ISLAMABAD: Pakistan Oilfields Ltd. (POL) has announced a significant rise in its fourth-quarter fiscal year 2026 earnings, reporting a profit of Rs12.4 billion, equivalent to Rs43.69 per share. This marks a 67% increase year-on-year and a 59% rise quarter-on-quarter, surpassing market expectations.

According to JS Global, the earnings exceeded projections due to higher-than-expected revenue and lower exploration costs and tax expenses. For the fiscal year 2026, POL's earnings reached Rs112.45 per share, a 32% year-on-year increase. The exploration costs decreased by 58% to Rs4.7 billion for the year, with fourth-quarter costs at Rs133 million, reflecting a 91% year-on-year and quarter-on-quarter reduction amidst reduced exploratory activities.

Net sales for the fourth quarter stood at Rs20.1 billion, a 64% increase year-on-year and 32% quarter-on-quarter, significantly higher than the expected Rs18.4 billion. For the fiscal year, sales rose 10% to Rs63.0 billion, attributed to increased oil and gas volumes and higher oil prices. The effective tax rate dropped to 19% for the quarter, lower than the anticipated 30%, as the company ceased provisioning for super tax in recent quarters.

Royalty expenses increased by 61% year-on-year to Rs2.1 billion for the quarter, bringing the annual total to Rs7.1 billion, a 10% rise. Operating expenditures saw a substantial increase to Rs3.6 billion due to a previous year's reversal in amortization costs. Other income fell by 11% year-on-year to Rs2.9 billion for the quarter, with an annual decrease of 33% to Rs9.7 billion.

POL declared a cash dividend of Rs72.50 per share for the fourth quarter, leading to a full-year dividend of Rs100.00 per share, an 89% payout ratio for fiscal year 2026. The company is recommended as a buy, trading at a forward price-to-earnings ratio of 6.7x for fiscal year 2027 and offering a dividend yield of 13%.