Pakistan: Oil and Gas Reserves Update

According to a report by IMS Securities, as per the latest hydrocarbon reserves data released by PPIS, as of June 2024, Pakistan’s total Oil reserves increased by 26% to 243 million barrels whereas Gas reserves were up slightly by 2% to 18.5tcf as compared to the reserves as of December 2023.

The substantial increase in oil reserves is primarily attributed to the improvement in oil reserves of OGDC, up 64%, while MARI’s oil reserves have doubled since December 2023, reaching 13.4 million barrels (similar to Tal block’s current reserves of 16.7 million barrels).

Despite the much-awaited addition of reserves of Bannu West (Shewa) and reserves upgrade of Mari Ghazij, overall gas reserves saw only a modest 2% increase, largely because of decline in other major fields.

Overall, a significant improvement in oil reserves was observed, largely due to the reserve upgrades of listed E&P companies, driven by the addition of Shewa and the reserve upgrades of Bolan East, Kunar, and Pasakhi/ Pasakhi North. This development is more favorable for OGDC and MARI as compared to PPL and POL.

 

Pakistan: E&P companies post windfall profit

According to a report by Pakistan’s leading brokerage house, AKD Securities, the Exploration & Production (E&P) sector has reported phenomenal earnings for 1QFY23. The sector’s profit after tax was reported at PKR100.8 billion—the highest in its history. 

The sector’s earnings grew 55%YoY, with favorable macros driving earnings growth this quarter.  Net sales were reported at PKR226.6 billion for the quarter, higher by 13%QoQ and 54%YoY. This despite a drop in Oil/Gas production, but a weak PKR fueled topline growth. 

Exploration expenses in the final quarter of last year were at PKR26.6 billion, with the giant’s share dropping in PPL’s lap, with the Company reporting PKR11 billion in dry well costs. In 1QFY23, the exploration expenses of the sector were stated at PKR9.2 billion, lower by 65%QoQ, due to the absence of any substantial dry wells. 

On a company wise basis, the greatest sequential growth in profitability was posted by PPL, with net profit growing rising to PKR26.3 billion for the quarter. Trade Debts of OGDC and PPL were reported at PKR491 billion and PKR401 billion at the end of the quarter, respectively, increasing by PKR34 billion and PKR35 billion from the earlier quarter. 

The E&P sector provides investors with an exchange rate hedge, with the prospects of the sector having been muddied by mounting trade debts for the larger companies. Hence, within the sector, analysts like MARI and POL due to the relatively low exposure to the circular debt menace.