Pakistan Oilfields Limited (POL) announced its 1HFY12 financial results, which are below the market consensus estimates. The E&P Company was expected to post impressive profit growth more than it did, as the market expected profits to clock around Rs.7 billion-which actually came at Rs.6.1 billion. POL, however, continued with its high dividend payout policy announcing Rs.17.5/share as the interim dividend. The earnings growth was primarily driven by top line growth as both Companys oil and gas production and the realised oil and gas prices increased during the period in relation to the corresponding period last year. The Arab Light crude, the reference price for POL, averaged $108/bbl during the period under review, which is a significant 35 percent jump from the realised oil prices during 1HFY11. On the hydrocarbon production flows, the growth was not as much as it had been in the previous years, but even the 7 percent year-on-year production growth during the period, combined with higher realised prices to spur the top line. What also aided the bottom line performance were significantly lower exploration charges as the exploration and development activities during the period largely remained muted. This is not the healthiest of signs for the Company, as in an ideal scenario POL would want to be seriously engaged in production and development activities around the clock. The Companys investment in associate companies helped it reap dividend income from the likes of National Refinery Limited and Attock Petroleum Limited. Moreover, healthy cash and bank balance enabled the firm make profits on bank and other deposits. The trend is likely to continue, as the associate companies have registered impressive financial performance and the cash position continues to remain strong. The Companys stock price has been under pressure of late after the unsuccessful appraisal attempts in Domail -II. The capitalisation of costs also poses serious risk to the profitability in the near future, should things not go in favour of POL. The Company plans to be engaged in drilling and exploration activities in the latter half of the year, which should bode well on the volumetric growth front. There are encouraging signs for the E&P sector, as the ministry has hinted at improved gas well ahead pricing for new blocks-which could trigger a round of intense drilling and development activities.
==================================================== Pakistan Oilfields Limited ==================================================== (Rs mn) 1HFY12 1HFY11 chg ==================================================== Sales 14,522 11,575 25% Gross profit 8,968 7,109 26% Gross margin 62% 61% 1% Exploration cost 132 300 -56% Finance cost 263 118 123% Other income 1,560 1,030 51% PAT 6,169 5,201 19% EPS (Rs) 26.08 21.99 ====================================================
Source: KSE notice
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