KARACHI, Aug 22: Pakistan’s biggest listed firm, Oil and Gas Development Co Ltd (OGDCL), lagged forecasts with flat full-year net profits after higher spending on oil exploration offset the impact of increased production.

The state-owned OGDCL, which is also on the London Stock Exchange, has been ramping up investment in an effort to reduce Pakistan’s dependence on petroleum imports as energy demand grows.

Analysts expect current year earnings to improve as benefits from the exploration programme feed through into production. Pre-tax profits are forecast to rise about 14 per cent in 2007-08, according to four analysts polled by Reuters Estimates.

Net profit for the year to June 30 dipped less than 1 per cent to Rs45.63 billion ($753.3 million) from Rs45.97 billion a year earlier -- below analysts’ expectations ranging between Rs45.8 billion to 47.08 billion .

OGDCL achieved its drilling target of 41 wells, an increase of 11 wells from the previous year, and produced an average 41,000 barrels per day, according to Pakistan Petroleum Information Services.“OGDCL followed an aggressive exploration strategy in which it completed its (drilling) target,” said Faraz Farooq, analyst at First Capital Equities Ltd. “That’s why costs increased and limited the gains from higher production.” OGDCL’s annual sales totalled Rs100.26 billion, up from Rs96.76bn in the previous year, but exploration spending more than doubled to Rs7.41 billion.

First Capital’s Farooq said the downward revision of gas prices from Qadirpur, OGDCL’s main field, also affected earnings growth.—Reuters