Oil and Gas Development Company posted 1HFY26 profit after tax of Rs. 73 billion, translating into earnings per share of Rs. 16.98, marking an 11 percent year-on-year (YoY) decline.

Despite softer 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 landmark payout was underpinned by improved liquidity, driven by the recovery of overdue receivables and the realization of term finance certificate (TFC) proceeds.

On a quarterly basis, OGDC reported 2QFY26 earnings of Rs. 34.7 billion, with earnings per share of Rs. 8.07, reflecting a 16 percent YoY decline and coming broadly in line with market expectations.

Quarterly net sales stood at Rs. 96.6 billion, down 4 percent YoY while remaining flat quarter-on-quarter (QoQ). According to Topline Securities, the decline in revenues was primarily due to lower gas output following Annual Turnaround Activity (ATA) at the Uch field.

Royalty expense increased to Rs. 11.9 billion, up 3 percent YoY, with royalty accounting for 12 percent of net sales, in line with OGDC’s historical average.

Exploration expenses surged sharply during 2QFY26, rising 2.2 times YoY and 2.9 times QoQ to Rs. 8.8 billion, mainly due to two dry wells—Khatian and Jakhro North—drilled during the quarter.

Operating expenditures (OPEX) climbed to Rs. 36.9 billion, 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 reflecting lower interest income.

The effective tax rate (ETR) for 2QFY26 eased to 29 percent, compared with 43 percent in 2QFY25 and 38 percent in 1QFY26.

The company’s recovery ratio improved markedly to 130 percent, up from 105 percent in 2QFY25 and 101 percent in 1QFY26, supported by 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 continues to maintain a BUY stance on OGDC, with the stock currently trading at an FY26E/FY27F price-to-earnings (PE) multiple of 8.6 times and 6.3 times, respectively.