Karachi: The energy and power sector is poised for a significant downturn, with earnings anticipated to decline by 39% this quarter compared to the same period last year. Key factors contributing to this decline include the absence of tax breaks, reduced hydrocarbon production due to supply constraints, lower average oil prices, and the impact of two unsuccessful drilling projects.

According to a statement by AKD Securities Limited, the sector is grappling with the effects of two dry wells during this quarter. The Kandewaro-1 well, fully owned by the Oil and Gas Development Company Limited (OGDC), and the Zarghun South-5 well, with a 75% stake held by Mari Petroleum Company Limited, have contributed to the sector's challenges, marking an increase from one dry well in the same period last year.

Despite these setbacks, the sector may find relief from recent liquidity improvements and regulatory amendments. These changes allow for the sale of gas to third parties, potentially providing the financial stability needed to navigate these challenging times.