Pakistan's oil and gas exploration sector posted quarterly profits of Rs92 billion in the third quarter of FY2026, benefiting from stronger crude prices, lower exploration costs and a reduced tax burden, even as other income weakened amid lower interest rates and currency-related losses. The sector's earnings rose 24 percent compared with the previous quarter and registered a modest 1 percent increase from the same period a year earlier, signalling resilience despite broader economic challenges. Total revenues reached Rs232 billion during the quarter, marking a 7 percent increase over the preceding quarter and a 1 percent rise on an annual basis. The improvement was primarily driven by a sharp increase in international oil prices. Arab Light crude averaged $80.38 per barrel during the period, compared with $65.37 per barrel in the previous quarter, representing a 23 percent jump. Operational performance also improved as exploration expenditure declined by 10 percent year-on-year. The reduction was largely attributed to fewer unsuccessful drilling attempts. Only one dry well was reported during the quarter, compared with two during the corresponding period last year, indicating more focused exploration activity and improved allocation of resources across the industry. However, not all indicators moved in a positive direction. Other income fell by 23 percent year-on-year to Rs19.7 billion, reflecting the impact of lower interest rates and exchange losses linked to currency appreciation. At the same time, finance costs declined by 16 percent to Rs3 billion. Cumulative financing expenses during the first nine months of the fiscal year also fell sharply, supported by a more favourable interest-rate environment. The sector further benefited from a lower effective tax rate, which eased to 28 percent from 32 percent a year earlier. Tax adjustments contributed to the reduction, helping strengthen bottom-line profitability. Performance among major exploration and production companies varied. Oil and Gas Development C ompany Limited reported mixed results, recording lower earnings on an annual basis while posting strong quarter-on-quarter growth. Pakistan Petroleum Limited experienced a slight decline in yearly profits, with higher operating costs weighing on performance. In contrast, Mari Petroleum Company Limited delivered significant earnings growth, supported by stronger income and a substantial reduction in its tax rate. Pakistan Oilfields Limited also reported solid gains, benefiting from improved revenue streams and lower taxation. The results underscore how elevated crude prices, cost discipline and tax-related benefits helped sustain profitability across Pakistan's oil and gas exploration industry, even as some revenue components faced pressure from changing financial conditions.