Oil & Gas Development (OGDC): 4QFY18 EPS Rs5.1, +35% YoY (+9% QoQ); DPS Rs 2.5/share (In line with expectations)
- OGDC reported earnings of Rs22bn (EPS Rs5.1/share) in 4QFY18, up 35% YoY, in line with our estimates. The company also announced cash dividend of Rs2.5/share.
- The company’s net sales were up 27% YoY during the outgoing quarter thanks to 1) higher Arab Light oil prices, up 48% YoY and 2) PKR devaluation against the greenback, providing support to dollar linked revenues.
- However, oil production posted around 5% YoY decline in 4QFY18 where production flows from Nashpa field (28% of OGDC’s oil production) fell 12%, owing to short lifting of crude oil by refineries during Nov-Dec 2017 and natural depletion of the field.
- While Kunnar gas field production (~12% of total gas flow) was up 44% YoY during the outgoing quarter, decline in Nashpa and Qadirpur (cumulatively ~26% of total gas flow) led to flat gas production.
- The company booked exploration charges of Rs5bn, up 73% YoY during the outgoing quarter, mainly on account of dry well cost, we believe.
- Other income and share of profits from associates which were up 38% and 107% YoY, respectively, supported the company’s bottom-line.
- Increase in other income was mainly on the back of higher interest income and exchange gain, while improvement in profitability of Mari Petroleum (MARI) supported profits from associates, we believe.
- We flag 1) volatility in international oil prices, 2) lower than expected hydrocarbon production and 3) significant exploration and development cost as key risks for OGDC.
Oil and Gas Development Company is a petroleum exploration and production (E&P) company in the Pakistan oil and gas sector. Co.'s principal activity is to explore, develop, produce and sell oil and gas resources and related activities. Co. also manufactures Gas, Liquefied Petroleum Gas, Crude Oil, and Sulphur. Co.'s major fields contributing in the aforesaid production of crude oil include Nashpa, Kunnar/KPD, Pasakhi, Sinjhoro and Rajian and for gas include Qadirpur, Uch, KPD, Nashpa and Dakhni. Co. carries out exploration and development activities on its own as well as in joint ventures with other oil companies.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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