Islamabad: Pakistan Oilfields Ltd (POL) experienced a substantial 74% year-over-year decline in its first-quarter profits for FY25, primarily due to significant losses associated with a dry exploration well in the Chakwal region. The company announced a profit after tax of PkR 2.57 billion, translating to an earnings per share of PkR 9.0.

According to AKD Securities Limited, POL’s revenue also decreased by 7% year-over-year to approximately PkR 15.4 billion during the quarter. This reduction was largely due to a 10% drop in oil prices and a 6% decrease in crude output. The most notable impact on the company’s financials came from a sharp rise in exploration expenses, which increased nearly elevenfold year-over-year due to costs incurred from the unsuccessful Balkassar Deep-1A well, initially spud in April of the previous year.

Other income for the quarter fell by 23% to PkR 3.7 billion, affected by reduced cash balances and lower investment yields. The company’s operating expenses rose by 12%, mainly due to increases in administrative costs, while the effective tax rate climbed to 45% from 30% in the same period last year.

Given these challenges, AKD Securities has maintained a ‘HOLD’ recommendation on POL’s stock, with a target price of PkR 600 per share by June 2025, and anticipates a dividend yield of 15% for the fiscal year.