and closed at Rs154.19 with trading in 4.23 million shares at the PSX.
Net sales of the company rose 32% to Rs126.89 billion in Jul-Dec 2018 compared to Rs95.96 billion in the corresponding period of previous year. Higher net sales "came on the back of higher oil and gas prices, tagged with 21% year-on-year depreciation of the rupee against the dollar", Arif Habib Limited Deputy Head of Research Tahir Abbas said in post-result comments.
"However, oil and gas production declined 1% and 2% respectively, standing at 40,846 barrels per day (bpd) and 990 million cubic feet per day (mmcfd) respectively," he said.
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"The decline in oil production is mainly due to lower oil production in November-December 2018 due to reduction in purchases from refineries while gas production dropped due to annual turnaround at the Uch power plant."
Moreover, average realised oil prices reached $62.22 per barrel in Jul-Dec 2018 compared to $48.69 per barrel in the same half of last year. Likewise, realised gas prices touched Rs317.33 per million cubic feet against Rs253.83 in the same period of last year, he said.
Other income rose 78% to Rs11.85 billion compared to Rs6.66 billion. The surge was mainly the result of exchange gains due to rupee depreciation and interest income on bank deposits after increase in key interest rate.
Second-quarter result
In the second quarter (Oct-Dec 2018) alone, OGDC's profit rose 23% to Rs30.02 billion (EPS Rs6.98) compared to Rs19.66 billion (EPS Rs4.57) in the same quarter of last year.
The growth in earnings was primarily the outcome of 25% increase in net sales, rise of 2.2 times in other income, 57% drop in exploration charges and 20% growth in income from associates.
"We flag volatility in international oil prices, lower-than-expected hydrocarbon production and significant exploration and development costs as key risks for OGDC," Topline Securities said in its report.
Published in The Express Tribune, February 23rd, 2019.
Oil and Gas Development Company's (OGDC) profit soared 55% to Rs56.75 billion in the first half ended December 31, 2018 of the current financial year because of a significant growth in sales, higher other income and low expenses.
A surge in the key interest rate, rupee depreciation against the US dollar and higher benchmark Arab Light crude prices in recent months supported OGDC, which recorded an attractive profit in the half year, according to brokerage houses.
The oil and gas exploration company had registered a profit of Rs36.67 billion in the same half of previous year, according to a notification sent by the company to the Pakistan Stock Exchange (PSX) on Friday. Earnings per share (EPS) came in at Rs13.20 for Jul-Dec 2018 compared to Rs8.53 in the same half of previous year.
OGDC board of directors recommended a second interim cash dividend of Rs3 per share in addition to the previous payout of Rs2.75. The latest entitlement will be paid to shareholders whose names appear in the register of members on April 11, 2019.
Hydrocarbon deposits: OGDC finds new oil, gas reserves in Kohat
OGDC's share price increased 0.77%, or Rs1.18, and closed at Rs154.19 with trading in 4.23 million shares at the PSX.
Net sales of the company rose 32% to Rs126.89 billion in Jul-Dec 2018 compared to Rs95.96 billion in the corresponding period of previous year. Higher net sales "came on the back of higher oil and gas prices, tagged with 21% year-on-year depreciation of the rupee against the dollar", Arif Habib Limited Deputy Head of Research Tahir Abbas said in post-result comments.
"However, oil and gas production declined 1% and 2% respectively, standing at 40,846 barrels per day (bpd) and 990 million cubic feet per day (mmcfd) respectively," he said.
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"The decline in oil production is mainly due to lower oil production in November-December 2018 due to reduction in purchases from refineries while gas production dropped due to annual turnaround at the Uch power plant."
Moreover, average realised oil prices reached $62.22 per barrel in Jul-Dec 2018 compared to $48.69 per barrel in the same half of last year. Likewise, realised gas prices touched Rs317.33 per million cubic feet against Rs253.83 in the same period of last year, he said.
Other income rose 78% to Rs11.85 billion compared to Rs6.66 billion. The surge was mainly the result of exchange gains due to rupee depreciation and interest income on bank deposits after increase in key interest rate.
Second-quarter result
In the second quarter (Oct-Dec 2018) alone, OGDC's profit rose 23% to Rs30.02 billion (EPS Rs6.98) compared to Rs19.66 billion (EPS Rs4.57) in the same quarter of last year.
The growth in earnings was primarily the outcome of 25% increase in net sales, rise of 2.2 times in other income, 57% drop in exploration charges and 20% growth in income from associates.
"We flag volatility in international oil prices, lower-than-expected hydrocarbon production and significant exploration and development costs as key risks for OGDC," Topline Securities said in its report.
Published in The Express Tribune, February 23rd, 2019.