On Wednesday, Pakistan Petroleum (PPL) – the country’s second largest oil and gas explorer – announced its earnings with growth slowing down as higher field expenditures eat up increase in revenues.
According to a statement sent to the Karachi Stock Exchange, PPL earned Rs49.95 billion in the fiscal year 2012-13, 3% higher than Rs40.92 billion it made last year. The result announcement was also accompanied with a cash dividend of Rs5.5 per share, taking cumulative payout for the year to Rs10.5, along with a 20% bonus share issue – one share for every five ordinary shares.
Out of the earnings, the oil and gas explorer also appropriated Rs5 billion each towards the Insurance Reserve and the Assets Acquisition Reserve. In the period, PPL also acquired a 100% stake in PPL Europe E&P for Rs15.7 billion, the company’s statement of equity for the year revealed.
During the year, PPL’s revenues grew 7% to Rs102.35 billion, mainly on the back of increased oil production amid higher oil prices as production from Nashpa Block and Makori East, MamiKhel and Tal Block jump. Moreover, failing rupee against the dollar also helped in top-line growth as PPL receives its income in US dollars.
According to news report by The Express Tribune on March 12, PPL also won a provisional grant of 11 strategically-fit exploration blocks spread across Sindh, Punjab and Balochistan. The company committed a total of 6,445 work units, which translated into a minimum financial obligation of $64.45 million; though actual investment may be significantly higher on discharging the work commitment.
However, the growth in revenues was partially offset by the company’s surging field expenditures, which crossed Rs30.6 billion, due to an uptick in exploration activities. PPL has announced four significant discoveries since the incumbent government took office. But since the discoveries are not realised, the company can expect a boost in cash flows going ahead.
Other factor that absorbed revenue growth was a fall in other income. Other income declined 41% to Rs6.89 billion as the company booked a one-time reversal of provision for workers welfare fund of Rs4.4 billion in fiscal 2012.
Resultantly, profit before tax fell by around Rs2 billion to Rs62.63 billion in 2013 compared to 2012. Lower tax rates helped the company post a growth in profits as the company paid taxes on a higher rate in 2012.
Published in The Express Tribune, August 22nd 2013.