The earlier than expected resumption of production at Maramzai field within a week due to improved security situation and recent government measures to beef up security in the area. Additionally, positive reports with regards to exploration and general development of the Tal block will also benefit Pakistan Oilfields Limited (POL) in comparison to PPL and OGDC. Before suspension of production in January 2011 due to attacks on drilling and servicing staff employed by MOL, Maramzai produced 40 MMCFD of gas and 2,000 BPD of oil.
We expect the field to achieve similar levels of flow, and Maramzai should increase overall oil production in the Tal block by 25 percent and gas production by 15 percent, said Mohammad Fawad Khan at KASB Securities. Resumption of production will also remove doubts centering on development work in Maramzai and recent finds in Tal block and bodes well for ongoing and future exploration. The production recovery was also surprising to investors who expected activity to be completed in July and should result in a positive price reaction.
Stock prices fell by 2.0 to 3.5 percent in five sessions upon production suspension in January. Though earnings upgrades to FY11E should be limited given the limited impact, overall contribution of Maramzai to FY12E EPS (already in estimates) is estimated at Rs 3.27, Rs 0.90 and Rs 0.25 for POL, PPL and OGDC (seven percent, 2.5 percent and 1.2 percent of FY12E EPS), respectively .
