Equity Analysis /

Pakistan Oil & Gas – June 2021 reserves update

  • Pakistan oil and gas reserves have declined since Dec 2020 by 6.5% and 1.2% respectively

  • Notable upgrade in the gas and oil reserves of Sui and Makori East, respectively

  • We have an Overweight stance on the E&P sector

Intermarket Securities
7 September 2021

Moderate changes in overall hydrocarbon reserves

PPIS recently updated the 2P reserves of oil and gas in Pakistan. Overall Gas reserves, by June 2021, are down 1.2% to c.20.95tcf – compared to the level in December 2020. Oil reserves, however, have declined c.6.5% to c.249mmbbl, from c.266mmbbl in December 2020.

Key highlights of the changes in hydrocarbon reserves:

  • Significant upgrade at Sui (Operator, PPL): Gas reserves of Sui have been upgraded by 26% from the level in December 2020 to 1.18tcf by June 2021. Note that PPL drilled two development wells at the field during FY21, following 14 wells in the previous five years. Thus PPL has been able to contain the field’s depletion rate to less than 5% per year. Presently Sui is producing c.340mmcfd of gas (third largest gas field in Pakistan by output and accounting for c.10% of indigenous natural gas production).   

  • More good news from Tal Block (Operator, MOL): After the addition of Mamikhel South and upgrade of Maramzai’s reserves in December 2020, PPIS has reported a 44% upgrade in the oil reserves of Makori East to 11.1mmbbl. ME accounts for around half the oil production of Tal block and has been depleting sharply (average 15% pa) in the past three years. The upgrade improves its reserves life by about a year from 2.5 to 3.5 years.

  • Downgrade of Joya Mair (Operator, POL): The oil reserves of Joya Mair are nearly completely written off from 13.25mmbbl in December 2020 to 0.44mmbbl in June 2021. We understand that the earlier estimate were incorrectly reported, and do not justify the field’s present production level of 50bpd. Notably, there is no revision in the reserves of Jhandial, even though the appraisal well was not successful.

  • There are no notable changes for OGDC and MARI.

We have an Overweight stance on the E&P sector, with OGDC (Buy, PKR164/sh) and POL (Buy, PKR459/sh) as our top picks.