Oil and Gas Development Company Ltd (OGDC) Q3 earnings preview

AKD Research has just released an update on Oil & Gas Development Company Limited’s (OGDC) previous quarter’s financial results. Here are the important points from their 3QFY24E earnings preview:

Decline in Quarterly Profit

OGDC is expected to report earnings of PkR9.93 per share for the third quarter of fiscal year 2024. Analysts project a net profit after tax (NPAT) of PkR42.67 billion, representing a significant decline of 42% compared to the previous quarter and 34% compared to the same quarter last year.

Factors Contributing to Decline

The decrease in quarterly profit can be attributed to several factors:

1. Lower Oil Prices: Average oil prices experienced a decline of 4.3% compared to the previous quarter.
2. Reduced FX Gains: The company faced reduced foreign exchange gains due to a strengthening domestic exchange rate, with the PkR/US$ parity dropping by 1.3% compared to the previous quarter.

Production Performance

Despite the decline in profitability, OGDC’s hydrocarbon production witnessed improvement during the quarter:

• Oil and Gas Output: The company’s oil and gas output is estimated to increase by 4% and 12% quarter-on-quarter (QoQ), respectively, reaching 34.3 thousand barrels per day (kbpd) and 755 million cubic feet per day (mmcfd) during the quarter.
• Gas Production: Significant increases in gas output were observed, particularly at fields such as Uch (+58mmcfd QoQ) and Qadirpur (+21mmcfd QoQ).
• Oil Production: Oil production experienced a modest rebound by over 3% QoQ, reaching 34.3 kbpd.

Year-to-Date Earnings

For the first nine months of fiscal year 2024, OGDC’s earnings are expected to remain largely unchanged on a year-on-year (YoY) basis, with projected earnings of PkR166 billion (EPS: PkR38.60/sh). Alongside the earnings, the company is expected to announce a cash dividend of PkR2.5/sh, bringing the total dividends for the nine-month period to PkR6.60/sh, compared to PkR5.80/sh in the same period last year.

OGDC: Income Statement

Summary of OGDC’s income statement for the third quarter of fiscal year 2024:

Item	3QFY24E (PKRmn)	2QFY24A (PKRmn)	3QFY23A (PKRmn)
Net Sales	117,100	115,234	105,913
Royalty	14,021	13,798	12,654
Operating Expenses	32,703	33,224	20,929
Exploration Expenses	2,871	2,395	4,246
Operating Profit	60,746	59,589	61,233
Finance Cost	1,723	1,750	1,201
Finance Income	12,546	11,018	37,446
Other Charges	3,871	3,797	5,251
PAT	42,713	74,258	64,627
EPS-Adjusted	9.93	17.27	15.03
DPS-Adjusted	2.50	2.50	1.80

Conclusion

In conclusion, OGDC’s third-quarter results reflect a decline in profitability compared to the previous quarter and the same period last year. However, the company has shown improvement in hydrocarbon production, particularly in gas output. Investors will be keen to see how OGDC navigates through the challenges in the oil and gas industry in the upcoming quarters.

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Disclaimer:

The information in this article is based on research by AKD Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.