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AKD Securities Limited – Off the Analyst’s Desk (September 22, 2022)

Karachi, September 22, 2022 (PPI-OT): POL: FY22 Analyst Briefing Takeaways

Pakistan Oilfields Limited (POL) held its analyst briefing earlier today to discuss the FY22 results, the highlights of which are as follows:

The company posted earnings of PkR 8,439mn (EPS: PkR29.73) for 4QFY22, higher by 128%YoY and 28%QoQ, aided by a 74%YoY/12%QoQ increase in topline and 258%YoY/134%QoQ growth in Other Income. For FY22, the company posted earnings of PkR 25,935mn (EPS: PkR91.37), higher by 95%YoY.

Regarding Makori East, management apprised that all the production enhancement work at the field as per current plans was concluded. To recall, Original Gas/Oil reserves at Makori East were revised up by 19.6bcf/1.1mn bbls between Dec’21 and Jun’22, as per PPIS data.

In terms of the recently announced discovery at Tolanj West (expected flow of 34bpd of oil and 10.55MMCFD of gas), management has guided towards the production being connected within the next 2 months. Furthermore, planned testing at the field has already been completed.

The company also apprised that the PP12 pricing issues in Tal Block, wherein the government is demanding a windfall, has led to activity slowing down at the fields. Furthermore, the company stated that Mamikhel South, which has 70-80% oil reserves, is being delayed due to the pricing issues and the company is in constant talks with the GOP to resolve the issue. The production line at Mamikhel South-2 has been completed and once the GOP pricing approval is granted, the well will start production .

Regarding the prospects of the Solar panel business that the company is looking to enter, the management noted that the project was in its infancy and a pre-feasibility study is being conducted at the moment.

We have a Buy rating on the stock, with a Jun’23 TP of PkR 570/sh, offering an upside of 62% from its last close. That said, underlying market conditions may potentially restrict price discovery in the near term.