re: Petrol bomb unleashed
According to this article (Saudi Arab Light Crude Price to Average $105 This Year, NCB Says - Businessweek) the saudi Arab light crude oil will remain $105/barrel this year which amounts to crude oil cost of 66 cents/litre. So Pakistan will be charging around 50 cents/litre for oil processing and other allied costs?
This is the profits earned by oil sector during the previous year, expect bumper profits this year.
http://www.dawn.com/2012/03/05/gas-oil-producers-record-robust-growth-in-profits.html
**The winter corporate results reporting season now drawing to a close, several sectors surprised investors with better-than-expected financial figures.
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Among them were the Oil and Gas Exploration and Production companies—the largest group on the Karachi Stock Exchange in terms of market capitalisation, commanding around Rs1,180 billion of the aggregate value of the market at around three trillion rupees.
**The exploration and production (E&P) companies posted combined after tax profit at Rs69 billion in the first half of the financial year 2011-12 (July-Dec 2011), representing a robust growth of 28 per cent over the earnings of Rs54 billion in the corresponding period of the previous year.****The growth in earnings was fuelled by improved pricing along with increased contribution from ‘other income’ — meaning non-operating income such as higher interest income on investments of surplus funds.
The KSE-index heavyweight Oil and Gas Development Company led the pack with growth of 32 per cent increase in its profitability; other listed corporates in the sector also showed worthy increase in earnings by 17 to 21 per cent.
The aggregate revenue of companies in the sector rose by 14 per cent to Rs152 billion for the latest half year, from Rs133 billion in the same period last year. The sector top line benefitted from higher oil and gas prices. The Arab Light Crude oil prices averaged around $108 per barrel, 36 per cent higher than $79 per barrel in the first six months of the financial year 2010-11.
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The depreciation of rupee against the dollar also supported higher sales. Yet, in terms of oil and gas explored and produced, the E&P companies saw stagnation in production of oil, at around 48,000 barrels per day, which was about the same as last year. **Gas production, however, increased by two per cent to 2.1 billion cubic feet per day. The profitability of the E&P companies also received a big boost from curtailed ‘operating expenses’ and higher ‘other Income’.
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The operating expenditure was contained to a rise of 11.9 per cent to Rs37 billion, due mainly to subdued exploration costs. “Instead of going solo at drilling, most companies are now focusing on forming joint ventures so as to limit the loss in case their effort proves unfruitful, as happened in recent past when companies digging deep down hit upon barren rocks,” an energy expert explained.
The contribution of ‘other (non-operating) income’ in the E&P sector rose to 10 per cent of the aggregate profit before tax (PBT) and amounted to Rs10.1 billion for the half year, almost double the five per cent in addition to the total income in the same time last year.
The oil and gas giant OGDC recorded 32 per cent increase in earnings to Rs42 billion for the latest half year, benefiting from several factors including, first, a jump of 24 per cent in the company’s net realised oil prices, which stood at $82.03 per barrel; second, an increase of 3.7 per cent in gas production and third, a massive upswing of 385 per cent in ‘other income’ that contributed Rs4.6 billion.
The company maintains approximately 37 per cent of its liquidity in dollar deposits. During the half term under review, the company’s liquidity (cash and short-term investments) witnessed a rise of 1.2 times to Rs54 billion. The OGDC also benefitted from subdued effective tax rate of 31 per cent as against 38 per cent last year.
Energy sector analysts say the OGDC’s crude oil production during the half term had remained depressed, depicting a drop of three per cent. “The output of crude oil was affected due to floods in Sindh and annual turnaround (ATA) of Uch, Dakhni and Qadirpur plants. This situation was further aggravated by strike of transporters of crude oil from Chanda, Mela and Nashpa fields,” said an observer.
Pakistan Petroleum Limited (PPL) was next in row, in regard to earnings, with an increase of 21 per cent in profit after tax amounting to Rs20 billion. “It was contributed by higher net realised hydrocarbon prices and improved production from fields at Tal and Naspha block,” say analysts.
Other operating income climbed by a steep 79 per cent to Rs3.47 billion, mainly due to higher interest rate as the PPL’s short-term investment and cash formed almost 20 per cent of the company’s balance sheet footing the third corporate in the run, Pakistan Oilfields Limited (POL) also posted a decent growth of 19 per cent in its profitability at Rs6 billion, backed by favorable pricing scenario, improved production of oil by 5.2 per cent and gas by 5.5 per cent. Other income put more gloss on the bottom line by a sizeable increase of 51 per cent.
Some analysts thought that the company’s earnings had turned out to be lower than consensus estimates. An energy sector watcher says: “Higher amortisation of development cost and rise in effective tax rate were key earnings drags.”Mari Gas Company, the low profile energy sector corporate, posted profit after tax at Rs1.4bn, up by a massive 163 per cent over the same period earlier year. “However due to its unique ‘guaranteed return formula’, the benefit did not go entirely to the company, so that its distributable profit stood higher by only 17 per cent from the same period of last year,” a sector analyst commented.
Most energy sector watchers thought that the galloping prices of crude could be a blessing for the E&P companies. The sector was, however, grappling with the perennial problem of ‘circular debt’ which remains a key concern as it bites deep into the sector’s profitability.
Does this mean that people in Pakistan are richer now as compared to US?