RECORDER REPORT

KARACHI: The overall return of Oil and Gas Sector remained negative 10 percent (negative 12 percent in US dollar terms) under-performing KSE-100 index by 9 percent during the current fiscal year (FY20) to date, analysts said.

Interestingly, Pakistan Oil & Gas sector performed far better than benchmark crude blends including WTI, Brent and Arab light which posted return of negative 36 percent, negative 39 percent and negative 39 percent respectively, they added.

This is despite the fact that foreigners sold 120 million E&P shares in FY20 to date, according to our estimates. E&Ps remained the worst performing sub sector with return of negative 11 percent (negative 13 percent in dollar terms) during the period under review, Aftab Awan at Sherman Securities said.

“Although we had overweight stance on E&P sector, the unprecedented situation of global pandemic shocked the global oil stocks including Pakistan”, he added.

E&P remained worst performing sub sector

Pakistan E&P sector under-performed the KSE-100 index by 10 percent during FY20 mainly due to huge crash in international crude oil price on the back of corona virus pandemic. Similarly, the situation worsened due to oil price war between OPEC and Russia. Interestingly, MARI among E&P stocks, posted a return of 32 percent mainly because of the news regarding uncapping of MARI’s dividend. PPL on the other hand posted return of negative 25 percent mainly due to erosion in oil price and lower cash payout.

Oil & Gas Marketing under-perform KSE-100 by 5 percent

The sector return remained negative 6 percent (negative 8 percent in dollar terms) during the period under review.

Despite under performance of O&G marketing sector due to suppression in global demand and crashing oil prices, PSO posted highest return of 7 percent among peers, thanks to fixed retail margins, local OMCs remained immune to lower POL prices. SHEL on the other hand posted 2 percent return followed by APL with negative 1.0 percent. SSGC remained worst performer with negative 37 percent return.

Refineries out shine

Despite being tough year, refineries return remained negative 2 percent in FY20, under performing KSE-100 index by 1.0 percent. The sector performed better comparatively despite hefty inventory and exchange losses and lower uplift of POL products during the lock down period. ATRL out performed peers and posted return of 16 percent whereas NRL return remained lowest at negative 7 percent.