The countrys largest E&P Company OGDCL said its 1HFY12 earnings improved by 32 percent versus the corresponding period of last year. Yet, the scrip price dipped by Rs.3.5/share as the earnings were below the market consensus estimates. The stupendous earnings growth came mainly on the back of top line growth which was fuelled by a robust increase in oil and gas prices and the Companys cash-rich position during the period. The top line improved at a healthy rate as both oil and gas realised prices for the quarter increased from the same period of previous year. The crude oil prices in the international market surged during 1HFY12 as the global supply situation was adversely affected following MENA unrest, leading to a significant 24 percent year-on-year increase in realised oil prices for the period at $82.03/bbl. The oil production flows, however, remained under pressure for most of the period due to adverse weather conditions and other disruptions, yet the Companys crude oil production dipped marginally by 3 percent year on year (35,897bbl/day) as the production flows increased from Pasakhi, Napsha and Mela fields. On the gas front, the revenue growth was muted as the gas production increased marginally by 3 percent versus the corresponding period of last year. OGDC is trying to enhance production flows by applying latest techniques and keeping natural decline to a minimum by closely monitoring and taking up regular work-over jobs wherever required. Wellhead gas prices during the period increased by just 2 percent as a result of which the revenue mix was evenly shared by oil and gas. OGDC has historically had natural gas as its major revenue earner, but the relatively stable production and price increase in natural gas versus a sizeable increase in realised crude oil prices, led to a shift in the revenue mix. 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. A major boost to the bottom line came from four-fold increase in the other income. OGDCL has historically derived its other income from earning on cash and bank balances, and the favourable cash position during the period helped it earn a sizeable other income. That said, the inter-corporate circular debt is still hurting the Companys liquidity s its receivables mounted to a staggering Rs.109 billion as on December 31, 2011. The Company believes that the circular debt should be resolved soon as it is hampering not only the exploration and development activities, but also its dividend payout, which is also a loss to the governments kitty.
======================================================================== OGDCL ======================================================================== (Rs mn) 1HFY12 1HFY11 chg 2QFY12 2QFY11 chg ======================================================================== Sales 88,680 81,090 9% 43,994 40,808 8% Operating expenses 15,427 12,792 21% 8,197 5,571 47% Gross profit 62,126 58,022 7% 30,222 30,060 1% Gross margins 70% 72% -2% 69% 74% -7% Other income 4,622 919 403% 2,318 408 468% Exploration expenditure 1,781 3,536 -50% 1,116 3,495 -68% PAT 41,573 31,598 32% 19,658 16,428 20% EPS (Rs) 9.67 7.35 4.57 3.82 ========================================================================
Source: KSE notice
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