Lahore, December 23, 2021 (PPI-OT):Orient Petroleum Inc. (Pakistan Branch) is engaged in upstream Oil and Gas business in Pakistan, it includes exploration, development and production of oil and natural gas reserves. Currently, OPI has six production leases which comprise of Ratana, Dhurnal, Bhangali, Sinjhoro, Mehar and Sofiya and seven exploration licenses namely Sakhi Sarwar, Marwat, Harani South, Saruna, Kohlu, Sinjhoro and Mehar. Orient Petroleum Inc. (OPI) is part of the group which includes Zaver Petroleum Corporation (Pvt) Limited (Zaver “ZPCL”) and Orient Petroleum Pty Ltd. (OPPL).
The group is an established oil and gas business unit in Pakistan, with a portfolio of 9 Exploration Licenses and 8 Development and Production Leases. OPI’s reported segmental production of Crude Oil, Gas and LPG for Jul20-Jun21 is 130,282 BBL; 2,390 MMSCF and 6,038 MT respectively. OPI’s management is pursuing an expansion strategy as it aims to make additions to its revenue stream, to support the bottom-line profit. OPI reported topline of PKR 1.3bln for 1HCY21 (CY20: PKR 2.4; CY19: PKR 3.0bln) and the Company recovered from its losses to report profit of PKR 81mln for 1HCY21 (CY20: PKR 679mln; CY19: PKR (35mln)) owing to increase in production and crude oil prices.
OPI managed to acquire leases on three operated fields including North Potwar, Soan and Ratana and three non-operated leases including Sofiya, Mehar and Sinjhoro. The work program to enhance production volumes in the upcoming years will be supported through a mix of in-house financing and debt. The strength of the entity lies in risk-adjusted recoverable reserves both from its production and development assets and exploration assets. With the increased volume, the profitability will improve as the synergies and efficiencies will take effect.
These healthier cash flows will provide further support to the leveraged balance sheet, hence supplementing the company’s ability to meet its obligations. The financial discipline has been good and would be pivotal to future fiscal management. The ratings are dependent on the sustained relative positioning of the company in the oil and gas industry. Volatility in topline and profitability remains key areas for considerations. Financial discipline is considered core to the ratings, with enduring emphasis on maintaining relevant coverages.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
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