PPL – Earnings remain lifted

Pakistan Petroleum Limited (PSX: PPL) recently announced its financial performance for 1QFY24, and the growth in earnings continued. The oil and gas giant posted its highest-ever quarterly earnings with a year-on-year growth of 11 percent. The growth revenues and profits in first quarter of FY24 were primarily driven by higher prices as well as weaker domestic currency.

PPL’s topline grew by 6.7 percent year-on-year due to higher Sui wellhead gas prices that were up by 4 percent year-on-year. The accretion in topline was also supported by 23 percent depreciation of PKR against the US Dollar. On the production front, the oil and gas flows remained weak; both were down by around 5 percent year-on-year. However, sequentially, PPL witnessed a growth in hydrocarbon production. Oil production was up by 18 percent quarter-on-quarter, while gas production was up by three percent quarter-on-quarter. PKR also witnessed appreciation against the greenback on a quarter-on-quarter basis. This resulted in growth of 7 percent for PPL, on a quarter-on-quarter basis.

On the expenses side, the exploration and prospecting expenditure that accounted for three percent of the total revenue in 1QFY24 was up by 35 percent year-on-year. Other income was down by 23 percent year-on-year, which is attributable to lower exchange gain on foreign currency. However, on a sequential basis, PPL witnessed a growth in other income, which was up by 42 percent quarter-on-quarter.

Going forward, the remaining of FY24 looks sanguine for the oil and gas exploration and production sector especially for gas-heavy companies like PPL due to the gas price increase, which will help the company’s revenues, exploration and drilling activities, cash flows and eventually dividends.