The listed Exploration and Production (E&P) sector posted an earnings growth of 28 percent to Rs 69 billion during the first half of FY12, as against Rs 54 billion in the same period in FY11. "The improved profitability is on the back of better pricing scenario along with higher other income", Nauman Khan, an analyst at Topline Securities said.
Amongst the individual companies, Oil and Gas Development Company (OGDC) led the way, showing a growth of 32 percent, while other explorers also depicted a respectable growth of 17-21 percent. Benefiting from higher oil and gas prices, sector topline grew by 14.4 percent to Rs 152.3 billion in the first half of FY12 as against Rs 133.1 billion in the corresponding period last year.
Pakistan relevant, Arab Light crude oil prices, average around $108 per barrel up 36 percent from $79 per barrel in the first half of FY11, while PKR depreciation against the green back augmented topline growth, Nauman said. On the volume front, listed sector oil production remained stagnant as that of last year (hovering around 48000 barrels of oil per day), but gas production has increased by 2 percent to 2.1 billion cubic feet per day.
In addition, curtailed operating expense and improved other income also played their due role in bottom-line growth. Operating expenditure increase by 11.9 percent to Rs 37.3 billion primarily owing to subdued exploration cost (as most of the firm are focusing on JVs), he added.
The sector's other income depicted a phenomenal growth of 138.8 percent to Rs 10.1 billion with its contribution to PBT improved by 5pps to 10.1 percent in the first half of FY12 as against 5.1 percent in the same period last year. Amongst the individual companies, OGDC led the way showing a growth of 32 percent in its earnings (1HFY12 EPS of Rs 9.67) benefiting from 24 percent increase in its net realised oil prices to $82.03 per barrel, 3.7 percent increase in its gas production, 385 percent increase in its other income to Rs 4.6 billion and subdued effective tax rate of 31 percent as against 38 percent last year, Nauman said.
This was followed by 21 percent increase in PPL earnings (1HFY12 EPS of Rs 15.3) which benefited from higher net realised hydrocarbon prices and improved production from Tal and Naspha block. POL also posted a decent growth of 19 percent in its profitability (1HFY12 Rs 26.08 percent) on the back of favourable pricing scenario, improved oil and gas production by 5.2 percent and 5.5 percent, respectively and 51 percent increase in its other income, he said. Lastly, Mari post a PAT of Rs 1.4 billion, up by a massive 163 percent, however due to its unique guaranteed return formula, distributable profit stood by only 17 percent from the same period last year, he said.