OGDC_Best placed amid oil price upsurge , (AKD Daily, Sep 10, 2021)
AKD Daily
OGDC: Best placed amid oil price upsurge
- OGDC continues to trade at undemanding valuations even as crude oil prices witness a 45% CYTD increase. Going forward, the oil demand outstripping production in 2022 is expected to be contained by strengthening US$. We therefore, incorporate oil prices for FY22/23 at US$68/60 per bbl and USD PkR exchange rate of 163/171 in our projections.
- OGDC stands out in the E&P sector with a diversified production base, where c. 70% of oil and gas production emanating from 6 and 3 fields, respectively, as opposed to more concentrated production base of other players.
- While participation in Abu Dhabi’s offshore block 5 exploration concession agreement may keep exploratory expenditure elevated, the stock is still trading at undemanding valuations (FY22/23 P/E of 3.6/3.7x), underscoring our Buy stance (TP: PkR156/sh).
- Meanwhile, structural reforms in energy chain may likely result in higher payouts from OGDC. The GoP has projected dividend expectation from OGDC at PkR15/sh in FY22 budget—possible if PHPL uses cash inflow from GoP to buy back TFCs from OGDC, opening up payout potential for the latter.
AKD Research
Oil and Gas Development Company is a petroleum exploration and production (E&P) company in the Pakistan oil and gas sector. Co.'s principal activity is to explore, develop, produce and sell oil and gas resources and related activities. Co. also manufactures Gas, Liquefied Petroleum Gas, Crude Oil, and Sulphur. Co.'s major fields contributing in the aforesaid production of crude oil include Nashpa, Kunnar/KPD, Pasakhi, Sinjhoro and Rajian and for gas include Qadirpur, Uch, KPD, Nashpa and Dakhni. Co. carries out exploration and development activities on its own as well as in joint ventures with other oil companies.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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