A 55 percent year-on-year growth in Pakistan Oilfields 1QFY12 earnings surprised many - as the market was expecting the profits to increase by not more than 30 percent. The surprise factor was that the company decided to hold back writing off the Chak-Naurang South well (impact Rs438 million), which had not been successful despite repeated efforts to get the results out of it. The well was expected to be written off after having been declared dry in August, but the POL resisted the move and instead seems to be waiting on further development. The OGDC is reportedly targeting well workover; which could be the chief reason for POL not writing off the well during the period. On the operational front, the POL rode on improved hydrocarbon flows as both the oil and gas production improved significantly by 12 percent and 13 percent year-on-year respectively. The gas revenues were boasted by a modest increase in wellhead gas prices as the realised gas prices increased by nearly 6 percent year-on-year, during the quarter. The top line got the major impetus from the oil revenues, which jacked up significantly as the realised oil prices increased by 23 percent year-on-year, reaching $81/bbl. The companys top line is expected to receive a major boost in the 2QFY12, as strong dividend income would most likely be booked then. POLs dividend income from its major investment in National Refinery and Attock Petroleum is estimated to contribute Rs650 million to the bottom line which would supplement the anticipated improvement in hydrocarbon flows from different fields. The company is well and truly on track to hugely benefit from the expected increase in production stream in the second half of the fiscal year, despite a slight slowdown in the production flow from Pindori and Pariwali. Makori East and few other blocks have shown signs of promise and things look bright for the companys top line to remain firm in the near future.
================================================================ Pakistan Oilfields Limited ================================================================ (Rs mn) 1QFY12 1QFY11 chg ================================================================ Sales 7,328 5,394 36% Gross profit 4,903 3,208 53% Gross margin 67% 59% 12% Exploration cost 74 105 -29% Other income 430 271 59% PAT 3,455 2,233 55% EPS (Rs) 14.61 9.44 ================================================================
Source: KSE notice
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