OGDC Highlights Strong Receivables Recovery, Refocus on Gas Output

Oil & Gas Development Company (OGDC) reported improved cash recovery and outlined a strategic shift back toward gas exploration as it briefed analysts on first-quarter FY26 results and future plans.

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The management said receivables collection had surpassed 109% of billing, with recoveries from the Uch power project at 177%, SNGPL at 104%, and SSGC around 90%.

Power sector circular debt receivables at Uch have declined to Rs59 bn from Rs89 bn in December 2024, with the balance expected to be cleared in 2QFY26. Discussions with the government continue over a comprehensive resolution to gas sector receivables, including RLNG oversupply and curtailment issues.

OGDC reported progress in its seismic and drilling activities, completing a 3D survey at Uch and advancing exploration at Bettani, where two wells have been drilled and a third is under evaluation. The company confirmed that it is moving into higher-risk exploration zones as part of its long-term growth strategy.

The company also agreed with SNGPL to curtail gas only from fields that do not yield condensate or oil. Management noted that the curtailment previously affecting the Nashpa block has now been redistributed, cutting crude output losses by about 1,000 barrels per day.

After earlier attempts to boost oil output, OGDC has now shifted its emphasis back to gas production amid policy reforms and government engagement in the energy sector. Executives said gas is expected to account for a greater share of production in the coming years, with oil output optimization remaining a secondary focus.

In response to possible permanent allocation of MARI gas to fertilizer producers, OGDC may divert gas from its KPD-TAY field to alternate or third-party consumers, as the gas meets pipeline specifications. Management added that the company remains optimistic about offshore prospects, though commercial progress may take time.

OGDC announced a third interim cash dividend of Rs2.5 per share and remains attractively valued, trading at FY26E/FY27F price-to-earnings multiples of 5.8x and 5.6x respectively, according to market estimates. The company’s outlook aligns with broader energy reforms aimed at stabilizing Pakistan’s upstream sector and enhancing domestic gas supply sustainability.