PPL - down by oil prices

With apparent reason of low oil prices, the oil and gas exploration and production companies have seen a clip in their earnings in 9MFY15. Pakistan Petroleum Limited is yet another oil and gas company that has seen a fall in its profitability during the first nine months of FY15.
Though oil production has been optimistic, witnessing a rise of 24 percent year-on-year, the firm’s revenues dropped by nine percent year-on-year in 9MFY15 on account of more than 25 percent decline in Arab Light crude oil prices versus 9MFY14. This drop was more significant as prices fell by more than 50 percent year-on-year in the third quarter of FY15. Apart from the declining oil prices scenario, the top line was also a victim of low natural gas production as well as low well-head gas prices in the nine-month period. Gas production for PPL was low by eight percent in 9MFY15 versus similar period last year.
Going down the profit and loss statement, it can be seen that PPL’s bottom line shrunk by 33 percent year-on-year in 9MFY15. And besides the top line squeeze, and an increase in other income, the earnings for the period were also clipped by higher field expenditure, and higher operating expenses. Higher other income was a result of exchange gains in 3QFY15 versus exchange losses in 3QFY14, while the operating expenses are a result of impairment cost of PPL’s subsidiary - PPL Europe E&P - recorded in the second quarter.

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PAKISTAN PETROLEUM LIMITED

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Rs (mn)                      3QFY15    3QFY14     YoY   9MFY15    9MFY14    YoY

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Net sales                    22,774    30,391    -25%   80,584    88,867    -9%

Field expenditure            11,007     9,769     13%   28,447    23,327    22%

Royalties                     2,612     3,634    -28%    9,432    10,665   -12%

Other operating income        2,017     1,110     82%    6,048     4,798    26%

Other operating expenses        552       900    -39%    4,751     2,968    60%

Finance cost                    138       106     30%      415       319    30%

Profit after tax                413       793    -48%    4,336     2,648    64%

EPS                            3.96      5.87    -33%    15.19     19.32   -21%

Net margins                    34.3%     38.1%            37.2%     42.9%

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Source: KSE Announcement

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