Pakistan Petroleum (PPL), one of the largest and oldest exploration and production (E&P) company of Pakistan has reported of profit after tax of Rs10.1 billion (EPS: Rs3.71) for second quarter of FY20, below market expectations. This deviation can be attributed to higher than expected exploration expenses to likely book additional dry well in foreign exploration activities. Key highlights of the results are: 1) modest topline growth of 7%YoY/4%YoY as oil prices receded and indexation factors remained largely mute, 2) margins receding with GM/NM at 57/23% vs. 59/33% during 1QFY19, and 3) higher other income. As anticipated no interim dividend has been announced. 1HFY20 cumulative net profit now stands at Rs24.4 billion (EPS: Rs8.98) down 19%YoY. Margins have tapered to GM/NM of 60/29% as compared to 61/38% during 1HFY19, indicating that PPL’s foreign expansion program may prove to be a burden on profitability over the near term.