Oil & Gas Development Co profit in the second quarter of current fiscal year might show a rise of 11 percent compared with first quarter because of boost in production and rise in crude oil prices.
OGDC is expected to announce its 1HFY04 results on February 25. OGDC had announced an after-tax profit of Rs 4.7 billion, or 1.09 rupees a share during 1QFY04.
The profit was same as for 1QFY03. Higher exploration cost during 1QFY04, due to aggressive exploration, mitigated the impact of strong crude oil prices and higher gas volumes on company's bottom line.
"During 1HY04, we expect OGDC to announce an after-tax profit of Rs 9.8 billion or Rs 10 billion or 2.28 rupees or 2.33 rupees a share," said Mohammad Sohail, head of research of Investcapital Securities.
The comparable last year numbers were not available as the company was not listed at that time.
"But we believe that 1HFY04 would be better due to higher gas production in winter, especially in 2QFY04. E&P companies schedule different field closures in such a manner to optimise gas production during winter months, due to higher gas demand. We expect the company will not announce interim dividend.
OGDC has already paid an interim dividend of Re 1.0 during 1QFY04."
Mohammad Fawad Khan, research analyst from First Capital Equities said that OGDC second profit to be around Rs 5.226 billion.
The 11 percent improvement is due to modest increase in production of gas and oil, continuation of higher oil prices.
The international oil prices remained high due to prolong winter season in the west resulting in depletion of strategic reserves held by some countries and decline in oil supplies from Iraq. "We expect the company to pay 10 percent second interim dividend", he said
OGDCL has acquired five new exploration blocks during FY04. Out of these, four blocks (Dhudial, Rachna, Saruna, Zamurdan) were acquired in onshore. With its acquisition of exploration block in Indus Delta, OGDCL has become the third company after Shell and Total to venture into offshore exploration. With these five blocks, OGDCL total exploration blocks have increased to 21.
Higher crude oil prices bodes well.