Oil and Gas Development Company (OGDC) on Tuesday announced its financial results for fiscal year 2013-14 with a profit of Rs123.914 billion, up 35.7% over the previous year on the back of higher prices for oil and gas.
The state-run petroleum exploration giant also announced a final cash dividend of Rs3 per share, taking full-year payout to shareholders to Rs9.25 per share.
OGDC’s revenues increased 15% to Rs257 billion despite a 2% drop in its overall petroleum production in oil equivalent terms. Sales went up as a slight increase in oil production, which fetches a higher price, outshone the decline in gas output.
“Average oil production stood at 42,000 barrels per day (bpd) in fiscal year 2013-14 against 41,000 bpd in the previous year,” said Vahaj Ahmed, analyst at Topline Securities, citing the data provided by the Pakistan Petroleum Information Services (PPIS).
“On the other hand, average gas production was down 3% to 1,181 million cubic feet per day (mmcfd) against previous year’s 1,212 mmcfd.”
OGDC has yet to release detailed financial statements. PPIS is the official database that is used by all industry executives.
During 2013-14, OGDC made just two gas discoveries, which according to initial tests yielded just 7.84 mmcfd of gas and 65 bpd of condensate.
The results showed a sharp decrease in exploration and prospecting expenditure to Rs8.722 billion from previous year’s Rs14.97 billion, but analysts said that was because of a large tax adjustment in 2012-13 and write-offs involving dry wells.
Setting financial results aside, analysts don’t see much improvement considering the size of the company. “They aren’t doing enough,” said Vahaj Ahmed. “The number of wells being drilled has gone down as well.”
Huge profits also mask the liquidity strains suffered by OGDC, which has billions of rupees stuck in inter-corporate circular debt.
After it mails the final dividend, OGDC would have paid out Rs40 billion from its profit of Rs123 billion in cash dividends.
Industry officials say with major oil and gas fields depleting fast, petroleum exploration firms have to spend more to employ hi-tech machinery to dig deeper to find hydrocarbon reserves. OGDC has 39 operating licences.
Published in The Express Tribune, August 6th, 2014.
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