Annual Report of Pakistan

Oilfield Limited (POL)

Course: Theory and Practices Of Financial Management

Submitted to: Sir Faraz Nasim
Class: MBA-FRM
Presented by:
 Sana Sharif
 Ayesha Amir
 Uroona Altaf
 Uzma Khan
 Iqra Tabsum

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Table of Contents
Introduction...............................................................................................................4
INFORMATION ABOUT INDUSTRY:........................................................................4
COMPANY INFORMATION:....................................................................................4
MAJOR COMPETITORS:.........................................................................................5
MARKET SHARE OF THE COMPANY AND ITS COMPETITORS:...............................5
CONTRIBUTION TO G.D.P OR ECONOMY:.............................................................5
Income statement.....................................................................................................7
Common-size Analysis...........................................................................................7
Net Sales............................................................................................................8
COGS..................................................................................................................8
Gross Profit........................................................................................................9
Exploration Cost................................................................................................9
Net Income/profit for the year........................................................................10
Balance Sheet..........................................................................................................11
Common-size Analysis.........................................................................................11
INDEX ANALYSIS...................................................................................................12
Revenue reserves:...............................................................................................13
Non-Current Liabilities:...................................................................................14
CURRENT LIABILITIES AND PROVISIONS:.........................................................15
CURRENT ASSETS:................................................................................................16
Ratios.......................................................................................................................17
Profitability Ratios...............................................................................................17
Activity Ratios......................................................................................................18
Solvency Ratios....................................................................................................19
Liquidity Ratios....................................................................................................19
Valuation Ratios...................................................................................................20

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 INTRODUCTION
INFORMATION ABOUT INDUSTRY:
Pakistan’s burgeoning demand for oil and gas has stimulated the need for large-
scale exploration and expansion projects and investments to help boost oil and
gas production. Pakistan mainly depends on Oil & Gas for its energy generation.
These two components of energy contribute 77.40% to the energy requirement of
Pakistan. Pakistan has estimated oil reserves of 303.63 million barrels while its
current production is 65,531 barrels per day. The gas reserves of Pakistan are
estimated to be 28.32 TCF while its current production is 4 billion cubic feet per
day.
Currently, seven refineries are operating in the country, having the capacity to
refine 248,506 bpd. Three more oil refining companies would be established with
their total capacity of refining crude of 465,000 barrels per day (bpd) to enhance
the existing quantity produced by seven companies. After the establishment of
these companies the country’s refining capacity would reach up to 713,506 bpd.
Gas is the major source of energy in Pakistan. Pakistan has a well-developed gas
transmission infrastructure. The gas distribution companies plan to invest US$
285 million over the next five years in gas sector.
COMPANY INFORMATION:
Pakistan Oilfields Limited is a Pakistan-based oil and gas exploration and
production company. The Company is engaged in exploration, drilling and
production of crude oil and natural gas. The Company's activities also include the
marketing of liquefied petroleum gas (LPG) under the brand name POLGAS and
transmission of petroleum. Its products include crude oil, solvent oil, natural gas,
LPG and sulphur. The Company operates a network of pipelines for transportation
of its own, as well as other companies' crude oil to Attock Refinery Limited. It
operates nine development and production leases, including Pariwali, Meyal,
Joyamair, Minwal, Dhulian, Khaur, Pindori, Turkwal and Balkassar. The Company
has a network of distributors across the country with presence in Punjab, Khyber
Pakhtunkha, Azad Kashmir and Baluchistan. The Company's subsidiary includes
CAPGAS (Private) Limited, which is engaged in engaged in buying, filling,
distribution and dealing in LPG.
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MAJOR COMPETITORS:
The major competitors of Attock Petroleum Limited are as following:
 British Petroleum (BP) Pakistan
 Oil & Gas Development Company Ltd. (OGDCL)
 Pakistan Petroleum Ltd. (PPL)
 Mari Petroleum Company Ltd. (MPCL)
 United Energy Pakistan (UEP)

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MARKET SHARE OF THE COMPANY AND ITS COMPETITORS:
Following is the chart that shows the Market share of Attock petroleum limited
with respect to its competitors for the year 2015 and 2016.

CONTRIBUTION TO G.D.P OR ECONOMY:

The company continues to play a vital role in the oil and gas sector of the
country. During the year the company saved foreign exchange in excess of US
$332 million (2016: US$ 249 million) for the country. The contribution to the
national exchequer, in the shape of royalty and other government levies was Rs.
8,202 million (2016: Rs 6,633 million)

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Analysis of Financial Statements
INCOME STATEMENT
Common-size Analysis
  2014 2015 2016 2017 2018 2019
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of Sales 46.51% 47.32% 54.75% 44.22% 44.38% 39.08%
Gross Profit 53.49% 52.68% 45.25% 55.78% 55.62% 60.92%
Exploration Costs 4.81% 15.31% 8.26% 4.91% 8.55% 4.31%
  48.67% 37.36% 36.99% 50.87% 47.07% 56.60%
Administration expenses 0.34% 0.45% 0.56% 0.36% 0.49% 0.38%
Finance costs 1.84% 3.20% 4.11% 2.50% 5.48% 7.94%
Other charges 3.21% 1.57% 2.25% 2.71% 2.76% 3.64%
  5.39% 5.22% 6.93% 5.57% 8.73% 11.96%
  43.28% 32.14% 30.06% 45.29% 38.34% 44.64%
Other Income 5.13% 5.06% 5.68% 4.93% 9.32% 15.11%
Profit before taxtaion 48.41% 37.20% 35.74% 41.55% 41.02% 52.32%
Provision for taxation 12.15% 9.81% 6.62% 9.15% 8.48% 16.80%
Profit for the year 36.26% 27.39% 29.11% 32.40% 32.54% 35.52%

Index Analysis
(base year=2014) 2014 2015 2016 2017 2018 2019
Net Sales 100% 87% 70% 84% 98% 134%
Cost of Sales 100% 88% 82% 80% 94% 112%
Gross Profit 100% 86% 59% 88% 102% 152%
Exploration Costs 100% 277% 120% 86% 175% 120%
  100% 67% 53% 88% 95% 155%
Administration expenses 100% 115% 115% 89% 139% 148%
Finance costs 100% 151% 156% 114% 293% 577%
Other charges 100% 43% 49% 71% 85% 151%
  100% 84% 90% 87% 159% 297%
  100% 65% 49% 88% 87% 138%
Other Income 100% 86% 77% 81% 179% 394%
Profit before taxtaion 100% 67% 52% 72% 83% 144%
Provision for taxation 100% 70% 38% 63% 69% 185%
Profit for the year 100% 66% 56% 75% 88% 131%

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Net Sales

Net Sales Net Sales

120.00% 160%
140% 134%
100.00%
80.00% 120%
Axis Title

100% 98%
60.00% 100% 87% 84%
40.00% 80% 70%
20.00% 60%
0.00% 40%
1 2 3 4 5 6
20%
Axis Title 0%
1 2 3 4 5 6

The sales of company increase by 6,916,000 in 2014, 2,257,000 in 2015 as

compare to previous years, but after that it has decreases by 3,776,000 and
1,343,000 in 2016 and 2017 respectively but then it increases by 47505million in
year 2019. It has decline in 2016 and 2017 because of lower crude oil prices which
is there major product.
The same trend can be observed from common size analysis as there is 134%
sales in 2019, and 98 in 2018. In 2014 there was a major rise of as a result of
higher production of crude oil. The decline in 2016 and 2017 by 13.19% and 4.69%
is being observed because of fluctuation in crude oil price. Then in 2018 and 2019
sales increase.
COGS
Cost of Sales
120% 112%
100%
100% 88% 94%
82% 80%
80%
Axis Title

60%
Cost of Sales
40%
20%
0%
1 2 3 4 5 6
Axis Title

As compare to 2014 the COGS of the company have decreased by 14616 million,
by13,605million in 2016 by 13209 in 2017 than it increased by 15,529 in 2918 and

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18,576 in 2019.because of increase operating cost share from joint ventures and
depreciation.
The same trend can be seen by index analysis that COGS have increased by
46.69% in 2014, 47.44% in 2015, 54.37% in 2016 44.21% in 2017 44.38% in 2018
and 39.08% in 2019.
Gross Profit
Gross Profit
70.00% 60.92%
60.00%
53.49% 52.68% 55.78% 55.62%
50.00% 45.25%
40.00%
30.00% Gross Profit
20.00%
10.00%
0.00%
1 2 3 4 5 6

Gross Profit has been significantly decreased from 2014 to 2017 , The reason for
decrease in Gross Profit in 2014-17 is the decrease in sales.
The same trend can be seen by common size and index analysis that gross profit
has decreased -7.08% in 2015, -35.78% in 2016 and -19.62% in 2017 and then it
increases in year 2018 and 2019.

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 Exploration Cost
Exploration Costs
20.00%
15.31%
15.00%
Axis Title

10.00% 8.26% 8.55%

4.81% 4.91% 4.31%
5.00%
0.00%
1 2 3 4 5 6
Axis Title

Exploration Cost
300% 277%
250%
200% 175%
Axis Title

150%
100% 120% 120%
100% 86%
50%
0%
1 2 3 4 5 6
Axis Title

The exploration cost of the company has increased in the year 2014, 2015, while
it decrease in 2016 ,2017,2018 and 2019 as compare to the year 2014. It can be
seen from the trend analysis that this increase is by of amount 1710million in
2014, 4729,000 in 2015, then it decrease in 2016 by 2052million. This increase is
because increase in geological and geophysical cost of fields.
The same trend can be seen by trend analysis that exploration cost has increased
by 277% in 2015 decrease by 120% in 2016 and 120% in 2019.
Net Income/profit for the year

Profit for the year Profit for the year

150% 131% 36.26%
40.00% 35.52%
100% 27.39% 29.11% 32.40% 32.54%
100% 75% 88% 30.00%
66% 56% 20.00%
50%
10.00%
0% 0.00%
1 2 3 4 5 6 1 2 3 4 5 6

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The Profit for the year of the company has decreased in the year 2015, 2016 and
2017. It can be seen from the common size analysis that this this decrease is of
amount (3,400), (4,625), (2,180) in the year 2015, 2016 and 2017 respectively and
increase is of amount 11,383 in year2018,16,873 in year 2019.this decline in net
income is because of decline in sales.
The same trend can be seen by index analysis that profit has decreased by
-28.67% in 2015, -39.00% in 2016 and -18.38% in 2017 then it increase in 2018
and 2019.

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 BALANCE SHEET

Common-size Analysis
common size analysis
  2014 2015 2016 2017 2018 2019
SHARE CAPITAL AND RESERVES            
Authorized Capital 8.64% 9.02% 8.97% 8.67% 7.13% 6.14%
Issued, subscribed and paid-up Capital 4.09% 4.27% 4.24% 4.10% 3.37% 3.48%
Revenue Reserves            
Insurance Reserves 0.35% 0.36% 0.36% 0.35% 0.29% 0.25%
Investment Reserves 2.69% 2.81% 2.80% 2.70% 2.22% 1.91%
Unappropriated Profit 53.69% 50.93% 46.71% 47.48% 40.82% 41.08%
  56.73% 54.10% 49.87% 50.53% 43.33% 43.24%
Fair value gain on available for sale investments            
  60.82% 58.37% 54.12% 54.64% 46.70% 46.72%
NON CURRENT LIABILITIES 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Long term deposits 1.10% 1.31% 1.49% 1.47% 1.19% 1.04%
Deffered Liabilities 23.68% 24.92% 28.07% 26.02% 22.29% 20.93%
  24.78% 26.23% 29.56% 27.49% 23.49% 21.97%
CURRENT LIABILITIES AND PROVISIONS            
Trade and other payables 9.99% 8.79% 9.96% 10.24% 22.76% 23.72%
Provisions for income tax 4.41% 6.60% 6.36% 7.64% 6.81% 7.36%
Unclaimed dividend         0.24% 0.23%
  14.40% 15.40% 16.33% 17.88% 29.81% 31.31%
TOTAL EQUITY AND LIABILITIES 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
             
FIXED ASSETS            
Property, pland and equipment 16.08% 18.92% 18.70% 17.09% 13.41% 10.43%
Development and decommissioning costs 22.74% 22.39% 26.18% 23.20% 17.95% 13.57%
Exploration & evaluation assets 8.06% 4.80% 1.62% 3.27% 3.69% 0.06%

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  46.89% 46.10% 46.50% 43.56% 35.05% 24.06%
LONG TERM INVESTMENT IN SUBSIDIARY &
ASSOCIATED COMPANIES 16.62% 17.34% 17.26% 16.68% 13.70% 11.80%
OTHER LONG TERM INVESTMENTS 0.01% 0.01% 0.01% 0.01% 0.01% 0.00%
LONG TERM LOANS AND ADVANCES 0.03% 0.03% 0.02% 0.03% 0.02% 0.03%
CURRENTS ASSETS            
Srores and Spares 6.33% 7.71% 7.60% 6.76% 5.09% 4.81%
Stock in Trade 0.46% 0.27% 0.67% 0.39% 0.42% 0.36%
Trade debts 8.80% 6.27% 5.99% 5.71% 11.75% 10.93%
Advances, deposits, prepayments and other
receivables 2.16% 3.12% 2.63% 2.27% 3.27% 3.12%
Short term investments           1.00%
Cash and bank balances 18.71% 19.14% 19.32% 24.60% 30.69% 43.88%
  36.46% 36.51% 36.21% 39.72% 51.21% 64.11%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

INDEX ANALYSIS
Index Analysis
(base year=2014) 2014 2015 2016 2017 2018 2019
100 100 100 100
SHARE CAPITAL AND RESERVES % 100% % % % 100%
100 100 100 100
Authorized Capital % 100% % % % 120%
Issued, subscribed and paid-up Capital            
100 100 100 100
Revenue Reserves % 100% % % % 100%
100 100 100 100
Insurance Reserves % 100% % % % 100%
100
Investment Reserves % 91% 84% 88% 92% 108%
100
Unappropriated Profit % 91% 85% 89% 93% 107%
100 100 100 100
  % 100% % % % 0%
100
Fair value gain on available for sale investments % 92% 86% 89% 93% 108%
             
100 130 133 131
NON CURRENT LIABILITIES % 114% % % % 132%
100 114 109 114
Long term deposits % 101% % % % 124%
100 115 111 115
Deffered Liabilities % 101% % % % 125%

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100 102 276
CURRENT LIABILITIES AND PROVISIONS % 84% 96% % % 334%
100 139 173 187
Trade and other payables % 143% % % % 235%
Provisions for income tax            
100 109 124 251
  % 102% % % % 306%
100 100 121
TOTAL EQUITY AND LIABILITIES % 96% 96% % % 141%

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FIXED ASSETS            
100 112 106 101
Property, pland and equipment % 113% % % % 91%
100 111 102
Development and decommissioning costs % 94% % % 96% 84%
100
Exploration & evaluation assets % 57% 19% 40% 56% 1%
100
  % 94% 95% 93% 91% 72%
LONG TERM INVESTMENT IN SUBSIDIARY & ASSOCIATED 100 100 100 100
COMPANIES % 100% % % % 100%
100 120 120 120
OTHER LONG TERM INVESTMENTS % 120% % % % 0%
100 106
LONG TERM LOANS AND ADVANCES % 94% 75% % 94% 163%
CURRENTS ASSETS            
100 116 106
Srores and Spares % 117% % % 98% 107%
100 142 111
Stock in Trade % 56% % 84% % 113%
100 162
Trade debts % 68% 65% 65% % 175%
100 117 104 184
Advances, deposits, prepayments and other receivables % 138% % % % 203%
Short term investments            
100 131 199
Cash and bank balances % 98% 99% % % 330%
100 109 170
  % 96% 96% % % 248%
100 100 121
TOTAL ASSETS % 96% 96% % % 141%

Revenue reserves:

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 Revenue Reserves
56.73%
60.00%
54.10%
49.87% 50.53%
50.00%
43.33% 43.24%
40.00%

30.00%

20.00%

10.00%

0.00%
1 2 3 4 5 6

The revenue reserves of the company are decreasing from the year 2014 to 2019,
except year 2014 and 2017 where it has shown a slight increase i.e. 0% and -11%
respectively with the amount change of Rs. 99 and -3599 as compare to the year
2014.
The same trend can be seen from Index analysis that revenue reserves has a
decreasing trend except the year 2014 and 2017 where it has a trend of 1.0 and
0.89 respectively.
Reason:
The Company has aside insurance reserve for self-insurance of assets.
Share Capital and Reserves:

SHARED CAPITAL AND RESERVES

10.00% 9.02% 8.97%
8.64%
9.00% 8.67%
8.00% 7.13%
7.00% 6.14%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
1 2 3 4 5 6

The Share Capital and Reserves of the company are also decreasing from the year
2014 to 2019, except year 2015 where it has a slight increase from 8.64% to
9.02%.

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The same trend can be seen from index analysis that Share Capital and reserves
has a decreasing trend except the year 2015 where it has a increase of 0.9
respectively.
Non-Current Liabilities:
Non current liabilities
35.00%
29.56%
30.00% 26.23% 27.49%
24.78% 23.49%
25.00% 21.97%
20.00%
15.00%
10.00%
5.00%
0.00%
1 2 3 4 5 6

As compare to the year 2014, the non-current liabilities of the company are
increasing till 2016 but in year 2017 it has a slight decrease. In 2017 the change is
of 45% i.e. 4894 rupees change in amount.
The same trend can be seen from index analysis that the non-current liabilities of
the company are increasing, where in 2016 it has an increased trend of 1.45 then
it start declining 2017
CURRENT LIABILITIES AND PROVISIONS:
current liability and provisions
35.00% 31.31%
29.81%
30.00%
25.00%
20.00% 16.33% 17.88%
14.40% 15.40%
15.00%
10.00%
5.00%
0.00%
1 2 3 4 5 6

As compare to 2014 the current liabilities and provisions of the company are
increasing each year. In 2017 it has increased by 68% with the amount change of
rupees 4162 in 2019 it increase by 31.31%.

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The same trend can be seen from index analysis that the current liabilities and
provisions of the company are increasing and in 2019 it has an increased trend of
31.31%.
FIXED ASSETS:

Property, plant and equipment

20.00% 18.92% 18.70%
18.00% 17.09%
16.08%
16.00%
14.00% 13.41%
12.00% 10.43%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1 2 3 4 5 6

As compare to 2014 the fixed assets of the company are decreasing each year
except 2015. In 2017 it has decreased to 17% with the amount change of rupees
2377 as compared to year 2014.in 2019 it decreased to 10%
The same trend can be seen from index analysis that the fixed assets of the
company are decreasing and in 2019 it has a decreased trend of 1.10
CURRENT ASSETS:

Current Assets
70.00%
64.11%
60.00%
51.21%
50.00%
39.72%
40.00% 36.46% 36.51% 36.21%

30.00%

20.00%

10.00%

0.00%
1 2 3 4 5 6

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As compare to 2014 the current assets of the company are increasing. In 2017 it
has increased to 39% with the amount change of rupees 3675, 51% in 2018 and
64% to 2019.
The same trend can be seen from index analysis that the current assets of the
company are increasing and in 2019 it has an increased trend of 1.64.

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 RATIOS
Profitability Ratios
Profitability ratios helps in determining and evaluating the ability of the company
to generate the income against the expenses in incurs and takes into account the
different elements of Balance Sheet and Profit and loss account of the company
for analyzing the performance of the company.

*Industry Avg. 2019

 Gross profit margin and Net Profit margin tells us the profit of the firm
relative to its sales. POL’s net profit margin is slightly lower than the
median of 40% for the industry, indicating that company is using an
ineffective cost structure.
 Return on assets is an indicator of how profitable a company is relative
to its assets. Overall POL’s ROA is better than that of market ratio from
2017 onwards which shows that POL is consistently earning better
returns on its investments than industry. POL increased in the year
because of higher increase in sales in that year from asset.

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  Return on Equity tells us the earning power on shareholder’s book value
investment, and is frequently used in comparing two or more firms in an
industry. High ROE reflects that firm’s acceptance of strong investment
opportunities and effective expense management.
Liquidity Ratios
Liquidity ratios are used to measure a firm’s ability to meet short-term
obligations. They compare short-term obligations with short term resources
available to meet these obligations.

 Current ratio is above the industry average. The higher current ratio
indicates the greater ability of the firm to pay it’s short term liabilities.
 POL’s current ratio and quick ratio have been deteriorating from 2014 to
2019 but as we can witness the boom in 2019. As on 2019, current ratio
and quick ratio have risen above the industry average.
 In 2019 the increase in current asset was observed 16million which led to
the higher liquidity ratios. In 2018, current liabilities increased 10.6 million
which led to decrease in the liquidity ratios.
 Although, the company was initially fallen below the industry average due
to the increase in current liabilities and fluctuating current assets. But,
company has revived their liquidity ratios in 2019 by increasing current
assets.

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Activity Ratios
Activity ratios are also knows as efficiency or turnover ratios, measure how
effectively the firm is using its assets. In this section, we will focus our attention
primarily on how effectively the firm is managing two specific asset groups –
receivables and inventories – and its total assets in general.

 Inventory turnover helps in determining how effectively the firm is

managing inventory and indicate the sales increase or decrease in the
company. As we can observe that, inventory turnover increase in 2019 and
is higher than the industry average. In 2019, increase in sales were
12.5million which led to higher cost of good sold and higher inventory
turnover.
 Receivable turnover is also higher than the industry average which means
recoveries have been made. Also, average collection period in days
decrease from 24 days to 20 days.
 Payable turnover is lower than the industry average. A decreasing turnover
ratio indicates that a company is taking longer to pay off its suppliers than
in previous periods.

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In 2019, The Company sales and profit are the highest ever in Company’s history,
the Company has made profit after tax of Rs 16,871.7 million. Company’s
profitability has increased constantly over the period. POL's gross profit margin
and net profit margin are slightly below the Industry median but improving over
the period. ROA is fluctuating but the effect is not sufficient enough but if we
observe the fixed asset declining trend , can be concluded that due to increase in
net profit and current assets the ROA is sustainable position. ROE is higher than
Industry average that suggests the firm’s accept the opportunities and manage
the expenses effectively.
The liquidity ratios of the company tells us that the company’s performing well in
short term obligations with available resources. The activity ratio is also higher
than the Industry median indicates that outstanding receivable are collected on
time, inventory turn into sale efficiently and payable pay as funds available.

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