OGDC - on way to a stellar FY13

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With the announcement of its half-yearly financial results yesterday for 1HFY13, Oil and Gas Development Company (OGDC) clearly stands at a fine midway with the growth engines of the E&P giant roaring. The E&P giant displayed its gleaming performance for the first half of FY13 where the top line stretched by 25 percent YoY to Rs111 billion. The improvement in the revenues came not only from the improved production of the hydrocarbons but also the increased realised prices of some.

The volumetric growth of OGDC corresponds to a sizable jump of 9.3 percent in oil production primarily owing to the production flows from Nashpa, Kunnar, Tando Alam, to name a few. A reasonable growth of 5.5 percent in the gas flows during 1HFY13 poured in from fields like Kunnar, Mela and Nashpa.

As at December 31, 2012, OGDC contributed around 24 percent natural gas and 53 percent crude oil to the countrys overall hydrocarbon production.

During the period under review, the average realised prices of crude oil sold remained flat at 82.78 dollars a barrel against 82.03 dollars per barrel in 1HFY12. On the other hand, average net realizsed prices of gas that did the trick for an uptick in the revenues, increased by almost 20 percent from Rs263.83 per mmcf compared to Rs220.13 per mmcf in 1HFY12.

The net earnings of OGDC during this period expanded by 18 percent year-on-year in 1HFY13. Besides the revenue lift, the bottom line of the exploration and production player was supported by a 48 percent YoY rise in other income primarily due to the TFC issue during the first quarter of FY13. Interest income of approximately Rs2 billion on the companys TFC investment is a hefty addition to the companys earnings.

Some contribution was also made by the rupee depreciation of around eight percent during 1HFY13. However, the pressure mounted from higher exploration expenditure which propelled by more than three times during the aforementioned period on account of higher seismic activity and a dry well write-off.

Along with nine ongoing wells from the previous financial year, OGDC spudded 11 new wells during the six months-period. These include two exploratory wells, one appraisal well and eight development wells. A landmark of the period has been the E&Ps ability to complete a phase of Sinjhoro development project which is producing 1,000bpd of oil and is also supplying 10mmcfd of gas

to SSGC.

With half year remaining the prospects for the E&P Company are perked up. For one, the recent rebound in the international crude oil prices is likely to bloat earnings in the coming quarter. Besides, prospects for production flows are sanguine and will likely lift the top line, come the close of FY13.

Moreover, ECC has approved the increase of the cap on Qadirpur gas price from 2.5618 dollars per mmbtu to 3.0116 dollars per mmbtu which will definitely have positive impact on the companys financial performance and ongoing projects for the remaining FY13.

Courtesy: Business Recorder


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