Pakistan Oilfields Limited (PSX: POL) announced its financial performance for 1HFY22 last week where its earrings were seen climbing by 64 percent year-on-year. The growth in the E&P giant’s earning stemmed from the growth in topline that mostly came from higher prices. FY22 has seen higher crude oil prices among other commodities. And this was expected to spur the upstream oil and gas sector’s earnings in1HFY22.

POL’s revenues grew by 35 percent year-on-year in 1HFY22 primarily due to 71 percent rise in crude oil realized prices. Along with that, currency depreciation of around 4 percent also aided topline growth. Revenues in 2QFY22 were up by 44 percent where oil prices were higher by 78-79 percent year-on-year during the period, while currency depreciation was up by 8 percent. On the production front, crude oil and gas flows were down by 10 percent year-on-year each in 2QFY22, while the same were also seen falling overall in 1HFY22.

There was also a hefty growth in exploration and prospecting expenditure - rising by 5 times in 1HFY22 versus 1HFY21 and by about 3 times in 2QFY22 due to increased seismic activity. Finance costs also escalated. However, other income witnessed a big jump by around 8 times both in 1HFY22 and 2QFY22 due to significant exchange gains along with higher income on bank deposits and investments.

1HFY22 performance for POL has been a mix of currency depreciation and oil prices, which raises the concern over the falling production of hydrocarbons, the impact of which could start showing once oil prices start easing.