MARI keeping it stable

The oil and gas exploration and production sector is set to benefit from the high in oil prices, after a significant price shove in FY2. Rising oil prices along with short term gains from currency depreciation are key drivers for growth for OGDCL, PPL and POL that have foreign currency cash reserves. However, Mari Petroleum Company Limited (PSX: MARI), which is one of the largest E&P companies and also the second largest in natural gas production, benefitted little from it where its gas wellhead prices during the first quarter of FY22 dropped by one percent.

The decline in gas wellhead prices was, however, offset by rise in gas production. With a share of 21 percent in the country’s gas production, Mari’s gas volumes grew by one percent year-on-year. The oil production for Mari Petroleum was up by over 60 percent year-on-year. This is the trend that continued for MARI from FY21 where after a challenging FY20 for the oil and gas exploration and production companies due to depressed oil prices and weak production flows from COVID pandemic, FY21 brought improvement for MARI in its volumes. MARI’s gas production in FY21 was up by 8 percent year-on-year during the year. Its oil production was up by 19 percent year-on-year with 4QFY21 showing significant growth.

Mari Petroleum’s revenue for 1QFY22 was up by 2 percent year-on-year, while its bottom-line was flat at Rs9 billion. Exploration and prospecting expenditure was another factor in restricting earnings growth for MARI. The E&P expenses grew by 43 percent year-on-year during the quarter due to a dry well reported, which also increased exploration expenses’ share in total revenue from 6 percent in 1QFY21 to 8.4 percent in 1QFY22. Mari also recorded other income of Rs18 million in 1QFY22 against other expense of Rs507 million in 1QFY21, which a research note by Arif Habib claimed was owed to higher income from the seismic unit.