KARACHI: Pakistan’s listed oil and gas exploration and production (E&P) sector reported earnings of Rs113.4 billion in the first quarter of FY27, up 43 percent year-on-year (YoY), primarily driven by higher international oil and gas prices, according to a report by Topline Research.
However, sector earnings declined 47 percent quarter-on-quarter (QoQ), reflecting lower oil prices and the impact of a tax reversal recorded in the preceding quarter.
Net sales increased 32 percent YoY to Rs279.1 billion in 1QFY27, but fell 9 percent QoQ. Topline Research attributed the annual growth mainly to a 26 percent increase in international oil prices during the quarter, with Arab Light crude averaging US$90 per barrel compared to US$71.5 per barrel in 1QFY26. The sequential decline in sales reflected a 13 percent QoQ fall in oil prices. Meanwhile, the Oil and Gas Regulatory Authority (OGRA) revised wellhead gas prices for selected fields by approximately 8 to 10 percent for the first half of FY27.
Exploration costs rose 45 percent YoY but declined 61 percent QoQ to Rs10.2 billion during the quarter. The sector reported one dry well, Ishraq X-1, operated by Pakistan Petroleum Limited (PPL). The sequential reduction in exploration costs was attributed to two dry wells reported in 4QFY26 — Chak-203 and Saidpur — both operated by Oil and Gas Development Company Limited (OGDC).
The sector recorded a total tax provision of Rs52.1 billion, with an effective tax rate of 31.5 percent, compared to a provision of Rs44.6 billion and an effective tax rate of 35.9 percent in 1QFY26. In 4QFY26, the sector had booked a tax reversal of Rs54.8 billion following the Federal Constitutional Court’s (FCC) decision concerning super tax levies.
Listed E&P companies declared their first interim dividend of Rs26.9 billion in 1QFY27, up 31 percent YoY. The sector’s payout ratio stood at 23.7 percent, compared to 25.7 percent in the same period last year and 39.8 percent in the preceding quarter. Topline Research noted that Mari Petroleum Company Limited (MARI) and Pakistan Oilfields Limited (POL) announce dividends on a semi-annual basis.
Among individual companies, OGDC reported earnings growth of 53 percent YoY, although its earnings declined 54 percent QoQ. The annual increase was mainly attributed to higher sales and finance income, along with lower administrative costs. The company also announced a cash dividend of Rs5 per share, representing a payout ratio of 37 percent during the quarter.
PPL’s earnings increased 25 percent YoY but declined 33 percent QoQ, despite higher exploration costs. The annual growth was driven by higher sales and other income. The company announced a cash dividend of Rs2 per share, with a payout ratio of 22 percent in 1QFY27.
MARI posted earnings growth of 36 percent YoY, while its earnings fell 42 percent QoQ. The annual increase was supported by 24 percent higher sales and a lower effective tax rate of 23 percent. Its exploration costs declined 7 percent YoY and 75 percent QoQ to Rs2.1 billion during the quarter.
POL’s earnings rose 51 percent YoY but declined 34 percent QoQ. Its sales increased 26 percent YoY but fell 18 percent QoQ during 1QFY27. The annual growth in earnings was attributed to higher sales and a 58 percent increase in other income, supported by higher investment income.
Research maintained an overweight stance on Pakistan’s E&P sector.
Copyright Business Recorder, 2026
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