Dear Clients,

Oil & Gas Development Company Limited (OGDC) announced its financial results for 2QFY21 with earnings clocking in at PkR18.8bn (EPS of PkR4.39), undershooting our estimates and street consensus of PkR4.6/sh by 6%. Earnings are lower as a function of lower output and depressed prices.

– Earnings are down on sequential basis by 19% Q/Q. We note a steeper fall of 27% Y/Y in profitability. Last year during the same period, OGDC reported profits of PkR25.9bn (EPS of PkR6.02).

– The company announced an interim cash payout of PkR1.6/sh taking total payout to PkR3.6/sh for 1HFY21.

– Total profitability for 1HFY21 to PkR42.2bn (EPS of PkR9.82/sh) lower by 21% Y/Y compared to PKR53.1bn (EPS of PkR12.37) in the same period last year.

– Revenue for 2QFY21 stood at PkR54.6bn down by 8% Q/Q on the back lower oil and gas production along with 31% Y/Y lower oil prices. On a cumulative basis, revenues stood at PkR111.0bn, a reduction of 17% Y/Y.

– Operating expenses stood at PkR16.4bn, higher by 5%Y/Y but lower by 5% Q/Q. Royalty expenses saw an 8% Q/Q attrition. Overall the company recorded gross profits at PkR31.4bn down 11% Q/Q and 28% Y/Y. 1HFY21 gross profits stood at PkR64.0bn.

– Exploration expenses stood at PkR2.3bn, dropping by 87% Y/Y owing to lower costs on dry well and prospecting expenditure. This helped the company stem earnings dip.

– Notable decline in other income to 0.6bn, down 87% Y/Y and 81% Q/Q is attributable to likely exchange losses incurred and lower income from cash balances.

– The company has restated its financials with notable restatement of revenues and concurrent changes in other income. We await guidance from management and release of accounts to get clarity on the matter.

Regards,
KASB Research