The oil and gas exploration and production sector has seen some respite in production volumes in the ongoing fiscal year. Mari Petroleum Company Limited (PSX: MARI) announced a hefty growth in earnings for 1QFY24, which was partly due to higher oil and gas production by the company during the period. Recall that E&P have been facing weak production of hydrocarbons over the last few years. Same was the case in FY23.
MARI’s topline growth stood at around 52 percent year-on-year in 1QFY24 which was aided by healthy growth in gas and oil production (oil flows were up by 22 percent, while gas flows were up by 48 percent year-on-year), significant jump in wellhead price of Mari Gas Field (approximately 30 percent YoY), and currency depreciation against the USD of around 23 percent year-on-year. Not only the production volumes were up for the quarter, company witnessed the highest-ever quarterly hydrocarbon sales of 10 million barrels of oil equivalent during the quarter – up by 12 percent year-on-year, which lead to the rise in revenues.
Besides the topline growth, MARI’s bottomline also benefitted from higher finance income that came due to higher income on cash and investments. The earnings were supported by other income in 1QFY24 versus other expenses in 1QFY23.
On the expense side, the company witnessed 30 percent growth in exploration and prospecting expenditure during 1QFY24 due to and higher seismic and prospecting expenditure. The company’s earnings for 1QFY24 witnessed a growth of 51 percent year-on-year despite higher exploration expenses as well as higher share of loss from associates, and this has been due to growth in the company’s revenues.
What’s in store for Mari in the rest of FY24? It looks like the company’s earnings a going to continue to benefit from higher production flows as the company is expected to start production of 11MMSCFD gas from Mari Ghazij-2. Moreover, the drilling at two promising sites along with the improved utilization of Sachal Gas Processing Complex (SGPC) started gas supply to SNGPL earlier in 2023.
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