OGDC building up for FY13

The E&P giant touted gleaming results for the first quarter of FY13 yesterday, and it is clearly a fine start after the stupendous growth achieved during FY12.
The expectation for a sturdy year for the E&P sector yet again, backed partially by the announcement of the new petroleum policy, relies heavily on how OGDC performs.
The top line of the oil and gas company did most of the trick; volumetric growth during 1QFY13 resulted in revenue expansion of 20 percent YoY. This corresponds to a the sizeable jump of 11.4 percent YoY in gas production and a modest increase of 6.6 percent YoY in oil volumes, tapered by the heavy rains in Balochistan and Sindh.
The average realised prices of crude oil sold decreased during the quarter to 81.53 dollars a barrel against 82.78 dollars per barrel in 1QFY12, while that of gas were much higher at Rs251.16 per mcf against Rs218.32 per mcf.
With a parallel increase in the operating costs, the gross margin of Oil and Gas Development Company hovered around 71 percent during the said period.
Besides revenue growth, the bottom line was shored up by a mild increase in other income, underscored by exchange gains and interest income for the quarter ended September 30.
Net profits of Rs25.6 billion stood at a healthy 17 percent growth year-on-year, held back by exploration and prospecting expenditure increasing two folds. Besides higher 2D and 3D seismic acquisitions, the company made an important discovery at Nashpa-3 and also spudded six wells during the period.
With regards to net margins, the E&P Companys profits as a percentage of sales slipped to 47.7 percent during 1QFY13 versus 49 percent during comparable period last year. The results were accompanied by the announcement of the first interim cash dividend of Rs1.75 per share.
With energy and power deficit at its all time high, the industry is laden with challenges like the inter-corporate circular debt crisis. GoP in its recent attempts has approved the floating of TFCs worth Rs82 billion with OGDC as the subscriber.
This amount will be given on priority to the ailing IPPs which would help them offset their dues against the largest oil marketing company, PSO. What lies here for OGDC is that the company will be able to convert the non-earning and assets into earning ones which would further improve the earnings for FY13.

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OGDC

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(Rs mn)                     1QFY13      1QFY12         chg

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Production

Crude oil (bpd)             38,462      36,092

Gas(mmcfd)                   1,140       1,023

LPG(mtpd)                      281         174

Sales                       53,795      44,686         20%

Gross profit                38,226      31,905         20%

Exp & Prospecting            1,461         665        120%

PAT                         25,656      21,915         17%

EPS (Rs)                      5.97        5.10         17%

Gross margin                  71.1%       71.4%

Net margin                    47.7%       49.0%

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Source: KSE Notice