OGDC’s profits keep growing, defy spike in exploration costs

KARACHI: OGDC’s profit defies an 83 per cent rise in exploration costs and analyst expectations with help from rising sales and other income.

The Oil and Gas Development Corporation (OGDC) posted a profit after tax of Rs14.1 billion for the quarter ended March 31, up 11.9 per cent from the same period last year. Their earnings per share were Rs3.28, up from Rs2.93 in the same period last year. Although their nine month aggregated profit after tax decrease by 4.04 per cent from the same period last year to Rs42.6 billion. OGDCL announced an interim per share cash dividend of Rs 1.5.

The spike in exploration costs was due to many of the wells they drilled coming up dry. Circular debt has eroded the company’s liquidity, and reduced its bank deposits, said Topline Securities analyst, Furqan Punjani. This quarter’s increase is in part due to the one off earnings impact of an upward revision in Qadirpur gas prices, he added. Topline analysts were expecting higher exploration cost and lower ‘other income’ to drag down OGDC’s bottom-line.

They expected its profits to rise by seven per cent despite their estimates of a 55 per cent increase in exploration costs. First Capital Equities, analyst, Faraz Farooq expected the combined oil & gas production in 3QFY10 likely to remain five per cent lower from the same period last year and their net realised prices to grow by 25 per cent. OGDC’s current stock price is Rs134.32; it increased by Rs0.89 today, a 0.67 per cent increase.