After witnessing a 51 percent growth in bottom-line during FY05, Pakistan Oilfields Limited's (POL's) earnings for FY06 are expected to surge by 72 percent to Rs 6.48 billion, which translates into an earning per share (EPS) of Rs 32.89 as against a PAT and diluted EPS of Rs 3.76 billion and Rs 19.09 respectively.
The financial results (to be announced shortly) are to depict an improvement on the back of the combined effects of greater production of every product and higher energy prices.
The company's production of crude oil and gas during the nine month period ended March 2006 rose by 34 percent and 72 percent to 1.94 million barrels and 13 billion cubic feet respectively, whereas the price of the benchmark Arab Light crude oil rose by 36 percent to 58 dollar per barrel during FY06. As a result, POL's sales revenue is expected at Rs 16 billion compared to Rs 9 billion previously, up 78 percent.
Operating costs of the company are anticipated to increase by 68 percent due to an increase in royalty payments and exploration expenses. Gross profits and margins would consequently stand at Rs 8.7 billion and 54.3 percent, up 87 percent and 254 bps respectively, Jawad Haleem, an analyst at Atlas Capital Markets said.
Being one of the rare debt-free companies, POL employed debt this year to finance its expenditure rather than solely relying on equity. This explains the close to Rs 300 million financial charge anticipated for the year.
The company is expected to distribute a final cash dividend of Rs 7.5 per share, taking the full year pay-out to Rs 15.00 as against Rs 12.5 during FY05.
POL announced a surprise 50 percent bonus issue with its nine months results. "Therefore, we do not expect a stock dividend at the year end", he said. "The scrip is currently trading at a 15 percent discount to our fair value of Rs 410. Therefore, a buy stance is recommended", he added.
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