Karachi: Mari Energies Ltd (MARI) has reported a significant decline in its second-quarter fiscal year 2025 earnings, with Profit After Tax (PAT) falling to PkR11.2 billion, marking a 39% year-over-year decrease. The downturn has been attributed to increased operational expenditures and royalty expenses, causing the company to miss its routine half-yearly dividend for the first time in a decade.

According to a statement by AKD Securities Limited, the company's net sales for the quarter were recorded at PkR41.3 billion, a 9% decrease from the previous year. The decline in sales was primarily driven by reduced hydrocarbon production and a 14% drop in average oil prices. Data from PPIS indicated that both oil and gas production saw year-over-year decreases, estimated at 1.2 kbpd and 772 mmcfd, respectively, for the quarter.

Operating expenses for the quarter surged to PkR15.1 billion, an increase of 115% compared to the previous year. This rise is likely linked to higher amortization charges associated with the abandoned Zurghan South-5 development well, where Mari holds a 75% stake. However, further details on these charges remain forthcoming.

The company's finance income saw a 44% increase, bolstered by a higher cash and short-term investment balance of PkR78 billion as of September 2024, despite a downturn in investment yields. Exploration expenses also rose sharply by 154% to PkR3.7 billion, driven by drilling activities in Spinwarm-1 located in North Waziristan. Other charges decreased by 48% to PkR1.1 billion.

Despite these challenges, Mari Energies benefited from a reduced effective tax rate of 25% during the quarter, compared to 40% in the corresponding period last year.