IGI Securities Limited -Flash Note

Karachi, March 09, 2018 (PPI-OT): Oil and Gas Exploration Companies – PPL: Discovery of Hydrocarbons in Exploratory Well Adhi South X-1 (Adhi Block)

According to notice issued on PSX by Pakistan Petroleum Limited (PPL), the company (operator of Adhi Mining Lease) has discovered hydrocarbons from exploratory well Adhi South x-1 (Adhi Block) to the tune of 2.62 mmcfd of gas and 1,550 bopd of condensate.

PPL as operator holds 39% stake in the block while OGDC and POL hold 50% and 11% working interest in the block, respectively.

Based on our estimate, we expect annualized earnings impact of PKR 0.66/share, PKR 0.28/share and PKR 0.17/share for POL, PPL and OGDC, respectively based on oil price assumption of USD 60/bbl.

Recommendation

We maintain PPL and MARI as our top pick with our Dec-18 target prices of PKR 2,094/share and PKR 237/share offering 20% and 48% upside from last close, respectively. We have ‘BUY’ call on OGDC with our Dec-18 target price of PKR 195/share offering 20% upside from close, while maintaining our ‘HOLD’ stance on POL with our Dec-18 target price of PKR 617/share.

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