Topline Pakistan Research has updated its earnings estimates for the oil and gas exploration sector, raising projections for FY27-FY28 by 18-34% due to rising international crude oil prices and higher hydrocarbon production from the recovery of curtailed volumes and new discoveries.

We maintain an overweight stance on E&Ps, with a particular preference for OGDC and PPL, while setting a target price of Rs714/share for MARI, implying a 14% total return. Target prices for OGDC, PPL, and POL are Rs. 409 (31% return), Rs. 316 (43% return), and Rs. 752 (29% return) per share, respectively.

The oil price outlook has been adjusted to US$90/bbl until 1QFY27, with a long-term average of US$70/bbl from Q2 FY27 onward. Recent geopolitical tensions led Qatar to declare force majeure on RLNG supplies, giving domestic firms an opportunity to regain lost volumes. By Apr 2026, curtailed oil production had decreased significantly from 6,000 bpd to 800 bpd.

According to April’s PPIS report, oil production peaked at 72,176 bpd, while gas production surpassed 3,000 mmcfd. We have maintained our assumptions regarding the super tax pending judicial review, valuing Reko Diq at cost and without adjustments for circular debt, which could enhance E&P valuations.

For OGDC, we revised earnings upward by 7%-18% for FY26-FY28, driven by increased production and oil prices. Our target price for OGDC remains Rs409/share, representing a 31% upside.

PPL’s earnings estimates have improved by 17-34% due to production recovery and a share of Baragzai’s incremental output. We maintain a BUY on PPL with a target of Rs316/share, suggesting a 43% return.

MARI’s forecasts have been raised by 20-31% due to new fields and gas allocation revisions, with additional gas volumes expected from the Ghazij and Shawal fields by FY28.