Karachi, March 31, 2023 (PPI-OT): MARI: Strong prospects

1HFY23 marked a phenomenal period for the MPCL, with weakening exchange rate alongside Arab light prices, providing a much needed impetus to the sector overall in face of lackluster production (flood damages, annual fertilizer plant turnarounds).

According to the latest PPIS reserves data, MARI’s 2P reserves stood at 870MMBOE as of Jun’22. Reserves of its largest asset – Mari field – are estimated to stand at 4.84TCF of gas.

Assuming throughput from the field at ~750MMCFD going forward, the field could continue production for another ~18 years, despite 58% depletion.

As the company supplies most of its gas production to the fertilizer sector (~90% in FY22, 662mmcfd), it is shielded from circular debt related receivable buildups.

MARI is our top pick from the sector, with a Dec’23 target price of PkR2,900/sh on the stock, offering upside potential of 90% over the last close.