The countrys largest E&P Company, the Oil and Gas Development Company (OGDC) surprised many with its 1QFY12 financial results. The massive 31 percent year-on-year rise in profits beat the street estimates by a good 10-12 percent; as the E&P giant went on to report the highest ever quarterly earnings in the Firms history. The top line improved at a healthy rate as both oil and gas realised prices for the quarter drastically increased form the same period of previous year. The crude oil prices in the international market surged during 1QFY12 as the global supply situation was adversely affected following MENA unrest, leading to a massive 34 percent year-on-year increase in realised oil prices for the period at $82.78/bbl. The oil production flows, however, remained under pressure for most of the quarter due to adverse weather conditions and other disruptions, yet the company achieved the capacity to produce nearly the same quantity of oil that it managed to produce in the same period of last year at 36,092 bbl per day. Gas production flows, on the other hand, improved by 8 percent year on year which was primarily a result of Companys planned efforts to keep the natural decline in flows at a minimal level by using rig-less techniques and planned work over. The Company has successfully installed 14 compressors at Qadirpur gas field maintaining the production flow of 550-600 mmcfd. The revenue mix was equally distributed between oil and gas in sharp contrast to previous quarters where gas used to have almost two-third of the revenues share. A sharp decline in exploration expenditure provided the impetus to the bottom line as the company did not declare any dry wells during the period. Plus, the exploration activities also remained muted to a great extent in comparison to the same period of last year. There is also a concern on this account as the OGDC could not start operations in ten blocks (30 percent of its acreage) on non-clearance of security in Balochistan. What led to a major deviation from the consensus estimates was the massive jump in other income which nearly quadrupled on year-on-year basis. The return on bank deposits has historically been the source of other income for OGDC, it is safe to assume that the Company rode on its high bank balances coupled with the high interest rate scenario. Going forward, the company is well on track to complete the development projects. OGDC has also planned to undertake another development project to install two LPG plants. The fundamentals are sound and strong, and another year of record profits awaits OGDC.
===================================================== Oil & Gas Develpoment Company ===================================================== (Rs mn) 1QFY12 1QFY11 chg ===================================================== Sales 44,686 39,416 13% Operating expenses 7,230 6,355 14% Gross profit 31,905 28,176 13% Gross margins 71% 71% Other income 2,304 607 280% Exploration expenditure 665 2,532 -74% PAT 21,915 16,710 31% EPS (Rs) 5.10 3.89 =====================================================
Source: KSE notice
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