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IGI Securities Limited – Day Break (21 Sep 2023)

September 21, 2023

Karachi, September 21, 2023 (PPI-OT): Pakistan oil and gas reserves down by 17% and 6% as at Jun-23 end; RRR still below par

As per data published by Pakistan Petroleum Information Service (PPIS), Pakistan’s total oil reserves are down by 17% to 192.91mnbbls as at Jun-23 compared to 232.51mnbbls at Jun-22. Gas reserves are down by 6% to 18.34tcf as at Jun-23 compared to 19.51tcf at Jun-22.

Major revision in reserves during FY23 included Addition of Bettani oil reserves by 13mnbbls as at Jun-23, addition of Bettani gas reserves by 218mnbbls as at Jun-23, Mari gas reserves down by 11%y/y to 4,307bcf as at Jun-23, Kandhkot gas reserves up by 13%y/y to 501bcf as at Jun-23, Makori East gas reserves up by +57%y/y to 236bcf as at Jun-23 and Tolanj West gas reserves are up by +2xy/y to 30bcf as at Jun-23.

Reserve Replacement Ration (RRR) for OGDC, PPL, POL and MARI remained below par during FY23. For oil and gas RRR was 1.39 and 0.83 for OGDC, 0.16 and 0.58 for PPL, (9.28) and (8.43) for POL and (42.02) and (1.03) for MARI. Only OGDC reported oil RRR of more than 100% due to addition of Bettani oil reserves.

Pakistan Oil reserves and gas reserves down by 17% and 6% as at Jun-23

Compared to Jun-22, oil reserves are down due to downward revision in Mari and Jhandial field reserves (contributing nearly 51mnbbls) despite addition of Bettani reserves (13mnbbls). Compared to Jun-22, oil reserves dropped by 39.6mnbbls as at Jun-23 compared to FY23 production of 25.4mnbbls. Gas reserves are down 6% or 1,174bcf as at Jun-23 which is in line with FY23 production of 1,190bcf mainly due to addition of Bettani (218bcf) and upward revision of Kandhkot and Makori East gas reserves (Cumulative 141bcf) offset by downward revision in Mari reserves (535bcf).

Compared to Dec-22, oil and gas reserves are down by 14%y/y and 4%y/y respectively, mainly due to downward revision of Mari and Jhandial oil reserves and gas reserves were down due to downward revision in Mari compensated by addition of Bettani and upward revision in Makori East and Kandhkot. As a result, both oil and gas reserves declined more than 1HFY23 production between Dec-22 and Jun-23.

Major revision in reserves during FY23 included

Addition of Bettani oil reserves by 13mnbbls as at Jun-23.

Addition of Bettani gas reserves by 218mnbbls as at Jun-23

Mari gas reserves down by 11%y/y to 4,307bcf as at Jun-23.

Kandhkot gas reserves up by 13%y/y to 501bcf as at Jun-23.

Makori East gas reserves up by +57%y/y to 236bcf as at Jun-23.

Tolanj West gas reserves are up by +2xy/y to 30bcf as at Jun-23

POL: Oil and gas reserves down by 59% and 56% respectively as at Jun-23

POL’s oil reserves registered a massive decline of 59%y/y to stand at 13.28mnbbls while gas reserves reported at decline of 56% to 0.17tcf, as at Jun-23, compared to 32.28mnbbls and 0.40tcf as at Jun-22. Oil reserves dropped due to downward revision in Jhandial Reserves by 23.06mnbbls compared to total production of 1.83mnbbls while gas reserves declined due to downward revision in Jhandial gas reserves (by 282bcf) compared to production of 23.7bcf during FY23. This brings POL’s estimated reserves life to 6.89yrs for oil and 7.27yrs for gas (total reserve life of 7.27yrs).

OGDC: Oil reserves up by +6% while gas reserves down by 1% as at Jun-23

OGDC’s oil reserves are reported at 86.23mnbbls up by +6% while gas reserves are recorded at 6.46tcf, down by 1% as at Jun-23, compared to 81.63mnbbls and 6.52tcf at Jun-22. The jump in oil reserves was mainly due to addition of Bettani (13mbbls) compared to total FY23 production of 11.9mnbbls. Decline in gas reserves (down by 58bcf) was below FY23 production of 346bcf mainly due to addition of Bettani (218bcf). This brings OGDC’s estimated reserves life to 7.32yrs for oil and 18.67yrs for gas with total reserve life of 16.79yrs.

PPL: Oil and gas reserves down by 12% and 4% at Jun-23

PPL’s oil reserves are reported at 26.8mnbbls down by 12% while gas reserves are recorded at 2.52tcf, down by 4% as at Jun-23, compared to 30.49mnbbls and 2.63tcf at Jun-22. The decline in oil reserves (down by 3.7mnbbls) was below FY23 production of 4.45mnbbls due to upward revision in Makori East, Maramzai and Nashpa reserves while decline in gas reserves of 111bcf was below FY23 production of 262bcf owing to upward revision in Kandhkot Reserves (56bcf) and Makori East (24bcf stake adjusted). This brings PPL’s estimated reserves life to 5.96yrs for oil and 9.02yrs for gas with total reserve life of 8.76yrs.

MARI: Oil and gas reserves down by 77% and 11% as at Jun-23

MARI oil reserves are reported at 5.0mnbbls down by 77%y/y whereas gas reserves are down by 11%y/y to 4.36tcf as at Jun-23 respectively, compared to 21.67mnbbls and 4.92tcf at Jun-22. The decline in oil reserves is primarily attributable to downward revision of 17mnbbls from Mari oil reserves. Gas reserves declined by 560bcf as at Jun-23, which was above FY23 production of 275bcf mainly due to mainly due to downward revision in Tipu reserves (839bcf) despite upward revision in Mari HRL reserves (290bcf). This brings MARI’s estimated reserves life to 12.84yrs for oil and 14.87yrs for gas with total reserve life of 14.85yrs.

Reserve Replacement Ratio (RRR) remains key concern

reserves.