Mari Energies Limited (PSX: MARI) reported a significant decline in its profitability for the second quarter of FY25 (2QFY25), with profit after tax dropping by 39% year-on-year (YoY) and 42% quarter-on-quarter (QoQ). The company’s net profit for the quarter stood at Rs. 11.168 billion (EPS: Rs. 9.30), compared to Rs. 18.361 billion (EPS: Rs. 15.29) in the same period last year. Contrary to market expectations, the company did not announce a cash dividend for the quarter.

For the first half of FY25 (1HFY25), Mari Energies posted a net profit of Rs. 30.396 billion (EPS: Rs. 25.32), reflecting a 19% YoY decline compared to Rs. 37.505 billion (EPS: Rs. 31.24) in 1HFY24. The company’s topline also fell by 8% YoY, settling at Rs. 86.652 billion, down from Rs. 93.745 billion in the same period last year. This decline was attributed to a 5% YoY decrease in the wellhead price of the Mari Gas Field and a 2% YoY appreciation of the Pakistani rupee against the US dollar.

During 2QFY25, net sales dropped by 9% YoY to Rs. 41.354 billion, primarily due to a 5% YoY decline in oil production and lower wellhead prices. Exploration costs surged by 154% YoY to Rs. 3.720 billion during the quarter, driven by the dry well (Zarghun South-5) booked during this period. For 1HFY25, exploration costs rose by 106% YoY to Rs. 6.721 billion, reflecting higher prospecting expenditures and dry well costs.

Finance Income and Taxation
The company’s finance income increased significantly, reaching Rs. 5.676 billion in 1HFY25, up 39% YoY, due to higher income on cash and cash equivalents. In 2QFY25 alone, finance income surged by 44% YoY to Rs. 2.311 billion. Meanwhile, the effective tax rate for 2QFY25 was recorded at 25%, a notable decrease from 40% in 2QFY24.

The decline in profitability was largely driven by lower wellhead prices, reduced oil production, and higher exploration costs. The company’s decision not to announce a cash dividend during the quarter also disappointed market participants, who had anticipated a payout.