PPL profit likely to rise to Rs28.4b

Saturday, August 22, 2009

KARACHI - Pakistan Petroleum Limited (PPL) topline is expected to surge by 35.3 per cent to Rs 61.8 billion on year-on-year basis. The company has improved oil production by 2pc YoY to 4,130bpd in FY09, while the company s gas production is expected to decline by 3pc YoY. The surge in topline is due to increased wellhead gas prices by 50pc translating into net realised price of Rs168.79/mcf in FY09 for the company. The depreciating PKR/USD has also increased the income of PPL. Surge in oil production was primarily based on improved production from Mela field by 23pc YoY which mitigated the suppressed production from Adhi (-8pc YoY) and Makori (-12pc YoY). On the other hand, company s gas production is expected to decline by 3pc YoY to 962mmcfd on the back of lower production from Sui (-6pc YoY), Sawan (-10pc YoY) and Miano (-18pc). Royalty payments are expected to emulate the increase in the topline rising by 37pc YoY, to Rs7.5b.

On the exploration front, PPL remained inactive in its own-operated block as it scudded only 1 exploratory well (Tanga Pusht X-1) which was later abandoned while one developmental well (Sui-8) was in the process of drilling at the time of year end. It is expected that a 10pc increase in field expenditure as PPL s JV partners remained highly active in exploration and development activities. Owing to above factors, operating margins are expected to jump by 68.8pc. Furthermore, high interest rate environment is expect to bode positively on company s other income as they are forecasted to rise by 27pc to Rs3.8b. Therefore, PPL is expected to post a profit after tax (PAT) of Rs28.2b (EPS Rs 34.03), marking a growth of 43.3pc YoY. Likewise, the company is anticipated to announce a cash dividend of Rs5/share, which will translate into a cumulative annual payout of Rs15/share