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Pakistan Oil & Gas Exploration: E&Ps profits to rise 20% QoQ in 1QFY21; Oil and Gas Production up 7-19% QoQ

• Pak Oil and Gas production during 1QFY21E is likely to increase by 19% QoQ and 7% QoQ, respectively due to low base effect amidst COVID-19 related disruptions during 4QFY20. However, the same are down by 4% YoY and 3% YoY, respectively.
• Oil production from Adhi, Makori East and Makori Deep witnessed increase in the range of 6-64% YoY in 1QFY21 due to injection of more development wells.
• Gas production from Mari and Sui witnessed increase of 5-9% YoY. Mari touched an all time high weekly flow of 778Mmcfd in the second last week of Sep-2020.
• Oil and Gas production growth from Nashpa field remained lower than the average growth of top eight fields (on a QoQ basis) as the field was on an annual turnaround in mid Sep-2020.
• Topline E&P universe earnings is likely to witness rise of 20% QoQ in 1QFY21 on the back of increase in Arab Light Price to US$43/bbl, +59% QoQ. However, its impact will be slightly offset by lower wellhead gas prices, which are being priced at an average of US$46/bbl (Nov 2019 - May 2020), down 27% from its previous average marker price of US$63.5/bbl (Jun - Nov 2019). Total hydrocarbon production of listed E&Ps is expected to increase by 19% QoQ in 1QFY21.
• MARI: MARI is likely to post second best quarter of its history as earnings of the company are likely to clock in at Rs63.0/share, up 13% YoY and 21% QoQ. Gas production of the company is expected to record growth of 14% QoQ, wherein 14,476 MMCF of gas is likely to be priced under the incentivized Petroleum Policy 2012. The exploration cost is expected to come down by 80% QoQ due to absence of any dry well. In the last quarter, company had expensed out Miraj 1 as a dry well.
• POL: POL is expected to witness jump of 47% QoQ in its earning due to higher concentration of oil in its revenues. Oil and Gas production of the company is also expected to rise by 30% QoQ and 37% QoQ, respectively. Other income is likely to decline by 42% QoQ on account of FX losses to the tune of Rs313mn as PKR appreciated against US$ by Rs2.45. Exploration activities of the companies remained muted during the outgoing quarter.
• OGDC: OGDC is expected to post EPS of Rs4.7, up 23% QoQ. Oil and Gas production of the company is expected to increase by 30% and 10% QoQ, respectively in 1QFY21. Exploration cost is expected to clock in at Rs4.3bn, down 9% QoQ, while up 8% YoY as company is likely to expense out 3 dry wells vs. 2 wells in 1QFY20. Other income may come down 27% QoQ to Rs3.7bn due to exchange losses of Rs770mn. We expect company to declare dividend of Rs1.5/share.

PPL: PPL is expected to record EPS of Rs4.5, up 11% QoQ due to increase in Oil and Gas volumes by 27% QoQ and 13% QoQ, respectively in 1QFY21. The company is expected to record one dry well Miraj 1 (operated my MARI), that may result in exploration cost of close to Rs1.7bn, up 75% QoQ. Other income is likely to come down 66% QoQ due to absence of exchange gains and other one off items.