Exploration & Production: Depressive earnings on falling crude price – By Azee Research
Our today’s morning report is based on the performance of Exploration & Production (E&P) sector in 1HFY16. Our sample includes three liquid listed companies.
Cumulative earning slides over 34% YoY: Cumulative earnings of the Exploration & Production (E&P) companies witnessed a drop by 34% to Rs 49.63 billion during 1HFY16 compared to Rs 75.31 billion same period last year. This is owing to massive decline in oil prices by 48% at decade low, reduction in well head gas prices, lower oil & gas production, impairment of assets and reduction in other income. The bottom-line witnessed a fall of 17.4% YoY to Rs 24.09 billion in 2QFY16 versus Rs of Rs 29.15 billion in 2QFY15 owing to 20% YoY drop in global crude oil prices and lower gas production.
Top line down: Net revenue of big three companies drop by 28.2% YoY to Rs 139.54 billion from Rs 194.37 billion over the same period last year mainly due to squeeze in oil prices by 48% YoY to $45.6/barrel versus $88/barrel in 1HFY15 and decline in oil & gas production. Cumulative oil production of the three companies decreased by 4% to 60.3kbpd as against 62.68kbpd same period last year mainly due to lower production from Tal Block on account of shutdown of processing facility. Similarly, gas production marginally fall by 0.8% to 1.95bcfd owing to natural decline in mature fields, less gas intake form Uch and Qdirpur field by Uch power, Engro Powergen and liberty power.
By: Azee Securities Private Limited