The oil and gas exploration and production segment is likely to feel the pinch from the declining crude oil price scenario. Pakistan Oilfields Limited (KSE:POL) kicked off the annual results season for the E&P firms last week, depicting a massy decline in it FY15 earnings. The firm announced a final cash dividend of Rs25 per share in addition to an interim dividend of Rs15 per share already paid.
Though the oil volumes have been increasing, the oil and gas firm saw a 13 percent year-on-year decline in its revenues in FY15 primarily because of lower crude oil prices, and decreased gas volumes. Arab light prices witnessed a decline of 33 percent during the period. The oil volumes by the firm are expected to have risen by five percent year-on-year, while the gas volumes shrivelled to nine percent year-on-year.
POL’s gross profit also saw a 14 percent year-on-year drop in FY15 due to the shrinking top line and the rising operating costs. However, the gross margins remained muted due to a sizeable decrease in amortization of development and decommissioning cost.
Firm’s net income for FY15 dropped by 34 percent year-on-year due tight gross profits and rising exploration and finance costs. Exploration cost increased more than twice due to two dry wells write offs. Also a decline in other income pulled down the earnings for the year.
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PAKISTAN OILFIELDS LIMITED (POL)
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Rs (mn) FY15 FY14 YoY
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Net sales 30,881 35,540 -13%
Operating costs 8,726 7,608 15%
Royalty 2,610 3,439 -24%
Amortisation 3,027 5,201 -42%
Gross profit 16,267 19,010 -14%
Exploration costs 4,729 1,710 177%
Other income 1,563 1,823 -14%
PAT 8,459 12,887 -34%
EPS (Rs/share) 35.76 54.48 -34%
Gross margin 53% 53%
Net margin 27% 36%
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Source: KSE Announcement
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