Karachi: Pakistan's exploration and production (E&P) sector recorded a substantial increase in earnings during the fourth quarter of fiscal year 2026, driven primarily by the reversal of a super tax levy. Earnings in the sector surged 2.5 times year-on-year and 2.3 times quarter-on-quarter, reaching Rs214 billion, bringing the full-year earnings to Rs459.8 billion, a 31% year-on-year increase.

According to JS Global, the sector benefited from a tax reversal amounting to Rs54.9 billion in the fourth quarter, following a decision by the Federal Constitutional Court on super tax levies. Concurrently, net sales for the sector rose by 54% year-on-year to Rs307.4 billion, largely due to a 52% increase in oil prices as Arab Light crude averaged US$103.96 per barrel compared to US$68.61 in the same quarter of the previous year.

The report also highlighted a rise in exploration costs, which increased by 77% year-on-year and 82% quarter-on-quarter, amounting to Rs26.2 billion in the fourth quarter. For the fiscal year, exploration costs reached Rs61.8 billion, marking a 2% increase year-on-year with five dry wells reported.

In terms of dividends, the sector disbursed a total of Rs166.5 billion, a 26% year-on-year increase. Major contributors included OGDC, PPL, POL, and MARI, with OGDC reporting a 3x earnings growth and announcing a cash dividend of Rs6.0 per share for the fourth quarter. PPL and MARI also reported significant earnings growth, with PPL announcing a cash dividend of Rs6.0 per share and MARI Rs18.7 per share. POL's earnings rose by 62% year-on-year, with a cash dividend of Rs72.5 per share for the fourth quarter.

The report concludes with a positive outlook on the Pakistan E&P sector, maintaining an overweight stance.