Pakistan Petroleum Ltd (PPL) held its analyst briefing today to brief investors about FY24 financial results and shed light on the future outlook:
- PPL reported NPAT of PkR114.3bn (EPS: 42.0) in FY24, up 17% YoY. The increase was mainly due to the reversal of a tax provision relating to the depletion allowance and the devaluation of the domestic currency during the year.
- The company’s total production reached 713mmcfd in FY24 (vs. 815mmcfd last year), primarily driven by lower offtakes from Kandhkot and line-pack pressure in SNGPL’s network.
- The revenue collection ratio has seen marked improvements, reaching 81% in FY24 vs. 53% in the previous year. This was due to three back-to-back consumer gas price revisions during the last two years.
- The collection ratio for gas-based revenues is presently 100%, and management expresses optimism for its continuity. To address the outstanding stock of circular debt, the company is pushing for one-off bond issuance by the GoP (similar to a past instance) to settle the balance.
- SNGPL’s line-pack pressure continues to disrupt operators in the northern regions, specifically impacting the company’s production at Sui block.
- GENCO-II’s reduced offtakes are primarily due to equipment issues at the power plant. Current offtakes are around 100mmcfd vs contracted volumes of 150mmcfd. To address this issue, the company is actively pursuing the reallocation of Kandhkot gas.
- The award of the Sui D&PL has been pending for a long time, but management remains optimistic that it will be granted within a month.
- The cost of security has gone substantially up over the past year, and all E&P companies, especially in frontier areas, face this challenge. The matter has been formally raised with both the military and the Ministry of Interior.
- Management forecasts production of 0.70bcfd for FY25, with 8 development and 2 exploration wells planned, primarily in the Dhok Sultan, Shah Bandar, and Gambat South blocks. Management estimates a capex of PkR38bn during FY25.
- Regarding PIOL, drilling of two appraisal wells is complete, while a exploration well is currently underway. Management anticipates ADNOC to approve the field development plan (FDP) for the three existing wells, along with PCA, by Dec ’24.
- A feasibility study for the Reko Diq is underway and expected to be completed by Dec ’24. Additionally, the company’s board has approved funding for GoB’s share of investment in the BLZ mining project, with a total investment outlay of US$150mn.
- Management has indicated that the company has ample cash for the upcoming offshore block auction and looks forward to participating.
Courtesy – AKD Research
