KARACHI: Pakistan Petroleum Limited (PPL) on Wednesday reported a 57% decline in its net profit for the first quarter of fiscal year 2015-16, highlighting the impact of declining oil prices on hydrocarbon producers.
Net profit was down to Rs5.88 billion in July-September compared to Rs13.69 billion in the same period last year, continuing the trend where lower oil prices in the international market have impacted Pakistani companies.
PPL also saw a decline in its gross profit margin, which dropped to 35% against 60% last year.
A worrying sign for the company has been its growing reliance on oil to support its bottom-line. While PPL still draws 60% of its revenue for sale of gas, its production has been on a continuous decline.
The field expenditure of Rs10.96 billion was comparatively higher than the Rs8.71 billion spent in the same period last year, but analysts believe that’s probably because of the cost of a dry well.
PPL’s profit in 2014-15 plunged 33% to Rs34 billion over the previous year due to slide in global crude oil price.
Gas production was down 3.3% to 301,302 million cubic feet despite efforts to increase output from existing fields.
PPL has been facing difficulties in hitting large finds. Around 51% of the gas it produces comes from Sui field that was discovered in the 1950s.
Three of the only four new finds during the year came from Gambat South Block in Sindh that was identified as potential source couple of years ago.
Published in The Express Tribune, October 22nd, 2015.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.