Revising down TP to PKR 1,800/share
Mari Petroleum (MARI) recorded robust earnings growth in 3QFY18 on the back of i) upgrade in OGRA notified wellhead prices, which incorporated the impact of two consecutive quarters of oil price increase, ii) unwinding of Mari’s entitlement factor, and iii) higher production from Mari field, resulting in amplified impact on revenues due to incremental pricing mechanism. A reserve evaluation study carried out by the company has raised serious issues regarding the sustainability of flows from HRL formation. In the light of this issue we have revised our assumption regarding HRL flows and resultantly we have revised our target price downward to 1,800/share. The stock offers 15% upside to our target price, thus we are maintaining a positive stance on the scrip.
Mari Petroleum Company Limited is a Pakistan-based exploration and production company. The Company is engaged in managing and operating Pakistan's gas reservoir at Mari Field, District Ghotki, Sindh. Its segments include Exploration and Production; Mari Seismic Unit, and Mari Drilling Unit. The Exploration and Production segment includes various upstream business activities. The Mari Seismic Unit segment includes two-dimensional (2D)/three-dimensional (3D) seismic data acquisition. The Mari Drilling Unit segment includes onshore drilling services. In addition to Mari Gas Field, it holds development and production leases over Zarghun South and Sujawal Gas Fields, and has operatorship of eight exploration blocks (Ziarat, Harnai, Sukkur, Sujawal, Karak, Ghauri, Peshawar East and Khetwaro). Its other products include crude oil, condensate and liquefied petroleum gas (LPG). Its exploration and production assets are spread across Pakistan in all four provinces.
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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