MARI – earnings slip in 3Q

Mari Petroleum Company Limited (PSX: MARI) announced its financial performance recently, posting a decline in the latest quarter’s earnings. MARI’s bottom line contracted by 14 percent year-on-year in 3QFY24, while the company’s earnings in overall 9 months for FY24 were seen rising by 28 percent year-on-year.

The E&P company’s revenues during 3QFY24 were up by 28 percent year-on-year due to higher gas production by 26 percent year-on-year and an increase in Mari Gas Field wellhead price by 11 percent year-on-year. Overall, the company’s revenues in 9MFY24 witnessed a growth of 44 percent year-on-year which was driven by higher prices, production, and currency depreciation. During the nine months of FY24, the oil production by the exploration and production sector in the country witnessed an uptick of one percent year-on-year, whereas gas production depicted a 3 percent year-on-year decrease. Whereas MARI’s oil and gas production was up by 16 and 18 percent respectively, while the wellhead gas price was higher by 19 percent year-on-year, and PKR depreciated by around 17 percent year-on-year.

The contraction in the 3QFY24 bottom line was primarily due to a whopping four times rise in exploration and prospecting expenditure on account of a dry well during the period along with higher prospecting expenditure undertaken during the quarter. This also took the overall 9MFY24 exploration expenditure by almost double. Other factors that further restricted the bottom line were the higher operating expenses and lower finance income during the 3QFY24.

Another factor that contained bottom-line growth was the decline in finance income. The finance income was down by 11 percent year-on-year in 9MFY24 due to lower income on cash and cash balances. The decline in finance income in 3QFY24 was steeper at 57 percent year-on-year due to the absence of exchange gains during the quarter.

Improved gas production flows, prospects for more volumetric growth due to its drilling and E&P activity, and better liquidity due to the higher gas price of Mari Gas Field are likely to support bottom line growth for MARI in the coming quarter. The company has also planned mining investments. It has recently approved a Rs2.5 billion investment in its subsidiary Mari Mining Company (Pvt) Ltd (MMC) for the same purpose.