Oil and Gas Development Company Limited announced its financial performance for FY24, and the E&P giant demonstrated significant revenue growth in FY24, despite challenges that impacted profitability. The company’s performance was characterized by increased production in key areas, ongoing exploration success, and notable progress in development projects. However, rising operating expenses and declining gas production posed challenges.
A 2 percent year-over-year increase in oil production and the favorable impact of the Pakistani rupee’s devaluation against the U.S. dollar drove OGDC’s 12 percent year-over-year revenue growth in FY24. However, in FY24, realized prices for crude oil dropped 4.3 percent year-on-year. The company’s gas production dropped by 6 percent, while the LPG production remained stable in FY24. The decline in gas production was mainly due to reduced intake, which impacted output from major fields.
Throughout the year, the company’s profitability showed a 7 percent year-on-year decline. Despite this decline, gross profit saw a rise of 5 percent year-on-year in FY24, though operating expenses rose sharply due to increased costs related to rent, taxes, and the amortization of production assets. These higher costs significantly impacted the company’s profitability. The company’s declining gross profit margins reflected this.
Exploration costs saw a decline, dropping 34 percent year-on-year due to reduced costs for dry wells. During FY24, OGDC spud 13 wells, including 7 exploratory and 6 development wells, and made 5 new discoveries.
However, the non-operating income experienced a sharp decline of 73 percent year-on-year during the year, primarily driven by exchange losses and the absence of one-off gains that benefited the previous year. Overall, the net profit margin stood at 45 percent for FY24 versus 54 percent in FY23.
The E&P sector is facing the challenge of aging fields. The OGDC encountered operational challenges as a result of the same factor. System constraints and decreased demand from power companies also had an impact on gas production. However, the company remains optimistic about its exploration-driven growth strategy, as well as future projects like the Bettani Field Development and the Reko Diq Mining Project. The company declared a final cash dividend of Rs4 per share, bringing the total dividend for FY24 to Rs10.10 per share.
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