Oil production of Pakistan during FY23 witnessed a reduction of 6% YoY to 69,341 bopd owing to natural decline at major fields such as Nashpa, Mela, Adhi, Chanda, Maramzai, Mardankhel, and KPD-TAY. Similarly, the gas production declined by 4% YoY to 3,233 mmcfd during FY23 amid fall in production from Uch, Sui, Adhi, Qadirpur, Sawan, Miano, Maramzai, and Mardankhel. Whereas, during the 4QFY23, oil and gas production witnessed a decrease of 5% and 3% YoY, respectively due to the aforementioned reasons.

Drilling Activity

During FY23, 15 exploratory and 32 appraisal/development wells were spud against a target of 24 exploratory and 41 appraisal/development wells. The E&P companies face issues in importing equipment, spare parts, and other materials due to the shortage of FX reserves held by SBP, resulting in lower wells being spud during FY23. On quarterly basis, 4 exploratory and 11 appraisal/development wells were spud in 4QFY23 compared to 6 exploratory and 13 appraisal/development in SPLY.

Result Previews:

OGDC: Earnings of PKR 8.02/share expected during 4QFY23

Oil & Gas Development Company Limited (OGDC) is expected to disclose its financial result for the period of FY23 soon, where we forecast net profit to arrive at PKR 194,150mn (EPS: PKR 45.14), augmenting by 45% YoY. The growth in earnings is expected on account of PKR depreciation against USD by 28% YoY and hefty exchange gains during the period. On a quarterly basis, the bottom line is projected to clock in at PKR 34,511mn (EPS: PKR 8.02) in 4QFY23 vis-à-vis PKR 21,740mn (EPS: PKR 5.05) in 4QFY22, showcasing a jump of 59% YoY. The increase in profitability is primarily owed to the devaluation of PKR against USD by 32% YoY. However, oil and gas production depicted a fall of 5% and 11% YoY, respectively while oil prices plunged by 29% YoY. The exploration cost is anticipated to plummet by 43% YoY, settling at PKR 3,335mn in 4QFY23 owed to the lower cost of dry well Chak 20-1 during the quarter compared to dry well Bewato in 4QFY22 along with higher seismic activity in SPLY. Additionally, we expect the company to announce a final cash dividend of PKR 3.20/share (PKR 9.00/share in FY23).

PPL’s bottom line to clock in at PKR 7.53/share during 4QFY23

Pakistan Petroleum Limited (PPL) is anticipated to post profitability of PKR 102,330mn (EPS: PKR 37.61) in FY23 compared to PKR 53,546mn (EPS: PKR 19.68) in FY22, depicting a hefty growth of 91% YoY. The jump in earnings comes on the back of i) 16% YoY hike in Sui wellhead price, and ii) stable oil production while 2% YoY growth in gas production, and iii) a devaluation of the Pak Rupee against the greenback. On the other hand, during 4QFY23, net profit is expected to register a substantial jump of 16.8x YoY, clocking in at PKR 20,495mn (EPS: PKR 7.53). The surge in earnings is attributable to i) PKR depreciation against USD, and ii) higher exploration costs in SPLY, and iii) increase in Sui wellhead price (up by 14% YoY). The exploration expense is projected to plunge by 86% YoY in 4QFY23 amid the absence of dry wells (Khipro East X 01 and Pandran X-1 incurred in 4QFY22). Alongside the result, the company is expected to announce a final cash dividend of PKR 3.00/share (PKR 4.00/share in FY23).

POL’s earning to plummet by 30% YoY in 4QFY23

Pakistan Oilfields Limited (POL) is expected to announce earnings of PKR 35,658mn (EPS: PKR 125.63) in FY23, up by 37% YoY. The jump in bottom-line on account of a 28% YoY weak Pak Rupee coupled with higher exchange gains. However, oil and gas production depleted by 9% and 8% YoY, respectively. During 4QFY23, the profitability is expected to arrive at PKR 5,879mn (EPS: PKR 20.71), declining by 30% YoY. The fall in earnings comes on the back of i) 10% and 4% YoY reduction in oil and gas production, respectively, and ii) a 34% YoY fall in realized oil price. Moreover, we anticipate exploration costs to deplete by 52% YoY due to a decrease in geological and geophysical costs during the period. Alongside the result, the company is forecasted to announce a final cash dividend of PKR 70.00/share (PKR 90.00/share in FY23).

MARI’s profitability to surge by 128% YoY in 4QFY23

The management of Mari Petroleum Company Limited (MARI) is expected to unveil financial result for FY23 on 8th Aug’23. We project the earnings to clock in at PKR 53,087mn (EPS: PKR 397.94) in FY23 against PKR 33,063mn (EPS: PKR 247.83) in FY22, up by 61% YoY. The growth in profitability comes on the back of i) 61% YoY massive jump in the wellhead price of Mari Gas Field, ii) stable gas production, and iii) 28% YoY Pak Rupee depreciation against the greenback. On a quarterly basis, net profit during 4QFY23 is expected to ascend by 128% YoY, to arrive at PKR 12,795mn (EPS: PKR 95.92) given i) 56% YoY higher wellhead gas price of Mari Gas Field, ii) 32% YoY devaluation of PKR against USD, and iii) 5% and 10% YoY growth in oil and gas production, respectively. The exploration cost is anticipated to decline by 60% YoY, to arrive at PKR 2,573mn in 4QFY23 amid no dry well reported during the quarter compared to two dry wells in SPLY. Additionally, we expect the company to announce a final cash dividend of PKR 106.00/share (PKR 195.00/share in FY23).

Courtesy – AHL Research