Pakistan Petroleum Limited's (PPL) profit dropped 19% to Rs24.4 billion in the half year ended December 31, 2019, dented by higher operating and exploration expenses.

The company had announced earnings of Rs30.3 billion in the same period of previous year, according to a notice sent to the Pakistan Stock Exchange on Tuesday.

Earnings per share stood at Rs8.98 in Jul-Dec 2019 compared to Rs11.12 in the previous year.

'PPL reported lower-than-expected earnings during the outgoing quarter. This deviation from our estimates was mainly on account of higher-than-expected exploration expenses,' said Topline Securities' analyst Fawad Basir.

Revenue depicted an uptrend as it increased from Rs79.1 billion to Rs85.6 billion in the half year on the back of 14% year-on-year rupee devaluation against the greenback.

'However, oil and gas production witnessed 2% and 13% year-on-year decline, respectively, tagged with a 6% year-on-year drop in oil prices,' stated an AHL Research report.

Although the oil prices did not fare well for the period, the favourable exchange rate movement on a year-on-year basis was enough to post growth for the period under review. On the other hand, exploration expenses showed a substantial 74% increase to Rs14.3 billion from Rs8.2 billion in the previous year.

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According to the AHL report, the surge came due to a dry well (Noah X-1) reported during 2QFY20. 'However, we await clarity regarding the higher-than-expected exploration expense from the company.'

Meanwhile, PPL's other income plunged nearly 60% to Rs2.6 billion in the half-year period, given absence of exchange gains on the foreign currency account.

Finance cost of the company jumped an exponential 93% to Rs540.5 million compared to Rs280.5 million in the previous year.

PPL's share price was down Rs3.54 or 2.89% to Rs119 with a turnover of 2.1 million shares on Tuesday.

The company's earnings were down 39% to Rs10.1 billion in the quarter ended December 31, 2019 compared to Rs16.5 billion in the same period of previous year.

Earnings per share came in at Rs3.71 during the quarter under review compared to Rs6.05 in the previous year.

'We flag higher-than-expected volatility in international oil prices, delay in key projects and significant exploration and development costs as key risks to PPL,' Basir added.

© Pakistan Press International, source Asianet-Pakistan