Shell earns Rs 1.5bn, declares Rs 35 dividend

KARACHI: Shell Pakistan Limited (SPL) has completed the 3-D seismic survey of its off-shore block and plans to invest $25 million on the drilling of an exploratory well provided the outcome of the survey is positive.

“Already, the SPL has invested $12 to $15 million in the block and it would require another $25 million if the survey report indicates the presence of hydrocarbons.” This was stated by Managing Director, SPL, Farooq Rehmatullah while talking to newsmen at a press briefing here on Thursday.

He said the decision to go for drilling of exploratory wells would be taken by the end of this year. Presently, the evaluation of the survey was underway to see what are the risk factors and other details involved, he said.

He said Shell is part of the joint ventures with Kufpec consortium in which Kuwait Petroleum and Premier Oil are partners.

The block is close to the block of Total, he said adding that despite abandoning of exploration work by Total, Shell would take a decision on whether to drill a well or not after evaluating its own data.

To a query regarding capping of the petroleum products prices by the government and its impact on Shell’s revenue, Farooq Rehmatullah said the government has taken a dent on its revenue and at present the revenue from Petroleum Development Levy (PDL) is zero.

“The government owes Rs1.3 billion to the industry under inland freight and price differential but it is not a big deal,” he said adding that the government had set a target of collecting Rs37.5 billion for 2004-05 from PDL but at the moment it was collecting nothing and it is now prudent to pass on the global price hike to consumers.

Shell’s overall market share in the white oil products is 33 per cent and it is focusing more on lubricants side than the High Sulphur Fuel Oil (HSFO) side because of insecure credits and volatile demand.

He said the White Oil Pipeline Project (WOPP) is almost complete and it was in the final stage of testing and hopefully it would be operational by the end of this year.

“We expect dividends on Pepco to start in the year 2006,” he said. Farooq Rehmatullah disclosed that SPL has won the tender to supply Jet A-1 to Afghanistan but declined to give the quantity as well as revenue generated from this contract. Out of three contracts, Shell has won two and PSO one, he said.

Earlier, he said operating in an intensively competitive market, Shell has delivered a robust performance this year achieving a profit after tax of Rs1.5 billion.

“Shell has announced an excellent dividend pay-out of Rs35 per share, a testament to shareholders’ commitment and this Rs35 dividend is equal to last year and represents a full profit payout after taking into account the expected capital expenditure for investment in the growth of the company and future working capital requirements”, he said.

He said Pakistan’s economy is in a period of strong growth that is reflected in the oil products market. The company is keen to participate aggressively in this market growth through a capital investment of Rs1.1 billion in infrastructure development.

The company has managed to achieve growth in profits on the back of improved margins arising from a better product mix and by bringing cost efficiencies in its operations.

Giving key financial data, July-June 2004 against 2003, Hasnain Moochhala, Director Finance said the sales revenue rose by 1 per cent to Rs90.108 billion in Jul-June 04 against last year when it was Rs88.960 billion. The rise in revenue was due to upward prices in the international markets, he said.

The sales in volume, however fell by 9 per cent to 24,646,000 per barrels from Rs27,174,000 while the gross margin (excluding transport) was up by 15 per cent to Rs5.365 billion from Rs4.665 billion.

The operating expense (excluding transport) too rose by 10 per cent to Rs2.964 billion from Rs2.686 billion while Net Income After Tax (NIAT) FIFO also surged by 20 per cent to Rs1.508 billion from Rs1.255 billion.

The CAPEX however fell by 57 per cent to Rs1.118 billion from Rs2.603 billion but the earning per share was up by 20 per cent to Rs43.01 from Rs35.79.

As on June 2004, the stock-in-trade rose by 60 per cent to Rs4.559 billion from Rs2.851 billion, trade debts were higher by 29 per cent to Rs2.038 billion from Rs1.577 billion.

However, there was a decline in other receivables and cash balances account that fell by 7 and 47 per cent respectively to RsRs749 million and Rs567 million. On June 2003, the other receivables stood at Rs807 million while cast balances were at Rs1.076 billion.

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