Oil and Gas Development Company Limited (PSX: OGDC), Pakistan’s largest exploration and production company, has reported a notable decline in profitability for the financial year ending June 30, 2025. The company posted a profit after tax of Rs169.90 billion, marking an 18.70 percent drop compared to Rs208.98 billion in the previous fiscal year.
Earnings per share also mirrored this downward trend, falling to Rs39.50 from Rs48.59 in FY24. The fall in earnings underscores the dual impact of weaker sales and heavier taxation, even as certain financial gains provided partial relief.
The company’s net sales for FY25 stood at Rs401.18 billion, a 13.48 percent decline from Rs463.70 billion recorded in the prior year. This revenue contraction translated into a sharp decrease in gross profit, which fell by 18.25 percent to Rs231.61 billion, compared to Rs283.31 billion in FY24. The decline in topline performance was the primary driver behind reduced profitability, reflecting weaker demand dynamics and price pressures in the oil and gas market.
Despite the challenges, OGDC’s Board of Directors announced shareholder-friendly measures. A final cash dividend of Rs5 per share (50 percent) has been approved. When combined with interim payouts of Rs10.05 per share disbursed earlier in the year, the total dividend reaches Rs15.05 per share — the highest distribution in the company’s history. This reflects management’s continued focus on rewarding shareholders, even amid declining earnings.
On the cost side, the company demonstrated some operational discipline. Operating expenses fell by 2.71 percent to Rs120.20 billion, compared with Rs123.54 billion a year ago. Finance costs also dropped significantly by 18.72 percent, amounting to Rs5.81 billion. These reductions provided some cushion against the revenue slump.
One of the most significant boosts came from finance and other income, which surged by 97.90 percent to Rs81.82 billion, up from Rs41.34 billion in FY24. This growth helped offset some of the erosion in gross margins and highlighted the role of non-core income streams in stabilizing the company’s bottom line.
However, rising exploration and prospecting expenditure, which increased by 49.41 percent to Rs18.77 billion, weighed on performance. Meanwhile, taxation charges jumped sharply by 29.01 percent, climbing to Rs109.41 billion from Rs84.81 billion in the previous year. This surge in tax burden was a key factor in the steeper decline of net profitability, despite relatively modest reductions in pre-tax earnings.
OGDC’s profit before taxation was reported at Rs279.31 billion, down 4.93 percent compared to Rs293.79 billion in FY24. After adjusting for the higher tax expense, the final profit figure saw a much sharper year-on-year fall.
The FY25 results highlight the financial pressures facing Pakistan’s oil and gas sector, which continues to navigate fluctuating global commodity prices, domestic economic challenges, and regulatory obligations. While OGDC has delivered its highest-ever dividend, the decline in profitability signals ongoing headwinds for the sector and the need for greater resilience in revenue streams.
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