Oil, gas and fertiliser sectors lucrative for investors


The stock exchanges of the country are facing bearish trends due to liquidity crunch and political unrest but despite this, the investors and analysts share optimism for oil, gas and fertiliser sectors.
Talking to Pakistan Today, these analysts said that these sectors are undervalued and people could make profits if they invest in them. They added that in the previous years these sectors have shown positive growth and still hold a lot of potential. Maan Securities Director Irfan Saeed Chaudhry said that the entire petroleum sector in general is very lucrative for investment.
The fertiliser sector has become very attractive after increase in the use of fertilisers by the agricultural sector. He said the confidence of investors was shattered after the 2008 market downfall however now might be the perfect opportunity for investment by prospective investors. “The government should restore the confidence of the investors,” he exclaimed.
The director further went on to claim that in the petroleum sector OGDCL, PPL, POL and PSO along with FFC, ICI, FFBL and Fatimah Fertilisers in the fertiliser sector would prove to be profitable for investors. “The prices of petroleum scrips are undervalued and if government takes interest then it can bring a lot of foreign investment,” he said, adding that the oil and gas sector continued to be one of the major market players in 2010-11.
Capital Vision Securities analyst Mirza Irfan Baig said that the use of fertilisers have increased, resulting in high sale volumes of fertilizer companies. He explained that in the previous years, petroleum and fertiliser sector remained a major contributor of the market and both of these sectors played an important role in increasing capitalization. He said the earnings of PSO and POL could push the prices of these shares further.
According to the Economic Survey 2010-11, OGDCL has studded 20 wells showing an increase of 33 percent in drilling activities as compared to the corresponding period last year. Average oil production during the period July-March 2010-11 was 36,852 barrels per day compared to 36,312 barrels per day during the corresponding period last year.
While the average gas production during July-March 2010-11 stood at 854 mmcf as compared to 868 Mmcf. There have also been successful discoveries for the company. During July-March 2010-11, they made two successful gas discoveries, one in Sindh and the other in Khyber Pakhtunkhwa. The company remained on top in the earning list of KSE in 2010-11.
PPL operates six producing fields in Sui, Kandhkot, Adhi, Mazarani, Chachar and Hala – the first two wholly owned by PPL – and has working interest in ten partners – operating producing assets. On December 31, 2010, PPL’s proven recoverable reserves were 2.87 trillion cubic feet (Tcf) of natural gas, 14.8 million barrels (bbl) of oil/NGL
Fertiliser: The domestic production of fertilisers during the July-March 2010-11 period went up by 2.7 per cent compared to the same period last year.
The import of fertiliser decreased by 50 per cent; hence, the total availability of fertiliser also decreased by 15 per cent over the same period last year. Mirza Irfan Baig said that if the supplies of gas to Engro Fertilisers is settled then the company could also post attractive profits. He said that the balance sheets of fertiliser companies is very good and even under such circumstances, where the confidence of the investors has been shattered, these companies are managing to attract the investors.