KARACHI: The exploration and production (E and P) sector is projected to experience a 14% year-over-year decline in earnings for the third quarter of fiscal year 2025, according to a recent analysis by AKD Securities Limited. This anticipated downturn is primarily attributed to reduced hydrocarbon production caused by supply curtailments, alongside decreased oil and wellhead gas prices. The quarter also witnessed one dry well, further impacting production levels.

Arab Light crude prices contracted by 7% compared to the previous year, averaging $78.3 per barrel during the quarter. This decline is largely due to weakening global demand, which has put additional pressure on the sector's earnings.

Despite these challenges, there is a positive outlook for future capital expenditure in the E and P sector. The sector is expected to see a resurgence in activity, driven by improved gas collection ratios. These improvements come in the wake of significant tariff hikes over the past 24 months, with average consumer tariffs having tripled since June 2022.

In light of these developments, AKD Securities Limited has issued a 'BUY' recommendation for key players in the sector, including Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), and Pakistan Oilfields Limited (POL). The target prices for December 2025 are set at PKR 372, PKR 281, and PKR 800 per share, respectively.