A few brokerage firms that cover Mari Petroleum Company Limited (PSX: MPCL) raised their earnings estimates for FY18 after the E&P rocked FY17. MPCL has actually seen its profits grow year-on-year during the last five years when the other E&P firms had seen slowed growth or even negative growth. The good part of improved profitability is the increase in core revenues that have growth by a CAGR of around 24 percent over the last four years.
In 1QFY18 too, the MPCL depicted an increase of 29 percent year-on-year in its revenues that seem to have come from improvement of about five percent in production as well as increase in retention prices due to gas price incentive on key Mari gas field.
Operating expenses for the quarter were also higher due to increase cost related to higher production. But one reason for improving net margins at MPCL has been a constant decline in operating costs’ share in total revenue, which has come down from 38 percent in FY13 to 26 percent in FY17. Exploration and prospecting expenditure on the other hand, came down by 48 percent year-on-year; the trend has been similar for annual expenditure’s share in net revenues.
However, the firm might see an increase in exploration and prospecting expenditure in FY18 onwards as it has raised its exploration capex budget to $249mn in FY18 from $206mn in FY17 in the name of aggressive exploration and drilling.
The E&P firm has also announced to go global just recently. Mari Petroleum in partnership with MOL Group of Hungary has signed an MOU for increased collaboration and has planned to expand globally as well, which includes regions like Middle East, African continent and CIS region.
MPCL has gained a liking among the brokerage firms but it still remains underrepresented.
The stock price has seen correction of around 18 percent from its high reached in August 2017 after government divulged its plan to divest 18.4 percent stake in Mari.
Comments
Comments are closed for this article.