The largest oil and gas exploration and production company was awarded 29 new exploration licenses earlier this year by the Directorate General Petroleum Concessions (DGPC), which almost doubled the company’s exploration portfolio.
Similar aggressiveness can be seen in the company’s financials for 9M FY14. During the nine-month period, Oil and Gas Development Company’s revenues accelerated by 12.5 percent, year on year. Of this crude oil sales make up around 48 percent, while gas makes up approximately 50 percent.
Growth in top line can be attributed to increase in production coupled with favourable exchange rate. Crude oil production by OGDC increased by 2.6 percent year on year owing to increase in production from both operated and non-operated joint venture fields during 9M FY14. Similarly, its gas production also jumped up by 4.3 percent year on year.
Moreover, improvement in realised prices also played its role in revenue augmentation during 9M FY14; as per the result summary, average crude oil prices rose by 4.3 percent, year on year to stand at $87.45 per barrel, while realised gas prices improved by 7.2 percent, year on year to hover around Rs283.34 per million cubic feet.
Earnings of OGDC also benefited from the contraction in exploration cost; during 9M FY14 exploration and prospecting expenses decreased significantly due to subdued dry well.
Though the firm witnessed robust interest income from PIBs and TFCs that were received from the government in settlement of the circular debt and supported the bottom line well during 9M FY14, hefty exchange losses during the latest three months hurt the profitability during 3Q FY14 vis-à-vis 3Q FY13.

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Oil and Gas Development Company
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Rs (mn)                  9MFY14   YoY chg    3QFY14   YoY chg
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Sales                   190,362     12.6%    64,192       10%
Gross profit            133,308       11%    43,158        4%
Other income             14,199       32%     2,079      -46%
Exploration expense       6,747      -25%     1,922      -44%
PAT                      90,938       20%    23,712      -10%
EPS (Rs)                  21.14       20%      5.51      -10%
Gross margin              70.0%               67.2%
Net margin                47.8%               36.9%
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Source: KSE notice