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KARACHI, May 12, 2026: Pakistan’s oil and gas exploration sector is expected to deliver stronger earnings growth over the next two fiscal years. This outlook is driven by higher international crude oil prices and improving hydrocarbon production, according to a sector review released on May 11, 2026.
Analysts have revised earnings estimates for exploration and production (E&P) companies upward by 18% to 34% for FY27 and FY28. At the same time, they have maintained an overweight stance on the sector.
In addition, the report highlighted Oil & Gas Development Company Limited (OGDC) and Pakistan Petroleum Limited (PPL) as top investment picks. It cited stronger production prospects and attractive valuations. However, analysts kept a HOLD rating on Mari Energies Limited (MARI) and set a June 2027 target price of Rs714 per share, implying a 14% total return.
Moreover, analysts revised target prices for key E&P companies. They set OGDC at Rs409, PPL at Rs316, and Pakistan Oilfields Limited (POL) at Rs752. These targets suggest potential returns of 31%, 43%, and 29% respectively by June 2027. They based valuations on a reserve-based discounted cash flow model.
The revision comes after a sharp rise in global crude oil prices, triggered by ongoing geopolitical tensions and supply disruptions. Arab Light crude has averaged above US$105 per barrel since March 3, 2026. As a result, analysts raised short-term oil assumptions to US$90 per barrel through the first quarter of FY27. They now expect prices to normalize around US$70 per barrel from the second quarter onward, bringing the FY27 average to US$80 per barrel, up from US$76.83 in FY26.
Furthermore, the report noted supply disruptions in regional LNG markets. In particular, Qatar’s force majeure on RLNG cargoes created an opportunity for local producers. Consequently, domestic E&P companies increased output from previously curtailed fields and new discoveries. OGDC management confirmed that curtailed production dropped sharply between March and April 2026, signaling recovery.
According to the Pakistan Petroleum Information Service (PPIS), national oil output reached 72,176 barrels per day in April. This marked the highest weekly level in nearly two years. Meanwhile, natural gas production crossed 3,000 mmcfd, exceeding FY26 average levels.
Analysts also pointed to additional upside risks for the sector. These include potential super tax changes and valuation adjustments for the Reko Diq project. They noted that current estimates value Reko Diq conservatively at cost and exclude major circular debt recoveries, which could further lift valuations.
For OGDC, analysts raised FY26–FY28 earnings estimates by 7% to 18%. They attributed this to higher oil prices and stronger production. Notably, the Baragzai field alone has added over 6,000 barrels per day. Production is expected to rise to nearly 25,000 barrels per day over the next two to two-and-a-half years.
Similarly, PPL’s earnings forecasts increased by 17% to 34% for FY26–FY28. This improvement reflects stronger gas output from Nashpa, Kandhkot, and Tal Block. The company will also benefit from its stake in the Baragzai field alongside OGDC.
In contrast, analysts lowered POL’s earnings outlook for FY27 and FY28. They cited weaker long-term production assumptions and declining reserves in the Tal Block, its main production base. However, they maintained a BUY recommendation due to strong valuation support and an attractive dividend outlook.
