International crude oil and HSFO prices led the surge
The Oil and Gas Regulatory Authority (OGRA) has recently issued new wellhead gas prices for the period of 2HFY10 which indicated the surge of around 3% to 67% relying upon the field’s pricing mechanism. The revision was accounted in response to the increase in international crude oil prices along with the HSFO prices.
Arab Light Crude prices upped by 37%HoH
Arab Light Crude prices showed an up-move by 37%HoH during 1HFY10 to USD 69.09 per barrel on average comparing to the averaged price of USD 50.30 per barrel during 2HFY09. On the other hand, the PKR-USD Parity depreciated by 4%HoH during 1HFY10 to 83.12 comparing to 80.23 during the earlier half. On the other hand, HSFO witnessed 43%HoH increase to USD 422.06 per ton during the period.
Sui field witnessed the largest increment
The Sui and Kandhkot field prices increased by 24.3%HoH and 19.1%HoH respectively while Sawan and Minao wellhead gas prices upped by 19.4%HoH to USD 3.50mmbtu during the review. Moreover, the Adhi field prices depicted an up-surge of 3.7%HoH to PKR 124.03mmbtu where Bhit, Pindori and Pariwali fields witnessed a price increase of 19.4%HoH during the period.
PPL would be the major beneficiary
I believe that Pakistan Petroleum Limited (PPL) would be the major beneficiary of these revisions in wellhead gas prices as Sui and Kandhkot fields who witnessed the largest price increase are under 100% stake of PPL coupled with some other beneficiary fields. On the other hand, Pindori and Adhi fields are expected to improve the earnings of OGDCL and POL during the remaining half of the year.
Looking Forward
I maintain ‘buy’ stance for PPL and POL and ‘hold’ for OGDC by considering their FY10E earnings at is 8.44x, 8.43x and 10.11x respectively where my target price for FY10 is PKR 228, PKR 275 and PKR 122.50 per share respectively.
Showing posts with label Pakistan Petroleum Limited (PPL). Show all posts
Showing posts with label Pakistan Petroleum Limited (PPL). Show all posts
Thursday, April 15, 2010
Friday, April 9, 2010
Pakistan Petroleum Limited (PPL) at Glance
Scrip gained 5% in April 2010
Since the start of current month Pakistan Petroleum Limited (PPL) scrip has gained 5% or PKR 9.31 increase in its price from PKR 195.42 per share to PKR 204.73 till April 07, 2010 mainly at the back of the attractive valuation coupled with upcoming triggers including recent production expansions in support of the increase in wellhead gas prices.
PPL attracting foreigners
The aggressive foreign buying in oil and gas sector of the country precisely in OGDC for quite a long period is now triggering the foreigners to park their investment in other companies where PPL owing a sizeable float in the market is also attracting them primarily based on attractive valuation bundled with expected positive developments.
Another discovery at Latif Block
The company has recently disclosed a finding at Latif Block which is under a Joint-Venture (JV) between the PPL, OMV and ENI owing an equally distributed stake i.e. 33.3%. The company didn’t quote any number regarding the incremental production however the current production of the block stands around 30mmcfd of gas.
70 drills down the roadThe company has aimed to drill 70 exploratory along with 80 development wells in the upcoming 5 years. Currently, the company has a trend to make 4 explorations on average if examine the last 3 years’ trend which is creating a greater hope for the company to easily achieve the set targets. Moreover, the new production flows from at least 2 fields are expected to commence during the current quarter that are expected to contribute 4,300bpd oil and 85mmcfd gas where further 2 are expected to contribute in beginning of later half of the same year. The further benefit is likely to come from the increase in wellhead gas prices especially from Sui and Kandhkot to improve by 20%.
Looking Forward
I maintain ‘buy’ stance for PPL scrip by considering its FY11E earnings at 6.59x where my target price for FY11 is PKR 230 per share.
Since the start of current month Pakistan Petroleum Limited (PPL) scrip has gained 5% or PKR 9.31 increase in its price from PKR 195.42 per share to PKR 204.73 till April 07, 2010 mainly at the back of the attractive valuation coupled with upcoming triggers including recent production expansions in support of the increase in wellhead gas prices.
PPL attracting foreigners
The aggressive foreign buying in oil and gas sector of the country precisely in OGDC for quite a long period is now triggering the foreigners to park their investment in other companies where PPL owing a sizeable float in the market is also attracting them primarily based on attractive valuation bundled with expected positive developments.
Another discovery at Latif Block
The company has recently disclosed a finding at Latif Block which is under a Joint-Venture (JV) between the PPL, OMV and ENI owing an equally distributed stake i.e. 33.3%. The company didn’t quote any number regarding the incremental production however the current production of the block stands around 30mmcfd of gas.
70 drills down the roadThe company has aimed to drill 70 exploratory along with 80 development wells in the upcoming 5 years. Currently, the company has a trend to make 4 explorations on average if examine the last 3 years’ trend which is creating a greater hope for the company to easily achieve the set targets. Moreover, the new production flows from at least 2 fields are expected to commence during the current quarter that are expected to contribute 4,300bpd oil and 85mmcfd gas where further 2 are expected to contribute in beginning of later half of the same year. The further benefit is likely to come from the increase in wellhead gas prices especially from Sui and Kandhkot to improve by 20%.
Looking Forward
I maintain ‘buy’ stance for PPL scrip by considering its FY11E earnings at 6.59x where my target price for FY11 is PKR 230 per share.
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