MARI held its Corporate Briefing Session on June 24 to discuss the performance and outlook after the 9MFY22 results. The company posted an 18% rise in earnings during 9MFY22 to PKR27.5bn (EPS: PKR205.84). MARI is likely to make an all-time high production during FY22 (9M: 28mmboe), crossing the recent peak of 36mmboe in FY21.
Update on Sachal Gas Processing Complex (SGPC):
The Tipu Gas Processing Plant has faced mild delays owing to supply chain bottlenecks and COVID19 issues. The commissioning of Cross Country Pipeline and first gas from the Tipu GPF is likely to conclude by 4QFY23, where the expected flows of 150mmcfd (Goru-B: 90; Tipu: 20 and HRL: 40) are expected to tie in with the SNGP network.
We believe this will likely increase its exposure toward gas-based circular debt, where receivables from SNGP and GENCO have doubled during 9MFY22 to c.PKR25bn.
Update on Exploration:
Challenging wells in Surghar and Mian Miro Deep were being explored for hydrocarbons; however, they have become economically unviable.
Bolan South, an exploratory cum appraisal well, is currently being tested as per the recent drilling activity available with PPIS. This will likely be an oil reservoir in Ziarat block, the extension of Bolan East well that is already giving 761bpd and adds c.PKR9.7/share of annualized earnings to MARI. The market speculations are rife regarding announcing a discovery in the Bolan South exploration well. However, the management guidance reflected thinly on the future flows from this oil reservoir.
Some more exploration efforts in non-operated blocks with OGDC and PPL will likely yield potentially viable future flows. Near-term production enhancements will probably come from the Bannu West field in North Waziristan with an expected gas flow of 25mmcfd (estimated annualized earnings impact of PKR25.9/share).
The company has also won 5 new blocks in Bid Round 2022, 2 as an operator in Mach and Dadhar.
MPCL has now divested from National Resources Limited (NRL), having invested PKR209mn earlier, after the government made an agreement with Barrick Gold and Antofagasta for mineral exploration in Pakistan.
MARI is now focusing on rationalizing the prospective fields and appraisal wells on Mari-HRL. They are now being focused on production enhancements. From the ongoing SGPC project, only 20mmcfd is priced at the base gas price of the Mari gas field, and the remaining has the entire PP2012 applicable. The company boasts an optimistic outlook per the initial management guidance, while payouts may likely be restricted owing to international investment in PIOL.
(We are in the process of initiating coverage on MARI and we shall apprise the investors with a detailed note accordingly.)
Courtesy – Intermarket Securities Limited.