MPCL steady in FY16

FY16 was an unimpressive year for the E&P sector in terms of production. Domestic crude oil production was down by around 8.5 percent year-on-year to around 86,000 barrels per day, and domestic natural gas production continued to remain flat at four billion cubic feet per day in FY16. The decline in crude oil production in FY16 was largely due to lower crude oil prices.

However, Mari Petroleum Company Limited (PSX: MPCL) emerged as the out performer in FY16. The E&P player's oil and gas production increased by around seven and three percent, respectively while other key players registered declined outflows.

Though other listed E&P companies are yet to announce their financial performance for FY16. It is likely that MPCL will also outperform the sector in terms of earnings due to better quarterly performance. MPCL's financial performance for FY16 was driven largely by its aggressive exploration; there were around three discoveries in FY16 and Halini Deep was the key one.
Increased hydrocarbon production resulted in 12 percent year-on-year increase in net revenues for MPCL.

The firm's aggressive exploration and production activity can be seen from two times increase in exploration and production expenses. Also, the firm is also working on enhancing its production from Mari gas field, which will increase gas production by at least 10 percent. However, its operating profits dropped by 13 percent in FY16 due to higher exploration and prospecting expenses. Overall, MPCL's earnings saw a seven percent year-on-year increase in FY16.