AHL Brief Note: E&P

Oil & Gas Development Company Limited 28-Sep-2023

Conference Call Takeaways REP-300

Oil and Gas Development Company Limited (OGDC) held a conference call today to discuss FY23 financial results and future outlook. The company
posted the highest ever profitability of PKR 224,618mn (EPS: PKR 52.23) in FY23, depicting a healthy growth of 68% YoY. In addition to the result, the
management also announced a cash dividend of PKR 2.75/share (PKR 8.55/share in FY23)

Result Highlights & Conference Call takeaways

▪ Net sales clocked in at PKR 413,594mn in FY23, up by 23% YoY, amid i) surge in average net realized prices of gas, and ii) 28% YoY Pak Rupee
devaluation against the greenback. Whereas, oil and gas production plummeted by 8.0% and 7.4% YoY, respectively settling at 32,478 bopd and 764
mmcfd.
▪ The production decline was witnessed due to the natural decline at KPD-TAY, Bobi, Chanda, Bela, TOC, Mela, Bitrism, Nashpa and Sinjhoro fields.
Furthermore, torrential rains/floods forced production curtailment at Palli, Mangrio and KPD-TAY fields. Moreover, due to less intake by Uch Power
Limited amid rupture incident, which further kept OGDC’s production in check.
▪ The company injected 7 operated wells (Lala Jamali-2, Chak 5 Dim South-3, Qadirpur-63, Pasakhi Deep-7, Umair South East-1, Wali-1 and Kot
Nawab-1 during the period to mitigate oil and gas production decline. Moreover, the company conducted 96 work over jobs at mature field for the
purpose of arresting the natural decline.
▪ Average realized oil prices settled at USD 71.18/bbl during FY23 vis-à-vis USD 75.69/bbl during SPLY. Whereas, realized gas price was set at PKR
610.92/mcf in FY23 as compared to PKR 436.06/mcf during SPLY.
▪ Exploration costs increased by 22% YoY to PKR 14,230mn in FY23 on account of lower cost of two dry wells incurred during the period.
▪ During FY23, the company spud 5 exploratory, 4 development and 1 re-entry wells. Whereas, the company’s exploratory efforts yielded 3 new oil and
gas discoveries. For FY24, the company plans to spud 9 exploratory and 9 development wells.
▪ The company booked an exchange gain on foreign currency account of ~PKR 38bn during the FY23. During 4QFY23, the other income augmented by
5.3x YoY which is due to one-off gain on modification of finance lease of Uch Power Limited I.

Muhammad Iqbal Jawaid

D: +92 21 32462589
UAN: +92 21 111 245 111, Ext: 255
Iqbal.jawaid@arifhabibltd.com
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AHL Brief Note: E&P

Oil & Gas Development Company Limited 28-Sep-2023

Conference Call Takeaways
▪ According to the management, Uch Power Limited I lease, which was expiring on Nov’23, was extended till Sep’28. Therefore, the company
reassessed that the lease arrangement, resulting in a gain on modification of the finance lease.
▪ The management shared that the company has planned three compression projects at Dakhni, Uch, and KPD-TAY, each of which are expected to
complete in Nov’24, Apr’25 and Feb’25, respectively which is subject to the opening of LCs. After the completion of these projects, the aforementioned
fields will be able to add a total incremental raw gas and condensate of 722 mmcfd and 2,238 bopd, respectively.
▪ Regarding Offshore Block 5, the management shared that the work is under progress to acquire rigs for conducting drilling activity. The management
estimates first well to be spud in 1QFY26.
▪ The company’s overdue trade debts arrived at PKR 511bn (Jun’23) compared to PKR 498bn (Mar’23), which depicts a significant slowdown in the
accumulation of circular debt since the government revised consumer gas prices in Feb’23.
▪ Regarding Reko Diq, the management shared that first phase operation will commence after four years. Moreover, management estimates first phase
of the project cost to be USD 4bn. The management further stated a feasibility study will be conducted in 2024 after which first phase project cost will
be finalized.

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objectivity, AHL does not represent that it is accurate or complete and it should not be relied on as such. In particular, the report takes no account of the investment objectives, financial situation and particular needs of investors. The information given in this document is as of the
date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. AHL reserves the right to make modifications and alterations to this statement as may be required
from time to time. However, AHL is under no obligation to update or keep the information current. AHL is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in response to specific client queries. Past
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