In Focus: Result Preview of OGDC & SNGP (27102008)

Result Preview of OGDC 1Q09 Target Price: Rs130
OGDC is due to announce its 1Q09 result. We expect that the company would post massive growth of 36 percent in bottom line earnings resulting PAT of Rs16.78bn (EPS: Rs3.9), which is mainly backed be substantial increase in oil prices along with deprecation in Pak rupees against US dollar during the period under review. In addition, we expect the company will announce first interim cash dividend of Rs2.5 per share based on historic payout of the company.
Furthermore, top line of the company is expected to increase Rs40.5bn from Rs32.3bn in corresponding period last year which is primarily due to massive increase of 61.2 percent in crude prices (Saudi light) along with 19.4 percent deprecation in Pak rupees against US dollar. However, we expect oil production of the company will decline by 8 percent to 41.2BPD from 44.8BPD, while gas production will remain flat over same period last year.
During the quarter under review company has marked two new gas and condensate discoveries at Kunnar south-1 located in Tando Allah Yar. Initial testing result shows cumulative gas production of 25.7MMcfd and 450BPD of condensate from these wells.
Result Preview of SNGP 1Q09 Target Price: Rs48
SNGP is schedule to announce its 1Q09 result, were we expect company will post after tax profit of Rs1050.8mn and EPS of Rs1.91, depicting YoY growth of 3.7 percent. Further, net revenue of the company is expected to increase Rs32.9bn from Rs26.5bn marked in corresponding period last year.
However, the profitability of company is governed under fixed required rate of return formula. Where company should earn an annual return of not less than 17.5 % per annum on the value of its average fixed assets in operation (net of deferred credit) excluding income tax, interest charges on debt, UFG loss, dividends and other non-operating income.
Moreover, negative impact of UFG loss will continue in the bottom line earnings during the period under review owing to higher UFG loss, while higher non operating income of the company will provide some relief to earnings of the company due to deposits in bank.