Oil and Gas Development Company Limited (PSX: OGDC), Pakistan’s largest exploration and production company, posted after-tax earnings of approximately Rs170 billion in FY25, reflecting a 19 percent decline year-on-year compared to FY24. The drop in profitability was primarily driven by lower production volumes and declining global oil prices, partially offset by robust other income and ongoing exploration efforts.
In FY25, OGDC’s oil output fell by 6–7 percent to an average of 30,900 barrels per day, while gas production declined 9 percent to 652 million cubic feet per day (mmcfd). Realized oil prices averaged $60.8 per barrel, down from $68.7 in the previous year. Management noted that gas curtailments by SNGPL due to surplus RLNG led to estimated revenue losses of Rs40–43 billion.
Despite subdued earnings, OGDC declared its highest-ever full-year dividend of Rs15.05 per share, up from Rs10.10 in FY24. Gross margins narrowed to 57.7 percent from 61.1 percent, and the effective tax rate increased sharply to 39.2 percent from 28.9 percent. Exploration costs rose 49 percent to Rs18.8 billion, driven by three to four dry wells and intensified seismic activity, while other income nearly doubled to Rs82 billion, bolstered by interest from TFCs, delayed payment surcharges, and foreign exchange gains amid PKR volatility.
Historically, OGDC has maintained profitability despite structural challenges such as declining production from mature reserves. From FY19 to FY24, the company’s performance aligned closely with international oil prices and currency movements. In FY19, revenues grew 27 percent, leading to a 57 percent jump in net profit, while FY20 saw a 15 percent decline due to lower oil prices and COVID-19 disruptions. FY21 and FY22 marked recovery phases with rising revenues driven by higher prices, improved LPG output, and lower exploration costs, culminating in FY23 revenue growth of 23 percent amid a 28 percent rupee depreciation. FY24 saw a modest 12 percent revenue increase, but net profit declined 7 percent due to higher operating costs and exchange losses.
In FY26, OGDC reported a 7 percent year-on-year decline in 1QFY26 earnings, with revenues falling 9 percent amid lower oil realizations, a slight reduction in oil output, and continued gas curtailments. Arab Light prices averaged in the low $70s per barrel, down from above $80 per barrel the previous year. Other income fell by more than half due to the absence of penal income, TFC returns, and FX gains, though reduced exploration spending and a lower effective tax rate mitigated some pressures.
Operationally, OGDC has seen improvements. Cash recoveries now exceed billings, power-sector receivables have declined sharply, and remaining backlog is expected to clear within the quarter. Gas curtailments are currently limited to non-oil fields under an arrangement with SNGPL, with management projecting gas production to regain significance as new finds come online. Offshore exploration remains a longer-term prospect.
In conclusion, while near-term earnings have softened due to lower volumes and oil prices, OGDC’s strong reserves, active exploration, stable cash generation, and record dividend payout underscore its resilience. Operational and balance-sheet indicators point to a steadier medium-term outlook, positioning the company for potential growth as new production projects come online.
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