Pakistan Oilfields Limited (PSX: POL) saw a meagre increase in its bottom-line in 9MFY18. According to the quarterly performance announced on the stock exchange earlier this week, the oil and gas exploration and production giant posted a gain of a little over 5 percent in the first nine months of FY18, where as in the latest quarter i.e. 3QFY18, it posted an increase of 10.5 percent.
POL’s revenues (net) rose by 7.7 percent and 15 percent in 9MFY18 and 3QFY18, respectively, which primarily came from higher crude oil prices and production volumes. During the 3QFY18, crude oil prices (Arab Light) rose by around 24 percent, year-on-year. In terms of production, Tal block, a source of heavy reliance for POL, saw production increases. This along with the recent addition of Jhandial in its production portfolio was the key factors behind higher production flows during the period. Overall, the firm saw its oil and gas production increase by 7 percent and 12 percent, respectively in 3QFY18. For 9MFY18, crude oil production for POL was up by around 9.5 percent, while gas flows were up by 14.5 percent year-on-year. Added to these price and volume figures was the benefit of Rupee depreciation by around 6 percent to the top-line.
However, the recently announced revenues for POL are still lower as the results are based on old gas price for Tal Block since the decision in this regard is still pending. Recall that POL reversed enhanced revenue from Tal Block field conversion prior to the windfall levy issue unlike other E&Ps that didn’t.
The earnings of the firm were affected by higher royalty, exploration and finance costs. Higher exploration costs came from higher drilling activities including the seismic surveys conducted on Balkassar lease and DG Khan concession. On the other hand, higher other income during the period supported the bottom-line which probably came from higher exchange gains on financial assets.
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