PPL_1QFY23 Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Nov 14, 2022)
Pakistan Petroleum Limited (PPL) held its analyst briefing earlier today, wherein the following was discussed
- To recall, the company posted the highest quarterly PAT PkR26.6bn (EPS: PkR9.8) for 1QFY23, higher by 20.9x compared to the previous quarter.
- Company’s oil/gas production stood at 12,500BPD/808MMCFD in FY22, respectively. PPL contributes to 21%/17% of total domestic production of gas/oil, respectively. Gas production jumped significantly in 1QFY23 (848 MMCFD) due to better offtakes from Kandhkot, as offtakes from the field were hampered due to low purchases from GTPS Guddu—GENCO. Normalized gas offtakes for Kandhkot are expected to reach 180-190 MMCFD (current: 120MMCFD), following the installation of new compressors.
- Company was awarded total 4 blocks (2 self-operated & 2 partner-operated) during FY22. Regarding international operations, the block in Abu Dhabi has several known discoveries and company expects to spud the first well in mid next-year.
- Company has executed framework agreement for participation in the Reko Diq project, PPL’s stake in the venture stands at 8.33%. However, the company denied that it would be paying against the GoP stake.
- Regarding ongoing work programs, company drilled 4 exploration wells (3 partner operated, 1 self-owned). On the development front, total of 8 wells were drilled (6 partner operated, 2 self-owned).
- Cash collection from the sale of gas (customers including SNGPL, SSGCL, GENCO etc) stood at 47% during the year. Govt. alongside affected companies are formulating a ‘mitigation plan’ to reduce the said pileup of gas receivables. In regards to the deteriorating liquidity position, company has requested GoP to allow payment of royalties and sales tax on a receipt basis.
- Regarding future outlook, company expects gas production for FY23 to clock in at 800mmcfd. Near-term plans include drilling of 7/9 exploration/development wells during the year alongside seismic campaigns of 2D/3D of 1800/1000 sq kms.
- Regarding higher exploration expenses in previous quarter, management commented that PPL is moving onto frontier exploration projects due to healthy prospects and maturing nature of other areas. Although high in potential, the said frontier ventures also entails significant risk, and the company plans to cast the venture aside if sustainability/feasibility remains unestablished in coming 3-4 years.
- Regarding the Adhi water incursion issue, company plans address the water handling issue and begin drilling the well by next year. Normalized oil production from the well is 1,000bpd.
- CAPEX for FY23/FY24 is envisaged at PkR27bn/34bn, respectively.
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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