Shams ul Nisa

The Pakistan Petroleum Limited (PPL) is facing significant headwinds following a reported decline in sales revenue in the first quarter of FY2025 due to natural reductions in gas supply, according to WealthPK.

According to the company’s financial results on the Pakistan Stock Exchange (PSX), the net sales revenue fell sharply from Rs77.45 billion to Rs66.18 billion, reflecting a decrease of Rs11.27 billion compared to the same period last year. Hence, the company posted a 20.42% decline in net profit, translating to an earnings per share of Rs8.67 in 1QFY25 compared to Rs10.89 in the same quarter last year.

Established in Pakistan in 1950, the company’s primary goals are exploring, prospecting, developing, and producing oil and natural gas resources. The reduction in sales volumes is attributed to the natural decline of existing fields and curtailments imposed by the Sui Northern Gas Pipelines Limited (SNGPL). Specifically, the lower sales from key fields such as Sui, Kandhkot, Tal, Nashpa, and Latif have contributed significantly to this downturn during the review period.

According to the financial results, during 1QFY25, the PPL faced challenges from the rupee’s appreciation against the US dollar, which affected the pricing structures of the petroleum industry. Additionally, the average international crude oil price saw a decrease from US$88 per barrel to US$79 per barrel, further exacerbating financial strain on the company during the quarter.

Hence, the results indicate that the share of natural gas in sales fell to 46,245 million standard cubic feet per day (MMscf) in 1QFY25 from 52,844 (MMscf) in the quarter the previous year. In addition to the drilling challenges, the share of production volumes in sales has decreased, with the crude oil volume in sales down by 7.99% and liquefied petroleum gas (LPG) reduced by 14.64% compared to the previous year.

The company posted a total of 986,046 barrels (BBL) of crude oil and 24,918 million tons (M. Ton) of Liquefied Petroleum Gas, reflecting the ongoing difficulties in maintaining output levels. Despite these obstacles, the PPL remains committed to strengthening its operations by investing in advanced technologies and expanding exploration efforts. The company has successfully commenced production from newly discovered wells in Gambat South and Kirthar fields, which are expected to boost future sales performance.

Additionally, the PPL is working closely with the regulatory authorities and stakeholders to address the challenges of the current market landscape. With the CPI inflation showing a downward trend and the policy rate cut, the company is optimistic about improved market conditions that could help stabilize sales volumes in the coming months.

Credit: INP-WealthPk