Finally, Pakistan Petroleum Limited (PSX: PPL) announced itsFY16 financial performance, and to no ones surprise, the oil and gas exploration and production company posted a decline in earnings for the year bitten largely by low crude oil prices.
The E&P giant just announced its FY16 financial result as it had gotten approval from the SECP for an extension in the period for holding its 75th Annual General Meeting, which the SECP had directed to be held by 28th February 2017.
The firm saw a decline in its topline by 24 percent, year-on-year, which came basically from 44 percent year-on-year plunge in average oil price (i.e. from $73 in FY15 to $41 in FY16). While heightened exploration and production activity is a good sign, it also increased the field expenditure for the firm in FY16. PPL also witnessed a decline in its other income due to a declining the short-term investments. All these factorscontributed to lower bottomline for PPL, which was down by 55 percent year-on-year.
The company announced higher dividends this time around; it announced a final dividend of RSR3.5 per share in addition to an interim dividend of Rs2.25 per share, taking dividend payout to 66 percent in FY16 compared to 44 percent in FY15. Besides, the firm also approved and recommended the payment of Rs0.75 per share on convertible preference shares.
Along with its profit and loss statement for FY16, PPL also informed its shareholders that its FY13-FY15 financial statements were restated. As per the notice to the stock exchange, the company acquired 100 percentshareholding of MND Exploration and Production Limited incorporated in England and Wales back in 2013 and during FY16, the BoD of the company engaged external consultants to undertake an independent technical valuation of the investment to determine the accuracy of the valuation based on the data available and used for due diligence at the time of the acquisition.
PPL has been an aggressive exploration and production firm; and it has continued its fervor in FY16 as well. Boost to the bottomline will come from a turnaround in crude oil prices, and we might see that in 1QFY17 performance as oil prices have changed route. Positives prospects overweigh negativities; revision of Suis pricing formula is likely to raise gas price by 89 percent from FY18 providing significant lift to earnings as per AKD Securities. Also, incremental flows are expected from Tal and Nashpa block, which would increase its overall production.
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