ISLAMABAD: Pakistan Oilfields Limited (POL) has reported significant financial and operational updates in its latest annual report, including the reversal of a super tax and ongoing disputes affecting revenue recognition. The report highlights a reduction in the applicable tax rate and outlines future production plans that are expected to stabilize output levels.

According to JS Global, POL reversed Rs1.7 billion due to a super tax reversal in the fiscal year 2026, resulting in a decrease in the applicable tax rate to 52.53% from 62.72% the previous year. This change is viewed positively for future earnings as the super tax no longer applies. However, the company faces challenges with the ongoing Windfall Levy on Oil dispute over the TAL block, which has prevented the booking of Rs39.2 billion in extra gas price revenue. This amount will be recognized once the legal dispute is resolved in court.

Operationally, the company reported that the Bilitang well in the Tal block has tested approximately 26.5 million cubic feet per day (mmcfd) of gas and is expected to commence production in the second quarter of fiscal year 2027. This production is anticipated to counteract the natural decline from older fields. Additionally, after successfully increasing output from the Minwal-X1 well from 48 to roughly 300 barrels per day (bpd) using an electric submersible pump (ESP), POL plans to implement similar measures at other sites, including Balkassar A-7 and Joyamair.

The report also noted that the appreciation of the Pakistani rupee led to Rs2.6 billion in higher exchange losses during the year. Despite these challenges, JS Global maintains a "BUY" stance on POL, citing its current trading at a forecasted price-to-earnings ratio of 6.7x for fiscal year 2027 and a dividend yield of 12.8%.