Pakistan Oilfields Limited (POL) Eyeing Towards Global Oil Prices Stability

Azee Securities (Pvt) Ltd.

Pakistan Oilfields Limited (POL) announced its annual result for fiscal year ended 2015 declaring profit after tax of Rs 8.5 billion with an EPS of Rs 35.76/share depicting an annual decline of 34% against last year PAT of Rs 8.5 billion with an EPS of Rs 54.48/share.

The drastic decline in international oil prices and rise in exploration cost on account of 3 dry wells Pindori, Ikhlas and Malgin turned out to be the reasons of lower PAT. The company declared 250% final cash dividend making a total of 400% cash dividend concluding its fiscal year.

Lower oil prices drag net sales

Last Quarter faced extreme pressure

Last quarter remained critical as all the eyes were set to US-Iran talks that were directly affecting international oil prices. On the other hand, rupee dollar parity also kept the management on toes. Green signal to do drilling at three shores jumped the exploration cost by 9169% that resulted in shunt profit after tax by 46% to hit Rs 1.1 billion for the year ended 2015, that was earlier recorded Rs 2 billion during last year ended 2014.

[embeddoc url=”http://investorguide360.com/wp-content/uploads/2015/10/POL-RESULT-REVIEW-1.pdf” viewer=”google”]

Recommendation

As per the notice issued by the company, Makori Gas processing facility (MGPF) has been restored for the production of oil. LPG production, however, is expected to be resumed by the end of September 2015. The script is offering an upside potential of 43% from our June’16 target price of Rs 430/share.

Any positive news on exploration site would bring excitement; as drilling at Ikhlas block (80% share), D.G. Khan block (70% share), Margala and Margala North blocks (30% share), Tolanj block, Mardankhel-2 and Mardankhel-3 block, Chak Naurang block (15% share), and Gurgalot block (20% share) are undergoing. Buy!