Karachi: Oil and Gas Development Company (OGDC) has reported a 16% year-on-year decline in earnings for the second quarter of fiscal year 2026, with earnings per share dropping to Rs8.07, in line with industry expectations. The company’s half-year earnings per share now stand at Rs16.98, reflecting an 11% decline from the previous year.
According to JS Global, OGDC's net sales for the quarter were Rs96.6 billion, marking a 4% year-on-year decrease, although remaining flat quarter-on-quarter. The decline is attributed to reduced gas production due to the Annual Turnaround Activity at the Uch gas field. Royalty expenses rose by 3% year-on-year to Rs11.9 billion, maintaining a 12% share of net sales, consistent with historical averages.
Exploration costs surged to Rs8.8 billion, more than doubling year-on-year and nearly tripling quarter-on-quarter. This increase was due to dry wells at Khatian and Jakhro North. Operating expenditures rose significantly by 38% year-on-year to Rs36.9 billion, with costs per barrel of oil equivalent increasing to US$10.3 from US$7.0 in the previous year.
Finance and other income fell by 29% to Rs14.7 billion, driven by reduced interest income. The effective tax rate decreased to 29%, compared to 43% in the same quarter last year. Notably, the company’s recovery ratio improved to 130%, up from 105% in the previous year, attributed to better recoveries from Sui companies.
OGDC declared a cash dividend of Rs4.25 per share for the quarter, bringing the half-year payout to Rs7.75 per share, which translates to a 46% payout ratio, an increase from 37% in the previous half-year. JS Global maintains a buy recommendation on OGDC, noting the company’s current trading at a price-to-earnings ratio of 8.6x for FY26E and 6.3x for FY27F.
The post OGDC Reports 16% Decline in Quarterly Earnings Amid Production Challenges appeared first on Pakistan Business News.