POL - Pakistan Oilfields Limited

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Apr 11, 2017

Pakistan Oilfields Limited (POL): Higher revenues to fuel bottom-line growth in 9MFY18

13 April 2018
Pearl Securities Limited

  • The board meeting of Pakistan Oilfields Limited (POL) is scheduled on April 16th, 2018 to unveil its 9MFY18 financial results.
  • Net earnings of the company are expected to clock in at PKR8.36bn (EPS PKR35.33) in 9MFY18 as compared to PKR7.47bn (EPS PKR31.56) registered in the corresponding period of previous year, exhibiting a rise of 12%YoY.
  • In terms of quarterly performance, 3QFY18 bottom-line is estimated at PKR3.60bn (EPS PKR15.20) versus PKR2.81bn (EPS PKR11.88) registered in the same quarter last year, depicting a notable increase of 28%YoY.
  • Topline of the company is expected to rise 17%YoY to PKR23.80bn during 9MFY18 mainly due to significant increase in international oil prices (benchmark arab light price +22%YoY) amid stable production flows. Moreover, devaluation in USD/PKR exchange rate (6.2%YoY in 3QFY18) would further amplify company’s net revenues.
Apr 11, 2017
Pakistan Oilfields Limited (POL): Revenues Remain Largely Flat

16 May 2018
Ismail Iqbal Securities (Pvt.) Limited

  • Pakistan Oilfields Limited (POL) posted earnings of PKR 3.1bn (EPS: PKR 13.13) in 3QFY18. The earnings were up 39% QoQ; however, comparison with last quarter is not meaningful because the company reversed its entire TAL re-pricing gain in 2QFY18. On a normalized basis the company’s revenues remained flat largely because any upside due to a rise in oil prices was capped by (i) the reversion of TAL gas prices to their original Petroleum Policy of 1997 (PP97), and (ii) 21% decline in production from the newly discovered Jhandial well in Ikhlas block. We have slightly adjusted our target price to PKR 669.5/share, which implies a 2.4% downside form the last day closing price; thus, we are maintaining a neutral stance on the scrip.
  • Price reversion of TAL block has a considerable impact on POL’s earnings due to the company’s high reserve concentration compared to OGDC and PPL. We have highlighted our concerns regarding dwindling production flows from Jhandial in our earlier updates. Currently the company does not have any drilling operation in Ikhlas block despite its significant reserve size, which might be indicative of the company’s lack of faith in the block’s production potential.
  • In our E&P universe, POL offers the greatest sensitivity to Arab Light price as every USD 5/ bbl change in crude price changes our target price estimate by 4.5% in the same direction. The similar sensitivity for PPL is 3.7%, for OGDC it is 3.0% and for Mari it is 0.7% only . MARI is the least sensitive to oil prices due to its dependence on gas reserves. Despite the benefit from oil price hike, we are not comparatively positive on POL as it is also the most expensive stock in our E&P universe with an implied oil price of USD 66/bbl., The similar estimate for OGDC is USD 42/bbl and for PPL it is USD 57/bbl.
Aug 12, 2016
Education Level
Pakistan Oilfields Limited (POL): Higher oil prices boost profitability

23 May 2018
Azee Securities (Pvt.) Ltd.

  • In our today's morning report we would discuss the performance of Pakistan Oilfields Limited (POL) for 9MFY18 as company recently announced their result.
  • The earnings of Pakistan Oilfields Limited during the 3QFY18 remained impressive mainly on account of higher crude oil prices by 9.6% QoQ, surge in oil & gas production by 3.2% & 4.6% QoQ and PKR depreciation. During the period, the profit after taxation increase by 39% QoQ to Rs 3.10 billion (EPS: Rs 13.13) against Rs 2.22 billion (EPS: Rs 9.42) in 2QFY18 despite lower other income and one offs in 2QFY18. In 9MFY18 after tax profit stood at Rs 7.86 billion (EPS: Rs 33.26) compared to Rs 7.46 billion (EPS: Rs 31.56) in 9MFY17, depicting rise by 5%. This increase was attributed to higher production of crude oil & gas, better oil prices and increase in other income.
  • The top line of the company witnessed surge of 8% owing to higher production and robust oil prices. As a results net sales of the company stood at Rs 21.98 billion against Rs 20.41 billion in 9MFY17. Oil production surge by 9.4% to 7.33kbpd versus 6.70kbpd in 9MFY17 mainly due to higher production from Jhandial-1. Similarly, gas production up by 14% to 87mmcfd against 76mmcfd registered in 9MFY17 mainly due to higher volume from joint venture field. On the other hand, average crude oil prices massively rise by 22% YoY to $58.70/barrel against $48.30/barrel in 9MFY18.
  • While Jhandial-1, Adhi-30 field and Makori East 6 have connected would further support earnings momentum in near future. However due to better share price performance, we have market weight stance on stock with Dec'18 target price of Rs 671/share.
Apr 11, 2017
Pakistan Oilfields Limited (POL): Revision in earnings

01 June 2018
Sherman Securities (Pvt.) Ltd.

  • We are revising downwards our FY18 EPS estimates for Pakistan Oilfields Limited (POL) due to delay in settlement of issue relating to Windfall Levy on Oil (WLO). The case is currently pending in Islamabad High Court (IHC) and next hearing is scheduled on June 20, 2018. We now believe that one time revenue of Rs6.0bn (per share impact Rs16) relating to TAL block is now likely to be booked in FY19
  • Hence, along with one timer, rising oil price, PKR devaluation against dollar and increase in production is expected to significantly increase earnings in FY19.
  • Just to recall, In 2015, POL along with Joint Venture (JV) partners (MOL, PPL & OGDC) signed supplemental agreement with the government for conversion of TAL block’s Petroleum Concession Agreement to Petroleum Policy 2012. This resulted in enhanced well head gas prices. On December 27, 2017 government amended the supplemental agreement by including Windfall Levy on Oil/Condensate (WLO). Initially, the said levy was only applicable on gas. This resulted in additional cost of Rs14bn for POL which renders the supplemental agreement unviable.
Apr 11, 2017
Pakistan Oilfields Limited (POL): Is it over yet

11 June 2018
AKD Securities Limited

  • For a host of reasons, Pakistan Oilfields Limited (POL) has been on the investors' radar for most part of FY18. This time around, it's majorly the international oil prices together with consistently lower flows from Jhandial (and hence reserve size estimates) leading us to revise our earnings assumptions and target price. Also, we understand and incorporate 3QFY18 results into our model to better reflect full year profitability. Other minor changes include complete elimination of Makori field from our forecast horizon.
  • Accommodating the said, our EPS estimates for FY18/19F now stand at PkR49.31/73.47 and our target price comes down to PkR676/sh, while we still maintain a hold stance. Going forward, surprise movements in the stock can emerge from 1) success on the ongoing exploratory efforts at Khaur North and Joyamair Deep, though our channel checks suggest lower probability of substantial find at any of the 2 efforts, and 2) a favorable decision by the court on TAL block gas pricing issue.
  • With a lot going on in the international arena, intl. oil prices have rocketed to their ~3.5yr highs, specially after US' withdrawal from the JCPOA deal with Iran. In this backdrop, we revise our inputs to US$70/65/bbl for FY19/20F (previously at US$55/bbl throughout the forecast horizon), with a broad level earnings sensitivity of PkR3.7/sh for every US$5/bbl change.

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