Karachi, October 21, 2022 (PPI-OT): MARI: 1QFY23 Result Review

Mari Petroleum Company Limited (MARI) reported its 1QFY23 earnings earlier today, wherein the company posted Profit After Tax (PAT) of PkR 12,715mn (EPS: PkR95.31) for the quarter, higher by 1.27xQoQ and 40%YoY – slightly higher than our estimates.

Net sales clocked in at PkR31,825mn for the quarter, higher by 16%QoQ and 54%YoY, the highest quarterly topline posted in the company’s history. The growth in net sales was driven by a weaker PkR against the US$ (Period Avg Exchange Rate: 1QFY23: PkR223/US$; 4QFY21: PkR194/US$; 1QFY22: PkR164/US$), along with higher well-head gas prices being applicable from this quarter forward.

This offset the lower production from Mari gas field during the quarter, as offtakes from the field were hampered due to the leakages at Fauji Fertilizer Company’s Urea Plant.

Finance income was lower by 47% compared to the earlier quarter, likely driven by lower exchange gains for the period. To note, the company had posted exchange gains of PkR1,589mn in the earlier quarter.

A substantial drop of 78%QoQ was seen in the company’s exploration charges for the quarter, driven by the absence of any dry wells during the period. Compared to this, the company posted a dry well cost of ~PkR4,399mn in the earlier quarter.

We have a Buy rating on the stock, with a Jun’23 TP of PkR3,330/sh, along with a dividend yield of 12%. Our liking for the stock is driven by the company being one of the only E and P companies in the country with enhanced production prospects, and relatively lower exposure to circular debt.