Ayesha Mudassar

The Oil and Gas Development Company Limited (OGDC), the country's leading state-owned oil and gas firm, posted increases in revenue, gross profit, and net profit during the nine months (July-March) of the ongoing Fiscal Year 2023-24 compared to the corresponding period of the previous fiscal, reports WealthPK. During 9MCY24, the company pushed its revenue up by 13% from Rs309 billion to Rs348 billion. Likewise, the gross and net profit grew by 3% and 7%, respectively, during the period under review.

The earnings per share (EPS) for the nine months of FY24 stood at Rs39.78, representing a 7% rise compared to the same period last year. The rising EPS suggests an increase in the company's earnings available to the shareholders per share. During the nine months, the company paid Rs68.4 billion in taxes, while on the exploration and development side, it made significant progress in seismic efforts and drilling activities.

Financial position as of March 31, 2023

The analysis of the company's financial position showed a growth of 4% in its non-current assets during the nine months ending March 31, 2024, compared to 9MFY23. This rise indicates the company's investment towards enhancing its production capacity and overall operations.

Moreover, the current assets rose by 12% to Rs1,074 billion in 9MFY24 from Rs959 billion in 9MFY23. This was the result of a rise in trade debts and short-term prepayments. During 9MFY24, the non-current liabilities and current liabilities decreased by 1% and 5%, respectively, compared to the corresponding period of FY23.

Financial performance over the six years

During the years under consideration, the company's top line slid once, i.e. in 2020. However, its bottom line witnessed a decline in 2020 and 2021. In 2019, the company's revenue increased by 27% year-on-year (YoY) on account of higher oil and gas prices. Likewise, the bottom line expanded by 57% YoY, primarily due to the rise in the average exchange rate and an increase in other income. However, profitability in the year was partially impacted by the increase in amortization expenses. The fiscal year 2020 was slow in general. Owing to the outbreak of Covid-19, the company witnessed a reduction in its topline and bottom line. The absence of exchange gains restricted other income growth and increased expenses, which in turn impacted the net profit.

After a dip in 2020, the top line of OGDC regained momentum in 2021 and grew by 2.6%. Along with the increase in crude oil and LPG production volumes, the rise in average prices for natural gas was the driving factor for the revenue growth. However, the profitability during the year was affected by higher operating expenses and lower interest income. In FY22, the company's revenues increased by 40% YoY due to a surge in oil prices and domestic currency depreciation. Apart from the rise in topline, the growth in OGDC's bottom line was also due to hefty exchange gains from currency depreciation. The company's profit before and after tax jumped by 80% and 46%, respectively, during the year. The year 2023 experienced a staggering 68% YoY growth in its bottom line. The robust profit growth was the consequence of improved sales volume as well as price optimization strategies.

Company profile

OGDC, a national oil and gas company of Pakistan, was established in 1961 as a public sector corporation before being converted to a public limited company in October 1997. Its primary operations involve exploration, drilling operation services, production, reservoir management, and engineering support. The company remains steadfast in its commitment to harnessing innovative technologies and best practices to further enhance production capabilities, contribute to the nation's energy needs, and fuel economic growth.

Targets for the Fiscal Year 2023-24

During the Fiscal Year 2023-24, the company has planned to drill 16 new wells, including nine exploratory, and six developmental wells. The net capital expenditure is estimated at Rs98.30 billion.

Credit: INP-WealthPk