Pakistan Oilfields Ltd – FY11 EPS expected at PKR45.2

FY11 EPS expected at PKR45.2: POL’s board meeting for announcement of financial result for FY11 is scheduled on September 11th, 2011. We expect the company to post an EPS of PKR45.2 for FY11, up 44% YoY and announce final DPS of PKR23 taking full year payout to PKR33. Our final DPS expectation for FY11 assumes a payout ratio of 99% for 2H (FY10: 101%). 4QFY11 EPS shall remain stellar at PKR12.05, up 31% YoY and 8% QoQ.

Volume bonanza continued in FY11: FY11 shall prove to be the second successive year of volume bonanza for POL with likely gas volume growth of 39% while oil production is likely to rise 11.5%. Volume incline has though stalled during the last two quarters which depicted flattish QoQ growth.

Lower dry well costs to keep exploration expense under check; dividend income rise: A mere one dry well in FY11 against two in the last year shall keep exploration expense under PKR1.1bn for FY11, down 32% YoY. Higher dividend income from NRL shall push other income up 22% YoY.

Earnings revised; PT raised: Our estimates for POL now incorporates final flow numbers from Makori East-01 and Tolanj X-01, while we have also factored in Makori East-02 to yield hydrocarbon flows equaling 80% of the first well in the field. We have revised our FY12/13 EPS estimates by -2% / 9% and raise our PT by 7% to PKR480/share. BUY!

Volume bonanza continued in FY11

FY11 shall prove to be the second successive year of volume bonanza for POL with likely gas volume growth of 39% while oil production is likely to rise 11.5%. Key contributor to volume growth during FY11 was full period impact of Manzalai expansion, which more than offset the

27% decline in oil production from Pindori and Pariwali fields. However, volume incline has stalled during the last two quarters which depicted flattish QoQ growth. We still expect FY12 to be another year of strong growth with EPS likely to rise 22% YoY, driven by 21% growth in oil production and 15% uptick in gas, coming primarily from Domial, likely commencement of Makori East-01 from Jan-12 and full year impact of Maramzai commencement in May-11.

Lower dry well costs to keep exploration expense under check; dividend income rise

A mere one dry well in FY11 against two in the last year shall keep exploration expense under PKR1.1bn for FY11, down 32% YoY. Key to lower exploration cost shall be muted 4QFY11 exploration expenditure which shall contract 74% QoQ as 3Q entailed dry well cost of MG-01.   Higher dividend income from NRL shall push other income up 22% YoY in FY11 despite our conservative estimates of 8% QoQ decline in 4QFY11 other income.

Economic & Political News

Gas supply to fertilizer plants restored ahead of time

Gas supply to fertilizer plants, including Engro Corporation has been restored 12 days ahead of schedule as annual maintenance time period of Qadirpur Field was cut short, industry officials said on Tuesday

OGRA fines seven OMCs PKR21mn for non-compliance

The Oil and Gas Regulatory Authority (OGRA) has imposed a fine of PKR21mn on seven Oil Marketing Companies (OMCs) on violation of license terms and conditions under which OMCs should maintain 20-days fuel stock. The companies include Askar, Hascol, Admore, OOTCL, Bakri, Byco, and Total.
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