A first look at the earnings of Pakistan Oilfields Limited (PSX: POL) is pleasant; the exploration and production company has reported a sanguine increase in the bottom-line for FY17 (34 percent year-on-year). Pakistan Oilfields Limited (POL) is largely an oil exploration and production company (oil-heavy) and hence, the recent turnaround in oil prices has been favourable for the company.

POL’s net revenues have increased by 10 percent year-on-year in FY17 after continuously declining for the two years before that. Similarly, POL’s bottom-line has been up by 34 percent, year-on-year in FY17, that too after falling for the last two years.

The company also announced a final cash dividend of Rs25 in addition of Rs15 already paid. Also the exploration expenses have remained lower in FY17, which lifted the profits of the company and the profit margins as well. This is the sweet part.

The bitter part is that these exploration costs have remained tepid in FY17 as POL has only spudded one exploration well. Lower exploration cost might not necessarily reflect positively on a firm as it also points towards lower exploration and drilling activity.

Also, POL’s production flows have been lackluster specifically due to the fall in production flows from the TAL Block where it has a working interest. According to a research note by AKD Securities, POL is heavily reliant on TAL Block despite having 7 exploration licenses.