Oil and Gas Development Company Limited (OGDC) reported a strong financial performance for fiscal year 2026 (FY26), with earnings per share (EPS) increasing 42.8% year on year to Rs. 56.35 from Rs. 39.50 in fiscal year 2025 (FY25). The company also announced its highest ever annual dividend of Rs. 17 per share for FY26, compared with Rs. 15.10 per share in the previous year, representing a 12.6% year on year increase. The earnings growth was supported by higher oil and gas production, while a one off reversal of the super tax provision also provided a significant boost to the company’s profitability.
OGDC’s oil production increased by 25% year on year during FY26, while gas production grew by 17%. The stronger production levels contributed to the improvement in earnings and supported the company’s overall financial performance during the year. The company’s fourth quarter results were particularly strong, with quarterly earnings reaching Rs. 29.55 per share in the fourth quarter of FY26, nearly three times the Rs. 10.00 per share recorded in the corresponding quarter of FY25. The increase reflected stronger quarterly performance and contributed significantly to the company’s full year earnings.
Net sales during the fourth quarter of FY26 reached Rs. 149.1 billion, representing a 65% year on year increase and a 39% quarter on quarter rise. According to Topline Securities, the increase in quarterly sales was attributed to the commencement of production from the Baragzai field and higher crude oil prices. On a full year basis, OGDC’s revenue increased by 12% year on year to Rs. 449.2 billion. The improvement in revenue was accompanied by higher production and stronger quarterly sales, although the company also faced increases in several operating and exploration related expenses.
Royalty expenses rose sharply during the fourth quarter, increasing 699% year on year to Rs. 17.2 billion. Royalties accounted for 12% of net sales during the quarter. Exploration costs also increased significantly, rising 2.6 times year on year and 1.8 times quarter on quarter to Rs. 10.9 billion. The increase in exploration expenses was attributed to two dry wells, Chak-203 and Saidpur. Meanwhile, operating expenditures increased 45% year on year to Rs. 50.9 billion. Operating expenditure per barrel of oil equivalent stood at US$ 11.6 in the fourth quarter of FY26, compared with US$ 10.0 in the same quarter of FY25 and US$ 7.6 in the third quarter of FY26.
A major factor supporting OGDC’s quarterly and annual profitability was a Rs. 44 billion tax reversal following the Federal Constitutional Court’s decision on the super tax. The reversal significantly reduced the company’s effective tax rate for FY26 to 6% from 39% in FY25. This one off tax adjustment contributed to the substantial improvement in reported earnings alongside the company’s higher oil and gas production and increased quarterly sales. The company also recorded stronger recoveries during the fourth quarter, with its receivables recovery ratio improving to 103% from 86% in the third quarter of FY26.
The improvement in receivables recovery reflected stronger recoveries from Sui companies, with the ratio remaining above 100% for two consecutive years. OGDC declared a final cash dividend of Rs. 6 per share for the fourth quarter, bringing its total FY26 dividend to a record Rs. 17 per share. Despite the higher dividend, the company’s payout ratio declined to 30% in FY26 from 38% in FY25. The company is currently trading at estimated price to earnings ratios of 6.1 times for FY27 and 5.2 times for FY28. Overall, the FY26 results reflected strong earnings growth, higher production, increased revenue, improved receivables recovery, and the impact of the super tax reversal on OGDC’s financial performance.
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