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Pol-buy

Pol-buy

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Published by: api-3838342 on Oct 18, 2008
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SC Securities (Pvt) Ltd.
1
E& PSector
Pakistan Oil Fields
SC SEC URITIES ( PVT) LTD.
Corporate Member: Karachi Stock Exchange (Guarantee) Ltd.
Pakistan Oil Fields - BUY
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11/4/2003
3/24/2004
7/29/2004
12/9/2004
4/19/2005
8/25/2005
050
100
150
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400
450
KSE-100
POL

POL is involved in exploration and production in a total of 26 areas in Pakistan. Currently POL\u2019s own operated Exploration Licenses include Hyderabad with working interest of (75%), Chakral (100%) and Ikhlas (100%). At present POL has nine

Development and Production Leases: Pariwali, Meyal, Joya
Mair, Minwal, Dhulian, Khaur, Pindori, Turkwal and Balkassar.
Financial Highlights YE June
2004A
2005A 2006F
2007F
Revenue(PkR mn)
6842
8998
16740
21245
Net Profit(PkRmn)
2495.1
3762.7 6110.75 7648
EPS ( Pk R)
18.98
28.63
46.5
58.2
EPSchange
2.7%
50.8% 62.42% 25%
Pric e / Ea rn in g s
22.12
14.66
9.03
7.2
Dividend (PkR/share)
13
12.5
14
16
Dividend Yield
3.1%
2.98% 3.4%
3.4%
SH O RT TERM
Buy on Weakness
LO NG TERM
Buy
FAIR VALUE
PKR 465
Current Pric e :PKR 4 2 0
EPS fo r FY05 :Rs 28.63
EPS for FY06F : Rs 46.50
PER : 9
(based on expected earningsfor
FY06)
Market Capitalization:PKR 55,193.88m
Outstanding no of shares: 131.414m
Estimated free Float:4 2 %
Major Share Holder:5 4 %
Price Performance
(Dividend Adjusted)
52 week High/Low: 428/202
18 week High/Low: 428/288
Research Department
SC Securities (Pvt) Ltd.
Te l: 92 21 111 111 721 (Ext 107,108)
Em a il: research@scsecurities.net
KSE Vs POL
December 2005
SC Securities (Pvt) Ltd.
2
E& PSector
Pakistan Oil Fields

POL plants also manufacture LPG, Solvent Oil and Sulphur. POL markets LPG under its own name of POLGASas well as through its subsidiary CAPGAS(Private) Limited. POL owns

and operates a drilling rig capable of drilling deep wells to +
16,000 feet.

As per the latest printed accounts, POL is currently producing approximately 7000 barrels per day for 1Q FY06 as compared to 4926 barrels per day for the corresponding period last year showing the growth of 43% YoY basis. The impressive increase in production coupled with the jump in international oil prices, helped POL to post ever higher NPAT. With a view that the international oil prices would move in the band of $50 - $55 coupled with the POL to maintain it\u2019s daily production not going below 6800 barrels per day, we expect the company to post an EPS of Rs. 46.50.

Investment Highlights
??Pakistan Oil Fields is currently trading at a discount of 11

percent from our fair value of Rs 465 based on DCF valuation. POL seems to be the one of most discounted share and therefore it is advised for long-term investors to keep a positive stance on this stock and invest in the stock with long term perspective.

??POL is currently trading at the PER of 9 based on the

expected EPS of FY06 and offers a prospective yield of 3.4%. POL has a PE band of 6.8 \u2013 13, having conservative approach, we apply an average PEx of 10 which is at a discount to the E&P sector and Market as well, expecting the company to report an EPSof Rs. 46.5, the fair value comes to Rs. 465.

Financial Highlights
??POL has achieved third consecutive record breaking ever
highest results for FY05 which translates into the growth of
50.8%.
??In spite of the big hit from financial cost on P&L for the

acquisition of NRL, POL was able to post growth of 6% and 118% on QoQ and YoY basis respectively for 1QFY06, translating into an EPS of PkR 10.96 against PkR 5.02 in the corresponding period last year.

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FY03A
FY04A
FY05A
FY06F
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6000
7000
Sales
NPAT
Oil prices are expected to
remain around $52 - $55
mark
Currently trading at the
discounted PER to the
average of it\u2019s PER band
keeping conservative
view on the daily
production of oil and
international oil pric e, we
expect POL to report an
EPS of PkR 46.50 for FY06
SC Securities (Pvt) Ltd.
3
E& PSector
Pakistan Oil Fields
Production and Reserves
POL produced5555 barrels oil per day (BOPD) and 28.89
MMcfd of gas on average for the year 2003-04 and
maintained it for the next financ ial year 2004-05 with an
average daily production of 5540 BOPD and 31.39 MMcfd of

gas. The impressive increase in production from 5540 BOPD and 31.39 MMc fd of gas for the FY05 to 7043 BOPD and 46.5 MMcfd of gas for the first quarter of FY06, accompanied by the spike in international oil prices helped POL to post ever highest earnings.

POL shared 15.62% of total oil production of the country in
2004-05 whereas, it hold s 8.16% of total oil oil reserves.
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FY2004
FY2005
3M2006
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6000
7000
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MMcfd Gas MTLPG
MTSulphur BOPD (Solvent Oil) BOPD (Crude Oil)
Oil Production 2004-05
OGDC
47%
PPL
6%
BP
25%OTHERS
6%
POL
16%Oil Reserves 2004-05
OGDC
37%
PPL
13%
POL
8%
OTHERS
20%
BP
22%

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