Pakistan Oilfields accelerate Exploration
Pakistan Times Business & Commerce Desk

KARACHI: Pakistan Oilfields has accelerated its exploration activity on the back of sanguine profitability outlook fuelled by firming international oil prices along with the steady growth in the overall production levels.

POL’s exploration and development activities continued at a rapid pace during the fiscal year 2006 with exploration cost of the company soaring to Rs1, 051million, 80 per cent higher compared to the same period last year.

According to the financials of the company, work on development well Pindori-6 (ST-1) in Pindori D&P lease area has been successfully completed. The well was planned to exploit discovered reserves of Chorgali and Sakeasar Formations.

The well is currently producing 2455 bpd of oil and 8.89 mmcfd of gas on 32/64 choke with 2,882 psi WHFP. Furthermore, during March 2006, the company also announced the successful completion of the testing of Manzalai-2 well of the TAL exploration Block. The tests have been concluded for Samana Suk, Lumshiwal, Hangu and Lockhart zones with final co-mingled production rates at 1,202 bbl/day and 70.51mmcfd of oil and gas respectively.

The company is aggressively pursuing explorations and development activities to enhance its production portfolio. Furthermore, in a soaring oil price scenario, higher contribution of crude oil towards overall revenues is a big advantage to the company.

During July-March 2006, crude oil’s contribution toward total revenues of the company stood at 58 per cent, which in our opinion will further increased by 3pps to 61 per cent in full year FY06.

It seems that oil prices are to remain firm in the medium-term ensuing from the upbeat outlook of global demand, political flux in some oil exporting countries and limited spare production capacity presently available.

At current levels, Pak Oilfields offers 31 per cent upside potential to our Rs425 fair value. POL’s earnings for the first nine months of FY06 (July – March 2006) were up 83 per cent to Rs4.4bn (EPS: Rs22.30) as against Rs2.4bn (EPS: Rs12.18) during the corresponding period of last year.

Profitability growth emanated from higher oil and gas prices and increased energy output whereby revenues portrayed 84 per cent upsurge to Rs11.1billion.

The company’s exploration costs were also higher by 80 per cent to Rs1, 051million. With oil contributing approximately 58 per cent to the company’s revenues, crude oil sales increased by 95 per cent to Rs6.5billion as against Rs3.3billion last year primarily on the back of 34 per cent surge in crude oil production. Revenues generated from gas, LPG and POL GAS also contributed positively to the bottom line by depicting increments at 94 per cent, 32 per cent and 49 per cent respectively.

On quarterly basis, profitability during Jan – March 2006 also depicted a steady growth of 50 per cent to Rs1, 504million (EPS: Rs7.63) as against Rs999million (EPS: Rs5.07) with sales revenues soaring 81 per cent.

During the quarter, POL’s crude oil, gas and LPG production were up 32 per cent, 66 per cent and 44 per cent respectively primarily on the back of increased production from Pariwali, Manzalai and Pindori fields coupled with an upward revision in the well-head prices by OGRA. POL also announced 50 per cent bonus issue for the third quarter results.●