Pakistan’s oil and gas exploration sector is projected to experience a significant 15 per cent year-on-year decline in profitability during the second quarter of the fiscal year 2026, primarily driven by a combination of falling gas production and weaker international oil prices.
According to analysis from JS Global today, a 4 per cent year-on-year drop in gas production to approximately 2,732 million cubic feet per day (mmcfd) is a key factor impacting the sector”s outlook. This was exacerbated by a 13 per cent decrease in the price of Arab Light crude, which averaged US$65.37 per barrel during the quarter.
The report indicates that while oil production saw a modest increase of 2 per cent to an average of 64,700 barrels per day (bpd), this was insufficient to counteract the negative financial pressures. Profitability is expected to be further suppressed by a sharp 48 per cent YoY fall in other income, attributed to the absence of one-off gains seen in the previous year and a lower interest rate environment.
On a sequential basis, the sector’s earnings are anticipated to fall by 7 per cent compared to the previous quarter. This decline is foreseen despite a 4 per cent quarterly improvement in oil volumes, as the combined effect of reduced gas output and lower oil prices is expected to more than offset any gains.
At the company level, Oil and Gas Development Company (OGDC) is forecast to report earnings per share (EPS) of Rs7.83, a drop of 19 per cent YoY and 12 per cent quarter-on-quarter (QoQ). The company’s performance was reportedly affected by two dry wells and reduced production from its Uch field due to annual turnaround activity. An interim cash dividend of Rs3.5 per share is anticipated.
Pakistan Petroleum Limited (PPL) is expected to see its EPS fall by 26 per cent YoY to Rs7.44, though this represents a 1 per cent rise QoQ. The substantial yearly drop is largely due to a high base in the corresponding period of FY25, which included significant one-off gains from an insurance claim and the reversal of impairment losses. PPL is expected to announce a dividend of Rs2.0 per share.
In contrast to the sector-wide trend, Mari Petroleum (MARI) is projected to post a 35 per cent YoY increase in earnings, with an EPS of Rs12.59. This growth is attributed to a significant decrease in operating expenditure (OPEX) to US$2.86 per barrel of oil equivalent (boe) from US$4.78/boe a year earlier. In line with its previous trend, MARI is not expected to declare an interim dividend.
Pakistan Oilfields Limited (POL) is projected to witness a 31 per cent YoY decline in earnings, with an EPS of Rs18.35. This downturn is linked to a more than threefold increase in exploration costs associated with seismic activity in the Ikhlas and Pariwali areas. The company is forecast to announce a cash dividend of Rs20 per share.
Despite the anticipated downturn in quarterly earnings, the research note maintained an “overweight” stance on the Pakistani exploration and production sector.