Oil and Gas Development Company’s (OGDC) profit contracted 23.8% to Rs18.9 billion in the quarter ended December 31, 2020 mainly on the back of a sharp fall in other income.

According to a notice sent to the Pakistan Stock Exchange on Wednesday, the oil and gas exploration firm had reported a profit of Rs24.8 billion in the same period of 2019.

Accordingly, earnings per share (EPS) of the firm fell from Rs5.76 in October-December 2019 to Rs4.39 in October-December 2020.

Alongside the result, the company announced a second interim cash dividend of Rs1.6 per share. This takes the half-year dividend to Rs3.6 per share. Net sales of the company dropped 14.9% to Rs54.6 billion in the October-December 2020 quarter against Rs64.2 billion in the final quarter of 2019.

“Net sales plunged, which was attributable to a 5% year-on-year drop in oil and gas production and 33% fall in oil prices,” Arif Habib Limited analysts Tahir Abbas and Iqbal Jawaid said in a joint report.

OGDC’s finance cost was recorded at Rs581.7 million during the quarter under review, which was 23% lower than Rs754.9 million in the same period of previous year.

Finance and other income nosedived close to 90% to Rs639.7 million in October-December 2020. The company had received Rs6.1 billion under the head in October-December 2019.

“Other income showed a massive decline on the back of lower interest income along with a higher exchange loss on foreign currency account,” the two analysts said.

On the other hand, exploration and prospecting expenditure dropped from Rs6.5 billion in the final quarter of 2019 to Rs2.3 billion in the last quarter of 2020.

Exploration cost plunged 65% due to only one dry well (Sheen Dund-01) against three dry wells in the same period of previous year, the analysts elaborated. The company booked effective taxation at 33% in 2QFY21 versus 34% in 2QFY20.

During the day, the share price of OGDC decreased Rs2.14 to close at Rs107.51 with 2.3 million shares changing hands at the Pakistan Stock Exchange.

Half-year result

The oil and gas exploration company reported a profit of Rs42.2 billion for the half year ended December 31, 2020. It was 20.5% lower than earnings of Rs53.1 billion recorded in the same period of 2019.

During the six-month period, the EPS came in at Rs9.82 against Rs12.35 in the same period of previous fiscal year.

Published in The Express Tribune, February 25th, 2021.

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