Oil and gas companies report strong gas sales collections amid price revisions

KARACHI: The latest financial reports from Oil & Gas Development Company Limited (OGDC) and Pakistan Petroleum Limited (PPL) reveal significant improvements in gas sales collections, attributed to timely revisions in consumer gas prices.

According to the June 2024 financials, OGDC’s overdue trade debt related to circular debt has slowed down, with a revenue collection rate of 93 per cent, settling at Rs561 billion, compared to Rs559 billion in March 2024. OGDC’s cash sales have grown by 10 per cent year-over-year (YoY) and 22 per cent quarter-over-quarter (QoQ) in the fourth quarter of FY24. Currently, OGDC’s cash and cash equivalents have climbed to Rs259 billion (Rs177 billion excluding encashed term finance certificates) compared to Rs129 billion in March 2024. Over the last five years, gas sales have represented approximately 42 per cent of OGDC’s total revenue. OGDC holds about 28 per cent of the market share in local gas production.

According to the June 2024 accounts, PPL achieved 100 per cent collection from gas sales in the fourth quarter of FY24. The company was also able to recover Rs1.7 billion of pending receivables, resulting in total receivables of Rs535 billion, down from Rs536 billion in March 2024. Cash sales improved by 45 per cent YoY and 27 per cent QoQ.

PPL’s cash and cash balances have increased to Rs112 billion from Rs79 billion in March 2024. PPL’s gas revenue contributes approximately 64 per cent (five-year average) to its total revenues, and the company holds a 17 per cent share of local gas production.

With the increase in gas revenue collections, the liquidity positions of OGDC and PPL are expected to remain strong, said Muhammad Iqbal Jawaid, an analyst at Arif Habib Limited. He expressed optimism that both companies would offer better pay-outs in FY25, projecting dividends of Rs20 per share for OGDC and PKR 15 per share for PPL.