POL in 9MFY25
Pakistan Oilfields Limited (PSX: POL) reported a substantial decline in profitability for the nine months ended March 31, 2025, reflecting broader challenges facing the upstream oil and gas sector. The company posted a profit after tax decline of 44 percent in 9MFY25. The primary drag on earnings was the recognition of over Rs7 billion in exploration expenses related to the unsuccessful well, coupled with lower hydrocarbon sales volumes and a drop in average realized oil prices. Net sales declined 11 percent year-on-year in 9MFY25 as both crude oil and gas production fell by 6.4 percent and 12.2 percent, respectively. Increased pipeline pressures from the gas distribution company and subdued demand contributed to these lower production figures.
The financial performance in the 3QFY25 also mirrored this downward trend. POL recorded a quarterly profit decline of 47 percent year-on-year. Revenues during the quarter fell by11 percent year-on-year, driven by an 8 percent fall in oil production and an 18 percent drop in gas output. These operational setbacks were compounded by a 28 percent decline in other income, which fell by 28 percent year-on-year in 3QFY25 due to reduced interest earnings amid declining policy rates and lower investment yields. Exploration costs surged to over a billion rupees during the quarter, nearly 4.5 times higher than the same period last year, reflecting intensified geological and seismic activity.
Despite the earnings pressure, POL maintained strong operational momentum in its exploration and development activities. Drilling continued across key assets, while the company also continued to process seismic data across a wide range of fields and secured new acreage in the Sindh region.
At the sectoral level, POL's performance reflects the broader dynamics in Pakistan's E&P industry, where oil and gas production contracted by 11 and 7 percent respectively in 9MFY25. Nonetheless, a recovery appears to be taking shape, fuelled by recent gas price rationalizations, improved receivables, and renewed government focus. Although the company's financial performance was underwhelming, its continued investment in new reserves, coupled with a healthy liquidity buffer of over Rs100 billion, positions it well to benefit from a potential upturn in the E&P cycle.
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