Oil and Gas Development Company reported 1HFY26 earnings of Rs. 73 billion (EPS: Rs. 16.98), reflecting an 11 percent year-on-year (YoY) decline.
Despite the lower half-year profitability, the company announced its highest-ever dividend for any first half, declaring Rs. 7.8 per share for 1HFY26.
According to Arif Habib Limited (AHL), the record payout was driven by improved liquidity, supported by the recovery of overdue receivables and the realization of term finance certificate (TFC) receivables.
On a quarterly basis, OGDC posted earnings of Rs. 34.7 billion (EPS: Rs. 8.07) in 2QFY26, down 16 percent YoY, with the result coming broadly in line with industry expectations.
The company recorded net sales of Rs. 96.6 billion during the quarter, marking a 4 percent YoY decline while remaining flat quarter-on-quarter (QoQ). According to Topline Securities, the YoY drop in revenues was mainly attributed to lower gas production following Annual Turnaround Activity (ATA) at the Uch field.
Royalty expense stood at Rs. 11.9 billion, up 3 percent YoY, with royalty as a percent of net sales remaining at 12 percent, broadly in line with the company’s historical average.
Exploration costs in 2QFY26 surged 2.2 times YoY and 2.9 times QoQ to Rs. 8.8 billion, primarily due to two dry wells—Khatian and Jakhro North—drilled during the quarter.
Operating expenditures (OPEX) rose sharply to Rs. 36.9 billion in 2QFY26, up 38 percent YoY. OPEX per barrel of oil equivalent (BOE) increased to US$10.3 per BOE, compared with US$7.0 in 2QFY25 and US$7.3 in 1QFY26.
Finance and other income declined 29 percent YoY to Rs. 14.7 billion, largely due to lower interest income.
The effective tax rate (ETR) for 2QFY26 stood at 29 percent, compared with 43 percent in 2QFY25 and 38 percent in 1QFY26.
The company’s recovery ratio improved to 130 percent, up from 105 percent in 2QFY25 and 101 percent in 1QFY26, reflecting better recoveries from Sui companies.
OGDC also declared a cash dividend of Rs. 4.25 per share for 2QFY26, taking the total half-year payout to Rs. 7.75 per share, equivalent to a 46 percent payout ratio, compared with 37 percent in 1HFY25.
Topline Securities maintains a BUY stance on OGDC. The stock is currently trading at an FY26E/FY27F price-to-earnings (PE) multiple of 8.6 times and 6.3 times, respectively.