OGDC Profit Falls 16% in 2QFY26
Oil and Gas Development Company (OGDC) has posted a 16% drop in second-quarter earnings as lower oil prices and higher exploration costs weighed on profitability, while the payout ratio improved to 45%.
Oil and Gas Development Company reported earnings per share of Rs8.1 for 2QFY26, down from Rs9.6 in the same period last year. The decline reflects pressure from weaker international crude prices and rising operating expenses.
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The company announced a second interim dividend of Rs4.25 per share. This takes cumulative payout for 1HFY26 to Rs7.75 per share, compared with Rs7.1 during the same period last year. The payout ratio rose to 45%, up from 37% a year earlier, signaling stronger shareholder returns despite lower earnings.
Net revenue fell 4% year-on-year to Rs96.6bn during the quarter. The drop was primarily driven by reduced oil revenues amid softer global prices. The exploration and production sector remains sensitive to international price movements and exchange rate trends.
Operating expenses jumped 38% compared with last year. Exploration and prospecting expenses surged 120% year-on-year to Rs8.8bn. The sharp rise was largely attributed to dry wells during the quarter, which increased non-productive exploration costs and eroded margins.
Other income also declined sharply. It fell 29% year-on-year to Rs14.7bn in 2QFY26. The decrease stemmed from the absence of delayed payment surcharge income and lower returns amid declining interest rates.
The effective tax rate provided some relief to the bottom line. Taxation stood at 29% during the quarter, compared with 43% in the same period last year. The lower tax incidence partly cushioned the impact of weaker operating performance.
A notable improvement came in working capital management. Trade debt declined by around Rs30bn on a quarter-on-quarter basis. The recovery ratio improved to approximately 130% during 2QFY26, indicating stronger collections from customers. A clearer picture is expected once detailed overdue debt disclosures are released in the published accounts.
Improved recoveries supported liquidity. Cash and cash equivalents increased from Rs288bn in 1QFY26 to Rs300bn in 2QFY26. The stronger cash position enhances financial flexibility amid ongoing exploration spending and sector volatility.