OGDC: Oil & Gas Development Company Limited - 3rd Quarter Results update

OGC reported mixed results for Q3 2024. Earnings per share (EPS) came in at Rs. 11.1, accompanied by a cash dividend of Rs. 2 per share.

Although net income declined year-over-year and compared to the previous quarter, revenue saw a modest year-over-year increase. Notably, gross profit margin improved to 64%, exceeding the average of the past four quarters. This positive trend was partially offset by a rise in financial charges and a higher tax rate compared to the historical average. Despite the decline in net income, OGDC maintains a strong position within key Pakistani stock indices and holds significant reserves of the country's oil and gas resources. 

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OGDC | Scrip Performance & Valuation Metrics

OGDC is trading at a market price of Rs. 134.2, with a low price-earnings ratio of 2.4 and a very low price-to-book ratio of 0.5. In the last 52 weeks, the OGDC stock reached a high of Rs. 158.59 and touched a low of Rs. 73.1.

OGDC has paid a total of Rs. 8.85 as cash dividends in the last four quarters.

Over the past 6 months, the stock of OGDC has gained by 32%, compared to the 56% return of the KSE100 Index. And, over the course of the last year, the stock of OGDC has gained by 56%, compared to the 69% return of the KSE100 Index.

OGDC has not issued any shares in the last five years. Currently, OGDC has a market cap of Rs. 577,228 million. The market cap of OGDC has increased by just 0.1% in the last five years. 

OGDC has good weighting in PSX-indices. KSE100 Index: 3.81%, KSE30: 5.42%, and KMI30: 7.64%.

See OGDC Market Price Chart.

See OGDC Key Valuation Metrics

See OGDC Earnings Note.

OGDC | Third Quarter; PAT down 26%, lower margin, higher financial charges and higher taxation.

OGDC | Oil & Gas Development Company Limited
Earning Release Q3-Mar 2024

OGDC announced earnings per share (EPS) of Rs. 11.12, compared to Rs. 15.03 in the same quarter last year.

A cash dividend of Rs. 2 per share was declared for this third-quarter. 

On a 9-month basis, OGDC announced EPS of Rs. 39.78, compared to an EPS of Rs. 37.12 last year. 

OGDC earned a profit after tax of Rs. 47,808 million for the third-quarter of 2024. Registering a decrease of 26.0% over last year. In terms of the components of profit and loss,

↗ Revenue increased by 6.5% in this quarter compared to last year, 
= Gross profit remaining stagnant,
↘ EBIT decreased by 17.7%,
↘ Profit before tax decreased by 18.5%.

The tax rate for the quarter was 41.2%, which was higher by 6.0% compared to the same quarter last year. That eroded the bottom line further.

The gross profit margin for the quarter was 64.2%, which was lower than 4.1% in the same quarter last year.

To give a historic context to the earnings, please note that OGDC now, on a twelve-month trailing basis, has a profit after tax of Rs. 236,082 million. That has decreased by 6.7% over the twelve-month trailing PAT of the previous quarter. And on a twelve-month trailing basis, its EPS is Rs. 55, just up 1% over an average of last three quarters.

OGDC has paid a total of Rs. 8.85 as cash dividends in the last four quarters.

The performance of OGDC this quarter appears to be poor, primarily due to several factors. Firstly, compared to the same quarter last year, which boasted a higher gross margin of 68%, the current quarter's gross margin is notably lower. This decline is significant considering that the previous year's gross margin was the highest in the last six quarters. Despite this, there has been an improvement in the gross margin this quarter, albeit from a level of around less than 60% in the second quarter.

Additionally, a concerning trend in OGDC's profitability is the escalating financial charges, which have been increasing consistently each quarter. In the current quarter, these charges have surged to almost 22% of EBIT.

Moreover, the 'other income' of OGDC is comparatively lower than in previous quarters, particularly when compared to the same quarter last year, where it was notably higher.

Furthermore, the burden of higher taxation exacerbates the decline in profits, further contributing to the overall downturn in OGDC's performance.

Download: OGDC third-quarter announcement.

OGDC: Scrip Note

Oil & Gas Development Corp Ltd (PSX:OGDC) is currently trading at a market price of Rs. 134.86, within its 52-week range of Rs. 73.1 to Rs. 158.59. It has shown a six-month return of 33.2% and a one-year return of 53.9%. The company's price-to-earning ratio stands at 2.3, while its price-to-book ratio is 0.5. With 15% free float and 4,301 million issued shares, OGDC commands a market capitalization of Rs. 580 billion.

Comparatively, the KSE100 Index has achieved a year-to-date return of 11.68% and a one-year return of 75.70%.

OGDC, holds significant weightings within several key Pakistani Stock Exchange (PSX) indices. Notably, it comprises 3.78% of the KSE100 Index, 5.41% of the KSE30 Index, and 7.61% of the KMI30 Index, highlighting its considerable influence within the Pakistani stock market.

OGDC holds 20% stake in Mari Petroleum Company Limited, that trades on Pakistan Stock Exchange under the ticker 'MARI'. OGDC has also invested in Reko Diq Mining Company (Private) Limited (RDML) through Pakistan Minerals (Private) Limited.

OGDC Weekly Chart:

OGDC: Earning Release Q3 March 2023

OGDC: Oil & Gas Development Company Limited, Earnings Release: Q3 March 2023 

EPS: Rs. 15.03. Cash Dividend: Rs. 1.8 per share

Price (Rs.)	1 Month	6 Month	1 Year
86.17	5.50%	22.49%	1.90%

Profit after tax of Rs. 64 billion is almost 50% of the PAT of Q3 last year, while profit before tax (PBT) is about 54% higher than the same quarter last year.

Sales of Rs. 105.9 billion for the quarter have grown by 19%, while gross profit has grown by 16.6%. Gross margin was depressed due to higher operating expenses.

Revenue was boosted due to the weakening rupee and higher oil prices. The real boost to the income came from 'other income' of Rs. 37.4 billion, which grew 4.5 times over the same period last year, due to higher investment income as interest rates rose. Other income also increased due to exchange gains coupled with share of profit in associates.

The tax rate for the quarter was 35.2%, in line with the recent historic average.

OGDC is trading at very low multiples, i.e., PE of around 2 and price to book of less than half.

The free float of  OGDC is just 15%. The government of Pakistan holds 85% of the company.

OGDC holds a 20% stake in Mari Petroleum Company Limited.

Download OGDC: Earning Release Q3 March 2023 

OGDC	TTM	2022	2021	2020	2019
Sales (Rs. Mill)		335,464	239,104	232,925	261,481
Profit After Tax (Rs. Mill)	181,413	133,784	91,534	100,938	118,386
Earning Per Share (Rs.)	42.18	31.11	21.28	23.47	27.53
Dividend per Share (Rs.)	8.3	7.25	6.9	6.75	11

OGDC: Excerpts, Directors' Report, Mar-2023

Oil and Gas Development Company Limited

Directors Report: March 31, 2023

Discovery: OGDCL's exploratory efforts to locate new reserves during the period under review yielded 3 oil and gas discoveries having an expected cumulative daily production potential of 3,007 barrels of oil and 2.7 MMcf of gas. 

Production: OGDCL's production during the period under review contributed around 46%, 29% and 36% towards Country's total oil, natural gas and LPG production respectively (source: PPIS).

Production: The average daily net saleable crude oil, gas and LPG production clocked in at 33,034 barrels, 765 MMcf and 732 tons in comparison to 36,173 barrels, 828 MMcf and 822 Tons in the comparative period respectively. 

Revenue: Higher sales are primarily attributable to an increase in the realized price of crude oil averaging US$ 75.01/barrel (9M 2021-22: US$ 68.84/barrel).

Other Income: In addition to the above, higher interest income on investment and bank deposits and exchange gain coupled with share of profit in associates contributed towards improved profitability. 

Dividend: The Board has announced third interim cash dividend of Rs 1.80 per share (18%) for the year ending 30 June 2023. This is in addition to the first interim cash dividend of Rs 1.75 per share (17.50%) and second interim cash dividend of Rs 2.25 per share (22.50%) totaling Rs 4.00 per share (40.00%) already declared and paid during the fiscal year.

Investment: The Company has invested in the project company, i.e. Reko Diq Mining Company (Private) Limited (RDML) through Pakistan Minerals (Private) Limited (PMPL), an entity incorporated in Pakistan in accordance with the agreements for collective representation of the Company, PPL and GHPL. RDML is engaged in the mineral exploration activities in Pakistan. The Company's equity interest in PMPL is 33.33% with an effective interest of 8.33% in RDML. Project feasibility is in progress. The operator i.e. M/s Barrick Gold Corporation has mobilized its professionals.

Download OGDC Financial Report Mar2023

OGDC: Earnings Release 2nd quarter - Dec 2022

OGDC earned Rs. 9.7 per share in the second quarter ending December 2022. The company also announced a cash dividend of Rs. 2.25 per share.

OGDC's twelve-month trailing EPS is now Rs. 37.2 and a cash dividend of Rs. 7.5, translating into a compelling PE of 2.3 and a dividend yield of 8.6%.

Profit after tax of Rs. 41.7 billion for the second quarter was less by 21% over the first quarter on lower production, higher costs, and lower other income. 

Comparing with Ist quarter ending Sep22; Sales declined by 8.6% and gross profit declined by 14% over Ist quarter, Other operating expenses increased by 1.5 times, Other income halved, negatively impacting Profit before tax over 26%.

This is despite the higher spread in crude and the favorable exchange rate. Declining production is a cause for concern

For the HY ending December 22, crude oil sales made up 46% of total revenue, and natural gas sales made up 43%.

OGDC: Oil & Gas Devl Corp	ttm	Dec22	Sep22	Jun22	Mar22	Dec21
		Q2 - 2023	Q1 - 2023	Q4 - 2022	Q3 - 2022	Q2 - 2022
PAT (Mill Rs.)	159,913	41,709	53,303	21,740	43,161	35,253
EPS (Rs.)	37.18	9.70	12.39	5.05	10.04	8.20
Cash Dividend (Rs./share)	7.5	2.25	1.75	2.5	1	2

OGDC		Dec22	Sep22	Jun22	Mar22	Dec21
Miilion Rupees		Q2 - 2023	Q1 - 2023	Q4 - 2022	Q3 - 2022	Q2 - 2022
Net Sales	-8.29%	97,223	106,012	95,196	89,104	79,633
Gross Profit / Loss	-14.22%	64,509	75,206	55,849	62,365	52,391
Operating Profit / Loss	-19.97%	58,148	72,653	64,002	58,329	46,789
Financial Charges	79.14%	1,466	818	607	592	578
Profit Before Taxation	-26.72%	64,640	88,207	62,571	64,779	52,902
Taxation		-22,931	-34,905	-40,831	-21,618	-17,649
Profit After Tax	159,913	41,709	53,303	21,740	43,161	35,253
EPS (Rs.)	37.18	9.70	12.39	5.05	10.04	8.20
Cash Dividend (Rs./share)	7.5	2.25	1.75	2.5	1	2

Also See: 

Notes from HY Report Dec 22
Brief Intro

OGDC Market Performance

Download Earning Release

OGDC: Market Performance

OGDC is trading at Rs. 86.88 (market close Mar 10, 2023) down 3.14% in one year compared to 4.7% decline on KSE100 Index. OGDC share price had made a 52-week high of Rs. 109.8.

The scrip is trading at a very low earning multiple of 2.3 and price to book at less than half. Its twelve months trailing yield is 8.6%.

OGDC is one of the few of PSX listed companies that pay cash dividend every quarter. The Company never gave stock dividend.

Share Price (Rs.)	1 Month	3 Month	1 Year
86.88	-14.03%	20.82%	-3.14%

OGDC: Notes from HY Report Dec 2022

OGDC Profit in HY Dec 2022, boosted by higher international crude oil prices in comparison to the corresponding period last year. Average basket price of crude oil was US$ 93.53/barrel against US$ 75.22/barrel in the comparative period.

Furthermore, rise in average exchange rate from Rs 169.98/US$ to Rs 223.85/US$ lent strength to the financials. 

In addition to the above, the Company's profitability during the period under review was positively impacted by increase in interest income on investment and bank deposits and share of profit in associates. 

OGDC: Brief Background

Oil and Gas Development Company Limited was incorporated in Pakistan in 1997. The Company is the market leader in E&P sector of Pakistan holds the largest exploration acreage and portfolio. For Half year ending Dec 2022, OGDC contributed  46% and 29% and 37% towards Pakistan's total oil, natural gas production.

The Company was listed on Karachi Stock Exchange on 2004, and trades under the PSX:Ticker 'OGDC'. Moreover, Global Depository Shares (GDR) of OGDC are listed on London Stock Exchange. 

Free float of  OGDC is just 15%. The Government of Pakistan holds 85% of the company. The Market Cap of OGDC as of March 2023 was Rs. 374 billion (USD 1.34 billion).

 

Investments: 

 OGDC: Note on circular debt in recently released HY21 Financial Report.