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OGDC - FY23 Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Sept 28, 2023)

AKD, Off the Analyst's Desk

OGDC -  FY23 Analyst Briefing Takeaways

 

Oil & Gas Development Company Limited (OGDC) held its conference call earlier today to discuss the financial performance for the FY23 period. The highlights of the call are as follows:

• The said increase in bottom line is largely due to Net sales during the full year clocked in at PkR413bn (up 24%YoY) majorly due to higher gas prices during the period. To note, average realized prices for crude oil stood at US$71.6/bbl (down 5%YoY), while realized natural gas stood at PkR611/mmbtu (up 41%YoY). Production activity during the half year stood as follows: 32,478bpd of crude oil (down 7.9%YoY), 764MMcfd of natural gas (down 7.4%YoY) and 720 TPD of LPG (down 10.7%YoY), respectively.
• Company operated in 48 Exploration Blocks (22 blocks with full ownership and 26 blocks as operated JVs), covering an area of 87.0k sq. km as at June’23. On the drilling front, company spud total of 10 wells (vs. 13 last year) with five being exploratory wells, four developments and one re-entry well.
• Production output was impacted due to natural declines in fields including Unar, KPD-TAY, Chanda, Mela, Bitrism and Nashpa fields alongside production curtailments due to torrential rains/floods.
• Enhancement from Lala Jamali, Chak-5 Dim South-3, Qadirpur-63, Pasakhi Deep-7, Umair South East-1, Kot Nawab-1 and Wali-1 was witnessed during the outgoing period, cumulatively yielding 202k bbls/2,800MMCF in oil/gas, respectively.
• Furthermore, addition of electrical submersible pumps to Sono-7 also yielded additional 2k bpd. Moreover, various pressure buildup survey jobs were carried out at different sites including Qadirpur, Nashpa, Uch-1 etc. 
• With regarding to development projects, two development projects and three compression pumps are in the pipeline. Status of the compression projects are as follows: Dhakni compression (COD: Nov’24), KPD-TAY compression (COD: Feb’25) and Uch compression (COD: April’25). Incremental capacity/production once completion is achieved will be 747/141 mmcfd, respectively.
• CAPEX plan for FY24 is planned around US$80-100mn, largely spurring from projects in pipeline mentioned previously. Furthermore, company plans to drill total of 18 wells (9 development and 9 exploratory) during the financial year.
• The notable surge in finance income in the last quarter is attributed to the recognition of the NPV of future capacity payments related to the Uch-1 finance lease (with Uch Power Plant). This was due to the approval of the lease extension by the ECC in Jun'23, securing an additional five-year term.
• OPEX rose by 19%YoY during the year, largely due to one-off impairment charges on Thal and Bhambra fields amidst downward revision of reserves. Furthermore, expenses regarding D&P assets were elevated as well, as capitalization of Toot Deep-1 lease led to higher amortization charges during the year. Finally, costs associated with repairs and rehabilitation due to floods/torrential rainfalls also contributed to overall rise in overheads.
• Regarding potential gas price hikes, management expects recovery rate from sale of gas to naturally improve. Reflecting on the last increase which was in Jan'23, there was an observed positive impact on the collection rate and expect a similar improvement in the upcoming round of gas price increases.
• With regards to Wali Bettani, management commented that it is a difficult area to drill and there is another well presently in the pipeline. They anticipate reserve additions to materialize from the new well by the end of the year.
• Concerning offshore Block-5 (Adnoc), preparations for rigs and contracts are currently underway, with the commencement of drilling expected by 1QFY26.

 

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