The stock of Pakistan Oilfields Limited (POL) has been in the limelight, recording a gain of 6.2 percent in the last six trading days, outperforming its peers and the benchmark KSE-100 Index by 5.2 percent and 4.4 percent, respectively. This recent upsurge is mainly due to the discovery of Domial-01, yielding 942 bopd and 11 mmcfd of gas, where the company has a sizeable stake of 80 percent. ‘We believe the stock has more to offer in the short run due to firm oil prices and expectations of healthy final cash dividend of Rs20 per share’, said Shahbaz Ashraf at AHL. Furthermore, the announcement of stock dividend cannot be ruled out for the same period as previously mentioned, which could create further interest in the scrip. Recently, POL has announced a significant oil and gas discovery at Domial-01 in Ikhlas block, in upper Punjab with initial testing flows of 942 bopd and 11 mmcfd of gas. The company has a sizeable stake of 80 percent and the remaining 20 percent is owned by Government of Pakistan. The field is expected to come online in two to three months. This discovery would raise the company’s oil and gas production by 14 percent and eight percent to 6,000 bopd and 106 mmcfd of gas, respectively in FY12. The impact of this discovery is Rs 5.5 per share, contributing 10 percent to FY12 earnings. Appraisal and development of Domial-2 is underway and any positive development would enhance the total production from Ikhlas block. The company is expected to announce Earnings per Share (EPS) of Rs13 in 4QFY11, an increase of 15 percent in quarterly terms, taking full year earnings to Rs45.95 for each share. This rise would be mainly on account of higher oil prices, which currently stand at an average of $113 per barrel in 4QFY11in contrast to $102 per barrel witnessed in previous quarter, a rise of 10 percent since the last quarter.
Drilling activities at Maramzai (430 bopd, 12 mmcfd) is still suspended due to bleak security situation. Makori East -1 is being further drilled to find the true potential reserves; initially it was tested to produce 3,209bopd. With oil prices standing firm above $105 per barrel, the development should bode well for the company’s future earnings. In the near term, gas prices for 1HFY12 are anticipated to be revealed soon, it is believed it will be a non-event for POL as all gas prices are capped, he added.
