Intermarket Pulse: Pakistan E&Ps: Expect earnings growth in 3Q results on price catalysts
- We expect E&Ps to post buoyant 3QFY18 results on the back of higher oil prices and PKR depreciation, even though production growth was muted and well-head prices will be sequentially lower. On a combined basis, our E&P Universe earnings are expected to be higher by 30% YoY and 15% QoQ.
- OGDC is expected to post flattish earnings, courtesy two dry wells during the quarter. There will be a notable jump in PPL’s earnings sequentially due to higher oil revenue and lack of dry wells as in previous quarter. The same theme will play out in the case of POL, where the above positives will overcome lower well-head prices for three Tal block fields, the conversion terms of which is a sub judice matter.
- Our E&P Universe has risen 25% in the past 6mths, and we have a Neutral rating on the sector with valuations rolled over to Jun’19. The rally has priced in higher oil prices and PKR depreciation, in our view; we await production triggers (discovery or new project announcements) for upside to our estimates.
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.
Co. and its subsidiaries are principally engaged in the exploration, drilling, production and sale of crude oil and gas and other products.
Pakistan Petroleum Limited (PPL) is a supplier of natural gas. The Company is principally engaged in conducting exploration, prospecting, development and production of oil and natural gas resources. The Company operates nine producing fields, which include Sui, Kandhkot, Adhi, Mazarani, Chachar, Adam, Adam West, Shahdadpur and Shahdadpur West. It has working interests in approximately 20 partner-operated producing fields. Its partner-operated fields include Qadirpur Gas Field, Tal Block, Miano Gas Field and Sawan Gas Field. The Company, along with its subsidiaries, has a portfolio of approximately 40 exploration blocks, of which over 20 are operated by the Company, including Block-8 in Iraq, while approximately 20 blocks consisting of three offshore leases in Pakistan and two onshore concessions in Yemen are operated by joint venture partners. Its gas production from its operated and partner-operated fields is approximately one billion cubic feet of gas per day.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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