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WEEKLY
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| PPL profit up 15pc in third quarter |
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Tuesday, April 28, 2009
By our correspondent
KARACHI: Pakistan Petroleum Limited (PPL) on Monday announced a 15.24 per cent increase in year-on-year profit for the third quarter (Jan-Mar 2009) on the back of higher price of gas produced from its different wells.
PPL, the country’s second largest petroleum production company, is also expected to post higher profit for the full year which ends in June because of lagging effect of a gas pricing formula linked with international oil price, analysts say.
“This result is in line with our expectations,” said Hamad Aslam of BMA Capital. “Going forward, we expect higher earnings in the fourth quarter as well.” After tax profit of PPL surged to Rs7.195 billion in the Jan-Mar quarter compared to Rs5.678bn in the same period of previous year. Sales jumped over 31pc to Rs15.7bn from last year’s Rs11.9bn.
Oil and Gas Development Company, the largest oil and gas producer, announced a 3.2pc year-on-year increase in its third quarter earnings last week.
As compared to other companies relying on crude oil, PPL derives most of its revenues from the sale of gas. Gas prices, which are revised biannually in January and July, are calculated on the basis of international oil price for preceding six months.
The current pricing regime for different fields is based on average of $99 per barrel. But crude oil price from December 2008 up to March 2009 came down to $43 per barrel, according to data compiled by BMA.
A sharp decline in international oil price to $51 per barrel now from the high of over $140 per barrel in July 2008 will push down earnings of petroleum producing companies. However, analysts said, its negative effect would be neutralised to some extent in the case of PPL.
BMA’s Aslam said he was looking at a decline in PPL’s profit in the first half (July-Dec 2009) of next fiscal year. “But it will not be as substantial as the decline in oil price itself. This is because these companies get sale proceeds in dollar, which has appreciated against the rupee.” PPL is also facing a continuous decline in production from its key Sui field. However, Faraz Farooq of First Capital Equities said the company had been able to mitigate that depletion with production from new fields. “Importantly, the price of gas which is being produced from newer fields is higher than that of Sui,” he said.
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ISSN 1563-9479 
