E&P sector may achieve 44pc profit growth in 1QFY27 YoY

KARACHI: The profitability of Pakistan’s listed exploration and production (E&P) companies is expected to increase by 44 percent year-on-year (YoY) in the first quarter of FY27, supported by higher international oil prices and increased oil and gas production, according to Topline Research.

However, sector earnings are projected to decline 46 percent quarter-on-quarter (QoQ), mainly due to a Rs54.9 billion tax reversal recorded in the fourth quarter of FY26 following a Federal Constitutional Court ruling dated January 27, 2026, the research house said.

Pakistan’s total oil and gas production averaged 69,500 barrels per day (bpd) and 2,989 million cubic feet per day (mmcfd), respectively, during 1QFY27. Oil production increased 12 percent YoY, while gas production rose 7 percent. On a QoQ basis, oil and gas production declined 1 percent and 2 percent, respectively.

Topline Research attributed the increase in sector profitability to higher international oil prices and lower availability of imported liquefied natural gas (LNG), which supported demand for locally produced gas.

Geopolitical tensions and supply disruptions in the Middle East lifted Arab Light prices to an average of USD 90 per barrel during 1QFY27. Meanwhile, lower availability of imported re-gasified LNG (RLNG) supported demand for domestic gas, contributing to the 7 percent YoY increase in gas production.

Higher oil production from associated fields and the commissioning of new wells also supported overall production volumes. The Oil and Gas Regulatory Authority (OGRA) revised wellhead gas prices for selected fields by around 8-10 percent for the first half of FY27.

The research house expects operating costs of the E&P sector to increase 26 percent YoY during 1QFY27, although they are projected to decline 17 percent QoQ in line with the historical trend of higher operating expenditure per barrel of oil equivalent in the fourth quarter of the fiscal year.

During the quarter, the listed E&P sector reported one dry well, Ishraq-X-1 operated by Pakistan Petroleum Limited (PPL), compared with three dry wells in 4QFY26.

Among individual companies, Oil and Gas Development Company Limited (OGDC) is expected to report earnings of Rs12.91 per share in 1QFY27, up 45 percent YoY but down 56 percent QoQ.

The expected YoY increase in OGDC earnings is mainly attributed to higher oil and gas prices and volume growth from the Baragzai and other fields. The company is also expected to announce a cash dividend of Rs5 per share for the quarter.

PPL is expected to report earnings of Rs10.81 per share, representing a 46 percent YoY increase and a 21 percent QoQ decline. Topline Research attributed the expected annual growth primarily to a 37 percent YoY increase in the company’s topline during 1QFY27.

PPL’s exploration costs are expected to increase to Rs3 billion due to expenses related to the dry well during the quarter. The company is expected to announce a cash dividend of Rs3 per share.

Mari Energies Limited (MARI) is expected to post earnings of Rs16.73 per share, up 27 percent YoY but down 46 percent QoQ. The expected annual growth is attributed to higher oil and gas prices and volumetric recovery from the Shewa and Spinwam fields.

However, MARI’s exploration expenses are expected to increase 39 percent YoY due to higher 2D and 3D seismic acquisition costs.

Pakistan Oilfields Limited (POL) is expected to record earnings of Rs35.20 per share, up 84 percent YoY but down 19 percent QoQ. The expected annual increase is primarily driven by higher revenues and lower exploration costs, while the effective tax rate is estimated at around 26 percent.

Copyright Business Recorder, 2026