Karachi, February 22, 2023 (PPI-OT): Oil and Gas Exploration Companies – Oil and Gas Development Company Limited

Earnings: Oil and Gas Development Company Limited (OGDC) announced it 2QFY23 result. The Company reported 2QFY23 earnings of PKR 41.71bn (EPS PKR 9.70), up by +18%y/y compared to PKR 35.25bn (EPS PKR 8.20) in the similar period last year. On quarterly basis, profitability is down by 22%y/y. This brings total 1HFY23 profitability to PKR 95.01bn (EPS PKR 22.09), up by +38%y/y.

Dividend/Payout: The Company announced cash dividend of PKR 2.25/share along with the result bringing total cash payout for 1HFY23 to PKR 4.0/share.

Operating Performance: During the period under review, OGDC reported +22%y/y increase in revenue during 2QFY23 on the back of rise in average oil prices and PKR depreciation against greenback. However, earnings growth was limited by lower oil and gas production, lower other income, higher operating expense and exploration cost. Exploration cost increased by +11%y/y to PKR 5.10bn during 2QFY23 likely owing to higher prospecting expense and dry well cost. Operating expenses increased by +11%y/y to PKR 21.12bn during 2QFY23 compared to PKR 17.79bn in the similar period last year. Other income declined by 11%y/y during 2QFY23 likely owing to lower exchange gains despite higher interest income. On quarterly basis, earnings dropped by 22%y/y mainly due to lower other income and higher exploration cost. Effective tax stood at 35.5% during 2QFY23 (1QFY23: 39.6%) compared to 33.4% in the same period last year bringing total effective tax rate for 1HFY23 to 37.8% compared to 34.5% in the corresponding period last year.