IGI Securities Limited – Day Break

Karachi, September 13, 2018 (PPI-OT): Oil and Gas Exploration Companies – Pakistan Oilfields Limited (POL) – POL: Substantial reserve size yet to translate in to production flows; ‘Hold’ call intact

We have revised down our earnings estimate and target price for Pakistan Oilfields Limited (POL) by 15%/12%/18% for FY19/20/21F based on a) lower than expected oil and gas flows from Jhandial despite substantial reserves base, b) depleting reserve base of Tal block towards the end leading to decline in production, c) reversion of Tal block wellhead gas price to Petroleum Policy 1997 (PP97) and, d) higher reserve base of Joyamair and Pindori yet to be reflected in production,

However favorable decision on Tal block and development of reserves (Jhandial, Joyamair and Pindori) will provide an uplift to POL’s earnings. As a result we have revised down our target price to PKR 595.5/share (down by 14%), thus maintaining ‘Hold’ Call on the scrip,

POL is currently trading at PKR 658.0/share which includes final cash dividend for FY18 of PKR 25.0/share, for which the adjusted ex-dividend date is 17th Sep-18. We maintain our ‘HOLD’ stance on the scrip with our revised Dec-18 target price of PKR 595.5/share offering 8.1% downside from last close.