Pakistan Petroleum Depicts Increase in Net Profit
Pakistan Times Business & Commerce Desk

KARACHI: Pakistan Petroleum Ltd., the country's biggest natural gas operator, Thursday reported a 58% rise in full-year net profit, which analysts said was fueled by gains from a revision of the company's gas pricing agreement for two fields and higher international oil prices.

Net profit for the year ended June 30 rose to PKR6.62 billion, from PKR4.19 billion a year ago, the state-run company said in a statement to the Karachi Stock Exchange.

It didn't immediately provide comment on the earnings.

PPL is provisionally listed on the Karachi Stock Exchange after the government sold a 15% stake in the energy firm through an initial public offering last month, which was oversubscribed. PPL operates the country's biggest Sui gas field in south-western Baluchistan province.

The steep rise in net profit was due the enforcement of an agreement between the government and the company to increase the output price of PPL's two main fields, Sui and Kandhkot, every six months from 2001 to 50% of prevailing international prices, said Abdullah Amin, an analyst at AKD Securities.

The Prices

Pakistan's natural gas prices are partially linked to international oil prices.

"Five revisions have been made so far, and the output price is now approximately 33.25% of the market price. Thus with more upward revisions in the pipeline, PPL will continue to post year-on-year growth and we estimate a compound annual growth rate of 19% and 20% in topline and bottomline respectively over the next five years," he said.

Strong global oil prices, which affects gas product prices in Pakistan, also helped boost the company's bottomline, said Mohsin Ahsan, an analyst at Global Securities.

The company said full-year revenue rose 45% on year to PKR 17.67 billion.

Joint Ventures

The rise in revenue was due to three new joint-venture fields in which PPL has a minority stake, Ahsan said. The fields are Sawan, Miano and Mazarani - located in the south of the country, he said.

Ahsan said the robust growth in oil prices and further production increases in two more fields are likely to further bolster profit in the next financial year.

PPL is expected to post a 26% increase in net profit in the next financial year to PKR8.35 billion, he said.

PPL shares closed up PKR3.3, or 3%, at PKR108.7 on the provisional counter. Formal trading of the shares is likely to begin in September when PPL joins the KSE-100 share index as the third-biggest capitalized stock on the market.

PPL is Pakistan's second-largest exploration and production company, contributing 25.3% of the country's total natural gas production. It owns the country's largest gas fields, with total reserves of oil and gas equivalent to 725 million barrels of oil.●