ISLAMABAD: Pakistan E&P sector earnings soared in 4QFY26 as listed oil and gas exploration companies delivered an extraordinary quarter, with a courtroom decision deserving nearly as much credit as the oil field did.
According to Focus Pakistan, the sector's combined earnings hit Rs214 billion in the fourth quarter of FY26. That's 2.5 times higher than a year earlier, and 2.3 times the previous quarter. Full-year earnings climbed to Rs459.8 billion on the back of it, up 31% from FY25. A big piece of that jump has nothing to do with drilling, it comes from a Rs54.9 billion tax reversal, tied to a Federal Constitutional Court ruling that links super tax liability to allowable limits set under Petroleum Concession Agreements. The FCC spent much of 2026 hearing super tax disputes across several sectors, upholding the levy's constitutionality in a January ruling. The precise legal basis for this quarter's PCA-linked reversal in the E&P sector isn't fully public yet, so the accounting treatment is best read as a direct consequence of that ruling rather than a blanket exemption. Compare the reversal with an effective tax rate of 26% in the same quarter last year, or 28% just one quarter earlier, and the swing alone helps explain a huge share of the earnings jump.
Higher Oil Prices Deliver a Second Windfall
Oil prices did plenty of heavy lifting too. Net sales grew 54% year-on-year to Rs307.4 billion. Arab Light crude averaged US$103.96 a barrel during the quarter, against just US$68.61 a year earlier, a 52% surge that lifted revenue across nearly every player in the sector.
Also Read: Pakistan Oil Production Jumps 20%, Yet Drilling Activity Collapses 65%
Exploration Costs Surge as Five Wells Come Up Dry
Exploration told a rougher story. Costs surged 77% year-on-year and 82% quarter-on-quarter to Rs26.2 billion, pushing the full-year exploration bill to Rs61.8 billion, up 2% from FY25. Five wells came back dry over the course of the year: Jakhro North-1, Khatian-1, Saidpur-1 and Chak203-01 from OGDC, and Pario-01 from MARI. Drilling harder and finding less isn't a comfortable combination, even when the quarter's headline numbers look this good.
Shareholders Collect Rs166.5 Billion
Dividends, at least, gave shareholders something uncomplicated to celebrate. The sector paid out Rs166.5 billion for FY26, up 26% year-on-year. OGDC, PPL and POL recorded their highest-ever disbursements, contributing 44%, 20% and 17% of the total respectively, while MARI accounted for another 19% of the sector payout.
OGDC, PPL, MARI and POL End FY26 on a High
Look at the four companies individually, though, and the story splits in interesting directions. OGDC delivered the biggest absolute earnings surge, with profit roughly tripling both year-on-year and quarter-on-quarter, riding higher sales alongside that tax reversal even while its own exploration costs shot up 2.6 times year-on-year. Its quarterly dividend came in at Rs6.0/share, taking the full-year payout to Rs17.0/share.
Also Read: OGDC Turns to US Energy Giant Baker Hughes to Squeeze More Oil, Gas From Ageing Fields
PPL had to work harder for its number. Exploration costs rose there too, yet earnings still climbed 93% year-on-year and 80% quarter-on-quarter. The company's Rs6.0/share quarterly dividend pushed its FY26 total to a record Rs12.0/share, the highest PPL has ever paid.
Then there's MARI, which delivered the sharpest swing in the entire sector. Earnings jumped 99% year-on-year and 77% quarter-on-quarter, with an Rs18.3 billion tax reversal providing a major boost against a 26% effective tax rate for the whole of FY25. MARI's board declared Rs18.7/share for the quarter alone, lifting the full-year payout to Rs27.0/share.
POL tells perhaps the cleanest growth story of the four. Sales rose 64% year-on-year and 32% quarter-on-quarter, and earnings followed with gains of 62% and 59% respectively. A lower effective tax rate helped 19% this quarter against 23% a year ago, and 23% for the full year against 31% in FY25. POL topped the entire sector's dividend table regardless, at Rs72.5/share for the quarter and Rs100.0/share for FY26, the highest payout in the group, by some distance.
One question hangs over an otherwise stellar set of numbers: how much of this profit boom came from the oil fields and how much came from a courtroom reshaping the sector's tax bill?