TAL Block’s Price Reversion Limits Upside
After incorporating PPIS’ reserve data, 2QFY18 performance and reverting back to Petroleum Policy (PP) 1997 for TAL block, we have updated the valuation for Pakistan Oilfields Limited (POL).Our new December 2018 target price stands at PKR 675/share which provides an upside of 5% from the last closing price, thus we have a Neutral stance on the scrip. Discovery at Jhandial (Ikhlas Block) provided a vital lifeline for the company by extending its reserve life to 12 years; however most of the upside from Jhandial was overshadowed by downward revision in reserves at Minwal and Mardankhel. As production flows from Jhandial continue to cause concern, we have prudently assumed production from the field to reach 2,000 BPD by FY21. Regarding the TAL block re-pricing issue we have taken a cautious approach by reverting our gas price assumption to Petroleum Policy 1997 (PP97). Any decision in favor of E&P companies with respect to TAL block re-pricing and an early upswing in production flows from Jhandial will lead the company to beat our estimates.
Co. and its subsidiaries are principally engaged in the exploration, drilling, production and sale of crude oil and gas and other products.
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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