Due to the extremely low demand of oil and gas in the world the oil sector is expected to take a hit of more than $1 trillion in revenues for 2020. With prices of crude oil plummeting and storage capacities overflowing the oil market is facing a very future.
The local companies have not remained insulated from the situation as well. Oil and Gas Development Company Limited has announced a slight decline in its earnings for 9MFY20 (2 percent YoY).
The key factors for slow growth have been a plunge in international oil price and lower hydrocarbon production due to reduction in demand specifically because of COVID-19 pandemic. These challenges in production were in addition to the natural decline of fields.
Another major factor for restriction in the bottomline growth was over a 100 percent increase in its exploration and prospecting expenditure. In 9MFY20, OGDCL spud 16 wells against 11.
Pakistan State Oil (PSO) has also posted an unconsolidated profit after tax of Rs3 billion (EPS: Rs6.41), which is down by 49.2pc YoY.