Pakistan’s listed exploration and production (E&P) companies are expected to report strong year-on-year earnings growth in the first quarter of fiscal year 2027, supported by higher crude oil prices and improved production volumes. However, profits are projected to decline significantly compared with the previous quarter as oil prices soften and a one-off tax benefit falls out of the comparison.
Combined earnings for listed E&P companies are estimated at approximately PKR 105 billion, representing a 32% increase from the same period last year. The growth is primarily attributed to a 26% rise in average crude oil prices and improved oil and gas output from key fields.
National hydrocarbon production averaged 69,302 barrels of oil per day and nearly 3,000 million cubic feet of gas per day during the quarter. Listed companies recorded double-digit year-on-year increases in both oil and gas production, supported by additional flows from newer and existing fields.
Higher Exploration Costs Put Pressure on Earnings
Exploration spending across the sector is expected to rise 65% year-on-year to PKR 11.6 billion during the first quarter of FY2027.
The increase reflects expenditure on one dry well, alongside expanded seismic surveys and exploration work across several blocks. While such investment is necessary to identify and develop future hydrocarbon reserves, it can weigh on near-term profitability.
Operating expenses have also increased for most companies, partially offsetting the benefits of higher production and stronger oil prices.
On a quarter-on-quarter basis, combined sector earnings are projected to fall by approximately 50%. The decline is attributed to softer oil prices and the absence of a substantial super tax reversal that boosted results in the preceding quarter.
The contrasting annual and quarterly comparisons suggest that the sector’s earnings growth remains supported by stronger underlying operating conditions, although one-off factors and commodity price movements continue to influence reported profits.
OGDC, Mari Energies and Other Producers in Focus
Company-level earnings projections indicate growth across several major listed producers, with dividend expectations varying by company.
Oil and Gas Development Company (OGDC) is projected to report earnings per share (EPS) of PKR 12.51, up 40% year-on-year. The company may also announce a dividend of PKR 5 per share.
Mari Energies is expected to report EPS of PKR 14.67 during the quarter, while Pakistan Petroleum Limited (PPL) is projected to post EPS of PKR 9.29.
Pakistan Oilfields Limited (POL) is expected to report EPS of PKR 28.89. Dividend expectations across the sector differ, depending on individual companies’ payout practices and financial performance.
These estimates provide an indication of expected quarterly performance, although actual results may vary depending on realised prices, production levels, operating costs and other financial factors.
Production Growth Supports the Sector
Improved oil and gas production remains a key driver of the sector’s expected earnings growth.
Double-digit annual increases in output indicate that additional flows from producing fields are helping listed companies benefit from stronger hydrocarbon prices. Sustaining this momentum will depend on field performance, the development of new reserves and the availability of infrastructure to bring production to market.
Reduced gas curtailments could further support output and cash generation in the coming quarters. Continued exploration activity, particularly in frontier areas, may also help strengthen the sector’s longer-term production outlook.
However, exploration carries financial and operational risks, and increased spending does not necessarily translate into immediate commercial discoveries or higher output.
Sector Outlook Remains Constructive
The outlook for Pakistan’s listed E&P companies remains constructive, supported by improving production, ongoing exploration and potentially better liquidity conditions.
Nevertheless, fluctuating global oil prices remain a significant variable for earnings. Higher exploration expenditure and operating costs could also limit the benefits of increased production, particularly if commodity prices weaken.
Investors will be watching quarterly results for evidence that companies can sustain output growth, manage exploration budgets and maintain cash flows amid changing market conditions.
While the projected PKR 105 billion in combined earnings points to a strong year-on-year performance in the first quarter of FY2027, the expected sequential decline highlights the importance of distinguishing recurring operating gains from temporary tax-related benefits.