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untitledIncreased prices, improved production and higher profits are all what Pakistan Petroleum Limited has been about of late. The FY12 began on the same note for PPL as its first quarter results show a significant improvement in profits of 27 percent year on year. Yet, the companys share price has been under pressure of late, as fears of oversupply on the secondary offering have overshadowed the rock solid fundamentals. Despite a dip in production flows from the major operating fields the overall production increased in comparison to the same period of last year. The oil revenues saw a massive jump of nearly 50 percent on account of improved production flows and significantly higher realised oil prices, as the international crude prices soared by 21 percent year on year. The performance on the gas front is overwhelming as well as the company realised the increased gas wellhead prices for its uncapped fields. The wellhead prices are expected to have increased by 13~17 percent year on year following the meteoric rise in crude prices in the six months period prior to 1QFY12. Other income continued to provide strong support to the bottom line as the companys increased short term investments in treasury bills and term deposits fattened the bottom line. The higher interest rate scenario is also a plausible reason of improved performance on this account. PPL seems to enjoy a healthy cash flow as the inter-corporate circular debt issue does not seem to hamper the liquidity a great deal, as the finance costs have not gone out of hand despite the receivables having mounted of late. The company seems to have the bases well covered for an even improved full year performance in FY12 as the wellhead gas prices are expected to rise further in 2HFY12. With production flows expected to strengthen in the near term, it should only be a matter of time before the scrip price gain momentum laying the fears of discounted secondary offering to rest

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Pakistan Petroleum Limited
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 (Rs mn)                                  1QFY12      1QFY11       chg
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Sales                                   22,647      18,219         24%
Field expenditure                        5,693       4,405         29%
Gross profits                           14,261      11,650         22%
Gross margins                               63%         64%        -2%
Other income                             1,585         951         67%
Operating expenses                       1,091         873         25%
PAT                                      9,887       7,790         27%
EPS (Rs)                                  7.52        6.52
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Source: KSE notice

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