Topline Securities hosted the Pakistan Energy Conference 2024, where the first session featured the Oil & Gas Development Company (OGDC). The speaker for this session was Mr Mohammad Anas Farook, CFO of OGDC, on 13 November.
§ OGDC’s cash collection ratio improved to 121% in 1QFY25. Management expects the pace of cash collection to continue as they believe that, under the IMF program, the government will announce timely gas price adjustments to meet the revenue requirements of Sui companies.
§ Management also highlighted that considering the strong recovery, investors can expect some dividend improvements; however, the announcement will depend on the board’s decision.
§ Moreover, various steps are under consideration to resolve the buildup of previous circular debt.
§ The ongoing feasibility study and financing for the Reko Diq project are expected to be completed by December 2024.
§ OGDC drilled 13 wells in FY24, compared to 60 wells drilled by the industry. In the future, OGDC plans to add three discoveries to the system this year, in addition to Nur West-1, which was added under the tight gas policy in July 2024.
§ Regarding Abu Dhabi Block-5, two appraisal wells have been completed, while an exploration well is currently in progress.
§ OGDC’s oil production stood at 33,117bpd in FY24, and if there were no curtailments, production would have been 33,495bpd. Similarly, OGDC’s gas production was 717mmcfd; without curtailments, it would have been 771mmcfd.
§ Management highlighted a natural decline of 7-8% in oil and 10-12% in gas production. However, in the case of OGDC, management is targeting improving production.
§ The country’s total oil reserves are 243 MMBBL, with OGDC holding a 51% share. In gas, the total reserves are 18,472 BCF, and OGDC holds a 32% share.
§ Bettani-2 will start producing in January 2025, and the company plans to conduct 3D in Bettani-3.
§ The policy of selling 35% of gas from the new field to a third party is still pending and has yet to be approved by the Cabinet Committee on Energy.
§ Management highlighted that OGDC made a major discovery in ZIN of low BTU gas in the past but did not put it into production due to its commercial viability. Management is now considering options to bring ZIN gas to UCH, but it will take the medium to long term.
§ Key challenges the company faces include (1) local procurement rules by PPRA, (2) the pileup of previous circular debt, (3) forced curtailment of gas by SNGPL and UCH Power, and (4) the security environment.
