OGDC posts quarterly profit decline amid oil price slump

Oil & Gas Development Company (OGDC) posted a net profit of PKR 47.14 billion ($167 million) for the quarter ended March 31, 2025, reflecting a 1.4% decline from PKR 47.8 billion in the same period last year. Earnings per share (EPS) stood at PKR 10.96, compared to PKR 11.12 previously.

The company's financial results came in line with market expectations, with earnings stagnating due to a 6% drop in oil prices and lower hydrocarbon production, which fell by 4% for oil and 13% for gas.

OGDC announced a cash dividend of PKR 3.0 per share, adding to the PKR 7.05 per share interim dividend paid earlier.

CEO Ahmed Hayat Lak attributed the decline in hydrocarbon production to forced curtailment by Sui Northern Gas and United Petroleum. "Moreover, lower crude oil basket prices, averaging $76.51 per barrel against $83.47 per barrel last year, combined with unfavorable exchange rate variance, exerted downward pressure on the company's financial performance," Lak said in a directors’ review.

Despite the downturn, sequential earnings growth was supported by a lower effective tax rate of 30%, compared to 41% in the previous quarter.

Sales revenue dipped 7.4% year-over-year to PKR 104.5 billion, down from PKR 112.8 billion. Exploration costs surged 95% to PKR 6.78 billion, reflecting heightened spending compared to PKR 3.47 billion in the prior-year period.

Security constraints impacted seismic activities, leading to delays in operations at Orakzai and Bettani blocks, as well as partial disruptions in Suleiman and Killa Saifullah blocks, the company noted.

On the drilling front, OGDC spud four wells in the nine months of fiscal year 2025, including three exploratory/appraisal wells—Chak 2022A, Baragzai-1, and Faakir-1—and one sidetrack well, Chak 2-2. Additionally, drilling and testing work for seven wells carried over from the previous fiscal year was completed.

OGDC trades at a forward price-to-earnings ratio of 5.0–5.5x, below the market average of 6.5–7.0x. Looking ahead, partial resolution of circular debt remains a key upside trigger, though continued weakness in oil prices—down more than 15% in the fourth quarter—poses a risk to earnings.