Exploration companies’ profit surge 31pc

KARACHI: The profit of exploration and production (E&P) companies depicted a surge of 31 percent, clocking in at Rs118 billion for the year ended June 30, 2017.

“The increase in earnings is attributable to a combination of higher prices and hydrocarbon production. To recall, the benchmark average Arab Light prices augmented to $48.40/barrel in FY17 vis-à-vis $40.70/barrel in FY16, up 20 percent,” said Shahbaz Ashraf at Arif Habib Limited. 

Furthermore, oil and gas production of the listed sector improved nine percent and three percent to 68,443bpd and 2,654mmcfd, respectively. Pakistan Petroleum Limited (PPL) delivered the best earnings growth of 107 percent led by retrospective impact of revised pricing of Sui; while Oil and Gas Development Company (OGDC), Pakistan Oilfields (POL) and Mari Petroleum (MARI) depicted earnings growth of six percent, 34 percent and 51 percent, respectively.

During the outgoing period FY17, benchmark for the powerful Organization of the Petroleum Exporting Countries (OPEC), Arab Light, made an intra-year high and low of $55.76/barrel and $38.94/barrel, respectively. Ashraf said that oil price average during 1HFY17 remained lower, at $45.69/barrel as opposed to the levels seen in the latter half, averaging $51.10/barrel.

“Fear of rising crude supply, as well as a stronger US dollar post US presidential election kept prices under check in the former part of the year. Albeit, as conformity by OPEC and non-OPEC to voluntary production cuts set in, prices recovered midway through FY17.”

Pertinently, this marked a brief rally given augmenting US rig count, which continued to surprise commodity markets and; hence, curbed the upside in oil prices.