PPL in 1HFY24

Pakistan Petroleum Limited (PSX: PPL) recently announced its financial performance for 1HFY24 with a growth of 41 percent in earnings. The E&P Company’s profitability during 2QFY24 was up by over 75 percent year-on-year. The surge in profitability for PPL was largely due to weaker currency as both volumetric production growth and the prices declined during the six-month period.

PPL’s topline was up by around 9 percent year-on-year during 1HFY24, while the growth in 2QFY24 was around 11 percent year-on-year. The rise in topline during 1HFY24 was due to weaker domestic currency whereas research note by Arif Habib Limited highlights that the Sui wellhead price declined by 5 percent year-on-year, and oil and gas production reduced by 3 and 14 percent year-on-year, respectively. During 2QFY24 however, the currency devaluation of around 20 percent year-on-year was accompanied by higher oil production of around two percent year-on-year.

The growth in gross profits for PPL was modest, while the PAT benefited significantly from lower exploration costs and taxation. The exploration expenditure was down by 5 percent year-on-year in 1HFY24, while the same was lower by 12 percent in 2QFY24 on a year-on-year basis. The decline in exploration and prospecting expenditure was due to the lower number of dry wells during the period. The rise in other income also supported the bottomline due to higher income from cash and cash balances.

Going forward, the earnings of the company are likely to benefit from the efforts being taken to clear the circular debt. And considering recent energy reforms in the sector, PPL has also enhanced its cape requirements for the ongoing year, which will positively impact on the company’s operational performance. The company also announced a cash dividend of Rs2.50 per share on ordinary shares and Rs2.50 per share convertible preference shares.