Financial Management Pakistan Oilfields Limited

Abstract

Pakistan Oilfields Limited is one of the leading oil companies in Pakistan. POL has 12% share in country’s overall oil reserves while it enjoys 6% market share in crude oil business. POL has the following products: Crude oil, Natural gas, Liquefied petroleum gas, Solvent oil, Sulphur (by product). Currently, Pakistan has about 45 rigs from which the country's oil and gas demands are met. The oil industry must prepare for the challenges of free market and sensitive consumers to the new era. As per OPEC long-term estimates that the needs of oil demand over the next 5years will increase by 33% to a volume of 22.345 million tones, compared to 16.805 million tones in 1998-99 real. Given the high level of imports, the economy is vulnerable to fluctuations in world market prices of crude oil and products. During the recent period of high international prices annual petroleum imports accounted for a major portion of total imports. After the financial analysis it was discovered that the net profit for FY09 is about 33% down from the previous year’s. The earnings per share decreases can be attributed to the lower net income and the demand for retained earnings for the various explorations and other activities the company is looking forward to. The decrease in profitability is primarily attributable to the decrease in production and the impact of the relatively higher exploration expenditure. For future years, there is considerable oil demand and oil price uncertainty, but still a very strong possibility that oil will trend higher. Against all odds, the Pakistan oilfields limited has managed to stay profitable in turbulent times.”