Topline Flash Note: Pakistan Petroleum (PPL): New reserves to the tune of 1 TCF in Kalat
- As per news reports, Pakistan Petroleum Limited (PPL) has found new gas reserves of over 1 TCF (Trillion Cubic Feet) in Kalat Block. To highlight, company announced a discovery from the said block on Dec 23, 2019 from Margand X-1 Field.
- However, PPIS reserve sheet of Dec-2019 does not contain any reserve information pertaining to Margand as reserve prospects develops gradually.
- As per company’s notice to the stock exchange, gas flows from the field were 10.7Mmcfd at 64/64 inches choke size, which has annualized earnings impact of Rs0.7/share.
- While news reports suggests that, this field can potentially add 300-400Mmcf on daily basis, which we believe will take time as more development wells would be needed to extract such flows. Nevertheless, 300mccfd will double PPL’s current earnings.
- Further, accurate size of reserves will also be confirmed after drilling of more appraisal wells.
- Nonetheless, this reserve size will bring a new life to Pakistan E&Ps space, as in recent past no significant discovery has been announced specially in the Baluchistan region, where major discovery earlier announced was Sui (which shares border with Sindh, see next slide for map).
- As per our channel checks, this field can take more than a year to come online as infrastructure needed for gas processing will take time.
- Assuming 1tcf reserve size and EV/barrel (reserve) of US$2.5, this size can add ~Rs27/share to our PPL’s valuation (TP: Rs130).
- We have a ‘Buy’ stance on Pakistan Petroleum (PPL). Confirmation of reserve size will provide an upside to our Target Price.
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.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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