Oil and Gas Development Company Limited (OGDCL) closed FY26 with record earnings, but the headline profit growth masks pressure on its underlying operations, reported 24NewsHD TV channel on Tuesday.
Profit after tax surged 42.7 percent year-on-year, translating into earnings per share of Rs56.35 compared to Rs39.50 in FY25.
Much of this increase, however, came from a sharp reduction in taxation rather than a comparable improvement in operating profitability.
Revenue from contracts with customers rose 12 percent year-on-year in FY26, supported by higher oil prices in the final quarter and improved production.
Average oil output increased 6.3 percent to 32,861 barrels per day, while gas production rose 2.3 percent to 667 mmcfd, representing 51 percent and 28 percent of Pakistan’s total oil and gas output, respectively.
OGDC also spudded 23 wells—its highest number in five years drilled a record 58,333 metres and reported nine discoveries.
Proven reserves remained strong at 728 million barrels of oil equivalent, although future gains will depend on timely development and commercialisation.
Higher revenue was partly offset by a steep increase in costs. Royalty expenses rose 11.6 percent, while operating expenses increased 22.9 percent year-on-year in FY26.
The increase reflected additional drilling and workover activity, along with one-off pension and gratuity expenses in the final quarter. Exploration and prospecting expenditure jumped 53.4 percent, mainly due to higher seismic activity and two dry wells.
Consequently, gross profit increased by a modest 6.5 percent in FY26, considerably slower than revenue growth. The gross margin declined to 54.9 percent from 57.7 percent in FY25.
General and administrative expenses also rose sharply by 47.2 percent year-on-year for OGDC in FY26.
Another drag came from finance and other income, which fell 33.5 percent. Although the company benefited from a 30.9 percent increase in its share of profit from associates and a 12.2 percent decline in finance costs, these gains were insufficient to protect pre-tax earnings. Profit before income tax and final taxes declined 7.2 percent.
The decisive boost came below the pre-tax line. OGDC recorded a reversal of around Rs50 billion in previously recognised super-tax provisions, reducing its effective tax in FY26. As a result, taxation fell 84.7 percent, lifting the net margin to 54 percent from 42.4 percent.
The improved cash position also supported shareholder returns. OGDC announced a final dividend of Rs6 per share, taking its full-year payout to a record Rs17 per share.
Reporter: Ashraf Khan