Karachi: Mari Energies Ltd (MARI) reported its financial results for the third quarter of fiscal year 2025, revealing a net profit of PkR15.9 billion, equating to an earnings per share (EPS) of PkR13.25. This figure represents a 13 percent increase year-over-year, surpassing analyst expectations due to reduced operating and taxation expenses. However, the company faces challenges from higher royalty charges, which impacted overall profitability.

Net sales for the quarter decreased by 5 percent year-over-year to PkR45.6 billion. This decline is attributed to lower average wellhead gas prices and a slight reduction in hydrocarbon production compared to the same period last year. According to Petroleum Policy and Infrastructure Services (PPIS) data, oil production was estimated at 1.2 thousand barrels per day and gas production at 809 million cubic feet per day, marking a year-over-year decrease of 2.3 percent and 2.6 percent, respectively.

Royalty expenses saw a significant increase, doubling to PkR11.6 billion, as a new royalty agreement for the Mari field lease took effect. In contrast, operating expenses decreased by 27 percent to PkR8.4 billion, and exploration expenses dropped by 81 percent to PkR2.9 billion, largely due to the absence of a one-time impairment charge of PkR13.5 billion from the previous year.

Finance income experienced a reduction of 13 percent year-over-year, totaling PkR1.8 billion, likely due to declining investment yields. As of March 2025, the company reported cash and short-term investments amounting to PkR74 billion, up from PkR61.3 billion a year earlier.

The company’s effective tax rate for the quarter was 29 percent, compared to 8.3 percent in the same period last year and 25 percent in the previous quarter.

In terms of operational developments, MARI’s management disclosed the commencement of gas production at a rate of 70 million cubic feet per day from the Shewa Early Production Facility. Additionally, the company achieved gas and condensate discoveries in multiple formations at the Spinwam-1 site, where it holds a 55 percent working interest. Discoveries were also made in partner-operated blocks, namely Jhim East X-1 and Pateji X-1, with gas and oil production reaching 18 million cubic feet per day and 290 barrels per day, respectively.

AKD Securities Limited maintains a ‘HOLD’ recommendation on MARI, with a target price of PkR670 per share by December 2025.