The earnings of the Exploration and Production (E and P) sector are projected to decline by 39% year-on-year for the second quarter of FY25, impacted by several industry-specific challenges.
According to a statement by AKD Securities Limited, the anticipated decline in earnings is attributed to the absence of tax breaks compared to the same period last year, reduced hydrocarbon production due to supply constraints, lower average oil prices, and the presence of two dry wells during the quarter. The listed sector has reported the dry wells as Kandewaro-1, operated entirely by OGDC, and Zarghun South-5, operated by MARI with a 75% stake.
The report highlights that the sector is also dealing with lower production levels, which is a significant factor in the expected decline in earnings. Despite these challenges, the sector is seeing potential for financial improvement due to enhanced liquidity conditions and recent amendments that permit the sale of gas to third parties. These changes are anticipated to provide the E and P sector with much-needed financial stability in the future.