Discuss PSX Sector - Oil & Gas Exploration Companies

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  • اپنی زندگی میں ہر کسی کو اہمیت دو, جو اچھا ہوگا وہ خوشی دے گا اور جو برا ہوگا وہ سبق دے گا
  • درخت جتنا اونچا ہو گا اس کا سایہ اتنا ہی چھوٹا ہو گا, اس لیے اونچا بننے کی بجائے بڑا بننے کی کوشش کرو
  • جو شخص کوشش اور عمل میں کوتاہی کرتا ہے, پیچھے رہنا اس کا مقدر ہے
  • جو لوگ میانہ روی اختیار کرتے ہیں, کسی کے محتاج نہیں ہوتے
  • حقیقی بڑا تو وہ ہے جو اپنے ہر چھوٹے کو پہچانتا ہوں اور اس کی ضروریات کا خیال رکھتا ہو

Apr 11, 2017
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#21
Oil & Gas Development Company Limited (OGDC): Result Review: EPS of PKR 13.21 in 9MFY18


27 April 2018
Arif Habib Limited




  • Oil and Gas Development Company Limited (OGDC) announced its financial result for 3QFY18 and posted a profit after tax (PAT) of PKR 20bn (EPS: PKR 4.68), up by 15% YoY. This takes the 9MFY18 earnings to PKR 57bn (EPS: PKR 13.21), up by 19% YoY. Moreover, the company announced an interim cash dividend of PKR 2.75/share taking the 9MFY18 dividend to PKR 7.50/share (PKR 4.00/share in 9MFY17)
  • During 3QFY18 revenue growth of 14% YoY to PKR 51.8bn was led by 15% YoY higher gas production and 24% YoY increase oil prices. Furthermore, PKR Depreciation against USD of 6% YoY also supported net sales.
  • Meanwhile, topline in 9MFY18 increased by 17% YoY to PKR 147.7bn from PKR 126.6bn in SPLY. This surge in sales is attributable 21% YoY higher oil prices and 3% increase in gas production. However, oil production during 9MFY18 declined by 6% YoY.
 
Apr 11, 2017
830
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#22
Oil & Gas Development (OGDC): 3QFY18 EPS Rs4.7, +15% YoY (+2% QoQ); DPS Rs 2.75/share (In-line with expectations)


27 April 2018
Topline Securities (Private) Limited




  • OGDC reported earnings of Rs20bn (EPS Rs4.7/share) in 3QFY18, up 15% YoY, mainly due to higher sales and considerable increase in other income. The company also announced cash dividend of Rs2.75/share.
  • The company’s net sales were up 14% YoY during the outgoing quarter thanks to 1) increase in Arab Light oil prices, up 24% YoY and 2) PKR devaluation against the greenback, providing support to dollar linked revenues.
  • However, oil production posted around 9% YoY decline in 3QFY18 where production flows from Nashpa field (30% of OGDC’s oil production) fell 24%. We attribute this to natural depletion of the field and lower uplift from refineries.
 
Apr 11, 2017
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#23

Oil and Gas Development Company Limited (OGDC): 3Q EPS clocked in at PKR4.7 – In line with expectations


27 April 2018
Insight Securities (Private) Limited




  • Oil and Gas Development Company Limited (OGDC PA) has announced its 3QFY2018 profits of PKR20.2b (PKR4.68/share), up 15%YoY. The earnings are in line with our expectations
  • During 3Q FY2018, net sales of the company increased by 14%YoY, despite decline in production, mainly due to 24% increase in average crude oil prices. While other income increased 41% to PKR3.8b owing to interest income on hefty short term investments and exchange gains during the quarter.
 
Apr 11, 2017
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#24

Oil and Gas Development Company Limited (OGDC): 3QFY18 EPS largely in-line with expectations



27 April 2018
JS Global Capital Limited




  • Oil & Gas Development Company (OGDC) announced its 3QFY18 results wherein the company posted profit of Rs20,150mn (EPS: Rs4.68) vis-à-vis profit of Rs17,586mn (EPS: Rs4.09), up 15% YoY, largely inline with our forecasts of Rs4.80 per share for the quarter. Nonetheless, payout disappointed our expectations as OGDC only gave out Rs2.75/share dividend during the quarter as compared to our expectations of Rs3/share.
  • Cumulatively during 9MFY18, PAT of the company clocked-in at Rs56,821mn (EPS: Rs13.21), an increase of 19% YoY. Revenues of the company during the quarter increased by 14% YoY to Rs51,752mn whereas gross profit increased by 17% YoY to 29,674mn. Revenue increase during the year can be attributed to higher crude oil prices as compared to the same period last year which offset weak oil production (41,417bpd during 3QFY18 vis-à-vis 45,523bpd in the corresponding period last year). On the cost side, exploration expenses inched up by 74% YoY to Rs3,819mn, keeping profitability growth in-check. This however, was already anticipated due to two dry-wells namely Ganjo Takkar-1 and Kacha Khel-1. However, we wait for further clarity on the subject
 
Apr 11, 2017
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#25

Oil and Gas Development Company Limited (ODGC): 3QFY18 EPS settled at PKR 4.68 (+14.6%YoY); in-line with expectations


27 April 2018
Taurus Securities Limited




  • Oil and Gas Development Company Limited (ODGC) has announced its 3QFY18 financial result, where the Company reported net profit after tax of PKR 20.1bn translating into an EPS of PKR 4.68, up by 14.6%YoY mainly due to higher oil prices.
  • Along with its 3QFY18 financial result, the company also announced an interim cash dividend of PKR 2.75/share, taking 9MFY18 payout to PKR 7.50/share. Strong payout by the Company is attributable to huge cash reserves held after PIBs maturity.
  • Net sales have surged by 13.6%YoY to PKR 51.8bn due to robust oil prices in int'l market as Benchmark Arab Light oil prices have increased by 24.2%YoY to average at ~USD 65.8/bbl. in 3QFY18.
 
Apr 11, 2017
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#26
Oil & Gas Exploration Companies: Robust growth in earning so far

02 May 2018
Azee Securities (Pvt.) Ltd.




  • Oil & Gas exploration and production sector has shown a notable growth in their profitability, during the nine months ended March 31, 2018. Cumulative earning of the listed companies' i.e. (OGDC, PPL & POL ) during the period were up by 32% to Rs 97.88 billion compared to Rs 74.13 billion recorded during the corresponding period of last year. Hike in profitability was mainly driven by rise in oil prices by 23% YoY, surge in well head gas prices, oneoff related impact on conversion of Tal block to PP12 and hike in other income.
  • Top-line of three companies has increased by 24% to Rs 261.52 billion in 9MFY18 against Rs 211.01 billion in the same period last year owing to higher oil prices. Crude oil prices increases by average 23% YoY to $58.70/barrel in 9MFY18 versus $47.80/barrel in 9MFY17. Similarly, higher wellhead gas prices gave a further boost to the net sales. Other income rise by 17% YoY to Rs 20.13 billion against Rs 17.26 billion in 9MFY17 on account of higher exchange gains.
  • In terms of percentage growth in earning, Pakistan Petroleum Limited (PPL) stood at the best performer in the sector as its earning grew by 74% YoY as after tax profit clock at Rs 33.19 billion (EPS: Rs 16.83) in 9MFY18 as against Rs 19.07 billion (EPS: Rs 9.67) in the identical period of last year. This is primarily due to increase in crude oil & wellhead gas prices along with higher other income. Second best remain Oil & Gas Development Company Limited (OGDC) whose earning rise by 19% (EPS: Rs 13.21) owing to due to increase in crude oil & wellhead gas prices
 
Aug 12, 2016
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Karachi
Education Level
B.Com
#27
Pakistan Oil & Gas Exploration: Trump factor & Aramco IPO hinting higher crude prices; Estimates revised up


03 May 2018
Insight Securities (Private) Limited




  • Arab light crude oil prices are back into US$70s, levels last seen in December 2014. Though the demand supply fundamentals have improved post OPEC supply cut deals and compliance to it, recent rally is more linked to expectations of sanctions on Iran and 1-Year low production from OPEC members, mainly Venezuela.
  • Though, we expect prices to remain elevated in short term, we expect prices to cool down a bit as indicated by future prices and supply increase from US (rig count back to Mar 2015 levels). To note, US is only second to Russia in global crude oil production, while Saudi Arabia is placed at third after the supply cuts. We have revised up our crude oil estimates by US$5/bbl. to US$65/bbl. for FY2019 and onwards (based on our analysis and estimates by various global firms).
  • Incorporating the same, our earnings estimates have increased by 3-7%, while valuations have inched up by 3-5%. As a result, we estimate FY2019 EPS increase for OGDC (by PKR0.9 to PKR21.5), PPL (by PKR1.0 to PKR25.0), MARI (by PKR5.0 to 199.1) and POL (by PKR4.1 to PKR62.8). We prefer MARI within our E&P universe with revised Dec 2018 reserves based DCF TP of PKR1,897/share, providing 22% upside. We also have ‘BUY’ call on OGDC and PPL, while we have HOLD stance on POL. Key risks to our estimates include i) significant fall in crude oil prices, ii) lower than expected PKR depreciation and iii) lower than expected production.
 
Apr 11, 2017
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#28
Oil & Gas Exploration Companies: Oil prices – another boost on the cards


09 May 2018
BIPL Securities Limited




  • The recent decision to re-impose sanctions on Iran by the US threatens the Iranian oil export, creating an expectation of a deeper supply deficit for CY18.
  • Though US has embarked yet again to put pressure on Iran, the European block has indicated its intention to continue honoring the agreement
  • This rise in US crude production is expected to act as a counterbalance against decline in Iran’s exports following sanctions.
  • With uncertainty yet again emerging in global oil market, rising crude oil prices will significantly benefit exploration companies.
 
Apr 11, 2017
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#29
Oil & Gas Exploration Companies: Hydrocarbon production remains soft in Apr-2018


15 May 2018
JS Global Capital Limited




  • As per recently updated Pakistan Petroleum Information Service (PPIS) data, oil production for the month of Apr-2018 registered a decline of 2.7%/1.8% YoY/MoM to clock-in at 89,732bpd.
  • Natural gas production also remained weak at 3,727mmcfd, down 4.1%/6.7% YoY/MoM.
  • LPG production also witnessed decline on a sequential basis of 3.8% MoM to clock-in at 2,259tpd. As compared to the same period last year however, LPG sales show improvement of 15.6% YoY.
  • Cumulatively during 10MFY18, oil production shows a minor increase of 1.9% YoY (90,337bpd vis-à-vis 88,635bpd) and gas production shows decline of 1.0% YoY (3,992mmcfd vis-à-vis 4,033mmcfd).
 
Apr 11, 2017
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#30
Oil & Gas Exploration Companies: Upgraded to 'Over-Weight'


28 May 2018
Sherman Securities (Pvt.) Ltd.




  • We have upgraded our stance from 'Market-Weight' to 'Over-Weight' on Pakistan Oil & Gas Exploration & Production Sector (E&P) as we now have 'Buy' rating on all three stocks under our research coverage (OGDC, PPL and POL). Previously we had a ‘Hold’ rating on PPL.
  • nterestingly, if Arab Light crude oil price plunges by 10% from existing level of US$75/barrel, oil price in rupee terms is anticipated to grow by an average 19% in FY19. Thus any upside from volumetric growth would be an icing on the cake.
  • Pricing of local E&Ps are linked with Arab Light crude oil price in US$ terms. Thus any rise in oil price and Pak rupee devaluation directly improve local E&P earnings.
  • In line with recent upgrade by Energy Information Administration (EIA), we have revised our Arab light oil price assumption to average US$67.5/barrel in FY19 which is to remain 10% higher than average US$61.5 /barrel oil price likely in FY18.
 
Apr 11, 2017
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#31
Oil & Gas Exploration Companies: Yet another slump or stability?


29 May 2018
BIPL Securities Limited




  • A stir up in geopolitics and dwindling production from Venezuela had sparked an oil price rally, gaining 19% in CYTD to make a high of USD77.4/bbl. However, a major headwind came with the recent news flow regarding OPEC and Russia’s plan to increase output by ~1.0mbpd that ended the upward rally with crude falling 4% in the last 4 sessions.
  • Though increasing production levels from OPEC seem to be a dampener for oil prices, we believe the action would merely balance the market in 2HCY18 given supply constraints from Venezuela and prospectively from Iran. Whereas, CY19 is expected to witness a deficit of 0.44mbpd. These factors have led us to revise up our oil price assumption for FY19 and onwards to USD65/bbl. In view of revised oil price assumption and attractive multiples, we have OGDC as our top pick in the sector with a target price of PKR211/sh, offering a total return of 41%
  • US production in the recent past has been on the surge, posting consistent gains. In this regard, production has jumped 9.6% CYTD to 10.7mbpd from 9.8mbpd. Being highly reactive to crude oil prices, tight oil was the prime driver for the recent growth in production where OPEC’s monthly report depicts an increase of 1.1mbpd in tight crude production for CY18 reaching 5.8mbpd. We expect US production to exceed OPEC’s recent estimates (derived) of 10.6mbpd for 2HCY18 and settle at 10.8mbpd.
 
Apr 11, 2017
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#32
Oil & Gas Exploration Companies: Weak production in May-18; PKR deval and strong oil prices offset negativities


12 June 2018
JS Global Capital Limited




  • Pakistan Petroleum Information Service (PPIS) data indicates sequential decline in oil production for the month of May-2018 of 2% MoM. As compared to May-2017 however, production improved by 7% YoY to clock-in at 88,428bpd.
  • Natural gas production remained weak, both on a YoY and MoM basis clocking-in at 3,772mmcfd, indicating decline of 5.2%/3.2% YoY/MoM.
  • PG production showed a similar trend as oil production, increasing on a YoY basis but declining sequentially to clock-in at 2,181tpd. This translates into a change of 14% YoY
 
Apr 11, 2017
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#33
Oil & Gas Exploration Companies: OPEC and non-OPEC production relaxation weighs down oil prices


26 June 2018
JS Global Capital Limited




  • In a major move, OPEC decided to relax its rules on production cuts with Russia. The development will pave way for additional 1mmbbls/day of oil production.
  • Since the decision, benchmark Arab Light Oil prices have come down by 0.5ppt, Brent Crude by 1.7ppt, whereas WTI has depicted a flattish trend.
  • Despite the recent movements, oil prices paint a positive picture for nearterm profitability of E&Ps, as net increase in Arab Light Crude during YTD 2018 is 12% whereas PKR has depreciated by ~10% during the same period.
  • Apart from PKR/US$ movement and increased oil price levels, overall E&Ps sector has underperformed the benchmark KSE-100 index by 2.7% during YTD 2018.
 
Apr 11, 2017
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#34
Oil & Gas Exploration Companies: Navigating deep waters after 8 years


26 June 2018
Sherman Securities (Pvt.) Ltd.




  • Pakistan Oil & Gas sector witnessed a major development recently where world’s largest energy company ExxonMobil acquired 25% stake in Pakistan’s offshore Indus G block. This development could be seen as a major breakthrough as this may lead to other international energy firms to bring foreign investment in Pakistan’s energy sector in future. Today, we will discuss the past history and prospects of newly planned ‘Kekra-1’ offshore well which is going to be drilled in 2019.
  • ExxonMobil is ranked as the world’s largest energy firm with operations spread around the globe. The company is mainly involved in exploration, development and distribution of oil, gas and petroleum products. ExxonMobil has more than 100 years of experience including deep and ultra-deep water offshore drilling.
  • Indus G block is approx. 7500 square kilometers located in ultra-deep water offshore Pakistan. According to the ENI (an Italian energy firm) this block is underexplored but with promising prospects. ENI is the operator of the block with joint venture partners including, Oil & Gas Development Company Limited (OGDC), Pakistan Petroleum Limited (PPL) and ExxonMobil with 25% stake each. According to Pakistan Petroleum Information Service (PPIS), total investment made so far in Indus G block is around Rs700mn since 2012.
 
Apr 11, 2017
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#35
Oil & Gas Exploration Companies: OMCs outperformed during YTD 2018 – but E&Ps and refineries disappointed


29 June 2018
JS Global Capital Limited




  • Pakistan listed E&Ps underperformed the benchmark KSE-100 index by 2% during YTD 2018 mainly due to muted performance of the national giant Oil & Gas Development Company (OGDC).
  • Private sector listed E&Ps such as Pakistan Oilfields Limited (POL) and Pakistan Petroleum (PPL) posted outperformance of 8% and 2% respectively during the same period.
  • We believe that investors will likely favor E&Ps going forward amidst tricky macroeconomic imbalances with the next leg of rally being driven by recent underperformers such as OGDC and Mari Petroleum (MARI).
  • Performance of refineries remained volatile throughout YTD 2018 and remained down by 3%; an underperformance of 6% against the benchmark.