Karachi: Pakistan's oil and gas exploration companies are poised for a significant increase in profitability in the fourth quarter of fiscal year 2026, with earnings expected to surge by 26% quarter-on-quarter. This growth is attributed to reduced supply curtailments and rising oil prices. According to JS Global, the exploration and production (E&P) sector is projected to post a 12% year-on-year increase in earnings, driven by increased domestic output amid constraints in liquefied natural gas (LNG) supply.
The country's total oil and gas production averaged 70,300 barrels per day, a 22% rise year-on-year, and 3,045 million cubic feet per day, up 12% from the previous year. Sequentially, oil production increased by 9%, and gas production rose by 3% in the fourth quarter. Geopolitical tensions and supply disruptions have pushed crude oil prices higher, with the Arab Light crude averaging around $104 per barrel. The temporary halt in LNG imports allowed local E&Ps to boost production from previously curtailed fields, further supporting overall output.
Among the companies, Oil and Gas Development Company (OGDC) is expected to report earnings of Rs12.1 per share, a 10% year-on-year and 23% quarter-on-quarter increase. Pakistan Petroleum Limited (PPL) anticipates earnings of Rs9.56 per share, reflecting a 35% year-on-year and 25% quarter-on-quarter growth. Mari Petroleum Company Limited (MARI) is projected to see a decline in earnings per share to Rs14.6, impacted by the normalization of the effective tax rate despite higher revenues. Pakistan Oilfields Limited (POL) is expected to report earnings of Rs29.86 per share, up by 14% year-on-year and 20% quarter-on-quarter. Dividends across these companies are also expected, with OGDC, PPL, MARI, and POL announcing Rs6.0, Rs3.5, Rs14.0, and Rs62.5 per share, respectively.
The sector also reported two dry wells, Chak203 and Saidpur, both operated by OGDC, during the quarter. Despite an anticipated 25% increase in operating costs quarter-on-quarter, the sector remains robust, with a maintained overweight stance on the E&P sector by market analysts.