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PakistanOilfieldsLimited
POLPA
Stockprice
370.4
ProfitshitbylowArablightoilprices&drywells
Targetprice
478.6
Source:CompanyAccounts&TSLResearch
Depressedcrudeoilpricesdamagedrevenuestreamin2Q
28%QoQdipinbenchmarkArablightcrudeoilpricestoaverageUSD74.65/bblin2QFY15coupled
with~3%subduedcrudeoilflowsto6.4kbpddraggedPOLrevenuesin2Q.Dropinoilproductionis
primarilyduetolowerproductionfromMakoriEast(down7%QoQto2.9kbpd)in2QFY15.How
ever, on the positive side, support came from 19% QoQ healthy rise in LPG production from Tal
block, which significantly boosted sales of POLGAS (~26% of net revenues) by 25% QoQ to
PKR2.1bn.Overall,revenuesofthecompanydeclinedby18%QoQtoPKR8.1bnin2QFY15.
Nonrecurringcosts&exchangelossescaused72%fallinPAT
330.1
0.9
471.2
361.9
PKRbn
FY17F
32.7
9.3
2.4
17.5
Otherincome
PAT
Keymatrices
EPS
54.48
38.05
44.48
47.28
DPS
52.50
35.00
39.00
44.00
BVPS
148.8
150.7
152.9
155.3
P/E(x)
P/BV(x)
FY17F
DividendYield
14%
9%
11%
12%
Earningsgrowth
19%
30%
17%
6%
ROA
23%
16%
18%
19%
ROE
38%
25%
29%
31%
EV/EBITDA
3.29 4.78
4.36
4.10
PricePerformance
740
POL
690
KSE100INDEX
640
590
540
490
440
390
340
Besides depressed crude prices, outrageous rise in exploration costs by 8.7x QoQ to
PKR2.8bn dampened earnings in 2QFY15. This sharp rise is attributable to expensing out of dry UsmanRiaz
wells namely Malgin in Tal block and Bhangali3. Conjointly low profitability of core operations, usman.riaz@taurus.com.pk
otherincomealsoremainedsubduedatPKR110mn,aheftydeclineof87%QoQin2QFY15,owing Direct:+922135216403
Feb15
QoQ
18%
1%
25%
873%
87%
72%
72%
46%
Dec14
2QFY15
8,078
2,133
4,457
2,799
110
1,180
4.99
Oct14
1QFY15
9,845
2,150
5,962
288
830
4,167
17.62
88
Aug14
1HFY15 YoY
17,923
0.5%
4,282
12%
10,419
4%
3,087
266%
940
36%
5,347
23%
22.60
23%
15.00 25.0%
237
Explor.Cost
Jun14
1HFY14
17,837
3,814
10,060
844
1,470
6,905
29.19
20.00
29.2%
Currentupside/(downside)
Apr14
PKR(mn)
NetSales
Oper.Costs
GrossProfit
Explor.Costs
OtherIncome
PAT
EPS
DPS
TSLResearch
BUY
Feb14
OilandGas
March6,2015
Continuedonpage2
DISCLAIMER:Theaboveinformationandadviceisgiveningoodfaith,withoutanylegalresponsibility.TaurusSecuritiesLimitedorindividualscon
nectedwithitmayhaveusedresearchmaterialbeforepublicationandmayhavepositionsinormaybeinterestedinthesecuritiesmentionedherein.
Insight
TSLResearch
to exchange losses of PKR160mn vs. PKR232mn gains in the preceding quarter. Apart from the
exchangelosses,absenceofpayoutsfromNRL(25%ownedassociate)alsoadverselyaffectedthe
otherincome.Asaresult,profitsin2QFY15fellby72%toPKR1.2bn(EPSPKR4.99).
Oilpricesandoperatingexpensesknockedearningsdownin1HFY15
During1HFY15,revenuesremainedstableatPKR18bn.Duringtheperiod,crudeoilflowsimproved
by16%YoYto6.5kbpdinadditiontorisingLPGproductionfromTALBlock(postcommencement
of operation of Makori GPF). However, 19% tumbled average crude oil price coupled with 10%
drop in gas flows neutralized the impact of improved hydrocarbon production (exgas flows).
Moreover,companysexplorationcostssurgedby2.7xYoYtoPKR3.1bnwhileotherincomeplum
metedby36%YoYtoPKR940mn.Consequently,bottomlineofthecompanyknockeddownto
PKR5.3bn(EPSPKR22.6)comparedtoPKR6.9bn(EPSPKR29.19)inSPLY.
AbouttheCompany
PakistanOilfieldsLimited(POL),asubsidiaryofTheAttockOilCompanyLimitedwasincorporated
onNovember25,1950.AttockGroupowns54%ofPOLsshares.Thecompanycurrentlyownsand
operatesfourexplorationlicensesandninedevelopmentandproductionleases.Italsoholdsnon
operatinginterestin4explorationlicensesandninedevelopmentanddevelopmentandproduction
leases.
Inadditiontoexplorationandproductionofoilandgas,CompanyalsomanufacturesLPG,solvent
oilandsulphur.POLmarketsLPGunderitsownbrandnameofPOLGASaswellasthroughitssub
sidiaryCAPGAS(Private)Limited.POLhasa25%shareholdinginNationalRefineryLimited.Further
more,alsooperatesanetworkofpipelinesfortransportationofitsownaswellasothercompanies
crudeoiltoAttockRefineryLimited.
ThecompanyalsooperatesaBarytemineinBaluchistanprovince.Itproducesoilwelldrillinggrade
Barytepowderfromthemine,whichhasprovenreservesof1.25milliontones.
TaurusresearchisavailableonBloombergunderTAUR&onCapitalIQ