Pakistan’s oil and gas exploration and production (E&P) sector is expected to post a 15% year-on-year decline in earnings for the second quarter of fiscal year 2026, weighed down by lower gas production, weaker oil prices and the absence of one-off income, brokerage house Topline Securities said.

In a sector outlook note, Topline said oil production during the quarter averaged 64,700 barrels per day, marking a modest 2% increase from a year earlier.

Gas production, however, declined 4% year-on-year to about 2,732 million cubic feet per day, exerting pressure on revenues.

The impact of lower gas volumes was compounded by a sharp fall in oil prices. Arab Light crude prices averaged $65.37 per barrel in 2QFY26, down 13% from the same period last year, according to Topline.

Profitability is also expected to be affected by a 48% year-on-year drop in other income, reflecting the absence of one-off gains and lower interest rates.

On a quarter-on-quarter basis, sector earnings are projected to fall 7%, despite a 4% sequential improvement in oil production.

Topline said weaker gas output and softer oil prices are likely to outweigh the benefit of higher oil volumes.

Among individual companies, Oil and Gas Development Company Ltd. (OGDC) is expected to report earnings per share of PKR 7.83, down 19% year-on-year and 12% quarter-on-quarter.

Topline attributed the decline to two dry wells — Khatian and Jakhro North — as well as lower production from the Uch field, where output fell 13% year-on-year and 23% sequentially due to annual turnaround activity. The brokerage expects OGDC to announce a cash dividend of PKR 3.5 per share.

Pakistan Petroleum Ltd. (PPL) is forecast to post EPS of PKR 7.44, down 26% year-on-year but up 1% from the previous quarter.

The year-on-year decline is largely due to the absence of one-off gains recorded in the same quarter last year, including an insurance claim and reversal of impairment losses. Topline expects PPL to declare a cash dividend of PKR 2.0 per share.

Mari Petroleum Company Ltd. (MARI) is expected to outperform peers, with earnings projected at PKR 12.59 per share, up 35% year-on-year but down 3% quarter-on-quarter.

Topline said the year-on-year improvement is driven by a significant reduction in operating expenses to $2.86 per barrel of oil equivalent, compared with $4.78 per boe in 2QFY25. No interim dividend is expected, in line with last year’s trend.

Pakistan Oilfields Ltd. (POL) is projected to report EPS of PKR 18.35, down 31% year-on-year and 4% quarter-on-quarter.

The decline is mainly attributed to more than a threefold increase in exploration costs, stemming from seismic activity in the Ikhlas EL and Pariwali D&P blocks. Topline expects POL to announce a cash dividend of PKR 20 per share.

Despite near-term earnings pressure, Topline said it is maintaining an overweight stance on Pakistan’s E&P sector.