Karachi: Pakistan Petroleum Limited (PPL) discussed its fiscal year 2025 results and future outlook during a corporate briefing, indicating a significant production increase and improved financial performance. The company forecasts a boost in production by over 50 million cubic feet per day (mmcfd) as the government negotiates RLNG cargo deferment with Qatar to lift current curtailments.
PPL reported an improved cash collection ratio of 91% in FY25, a notable increase from 81% in the previous year, though it slightly dipped to 87% in the first quarter of FY26. For the fiscal year 2026, PPL projects production levels between 600-650 million cubic feet equivalent per day (mmcfde) with plans for seismic acquisitions covering 700 km in 2D and 600 sq km in 3D.
Despite having a potential capacity exceeding 700 mmcfd, PPL's production remains constrained due to reduced demand amid curtailment, notably affecting fields such as Sui, Nashpa, and Tal. The management highlighted the possibility of enhancing Dhok Sultan's production capacity to approximately 1,400 barrels per day (bpd), up from the current 1,100 bpd.
While Sui's production declines at a natural rate of 7% and Kandhkot at 13%, PPL implements production enhancement measures to counteract these reductions. A new development well was recently drilled at Kandhkot, with another planned for the fourth quarter of FY26, alongside evaluations of the Sui Deep development well.
In FY25, PPL's revenue was largely driven by gas at 66%, followed by oil at 26%, with the remainder from LPG and other sources. The company contributes 19% to the local gas production and 16% to total oil production in Pakistan.
Looking ahead, PPL plans to drill 15 wells in FY26, including 4-5 development wells, and intends to embark on its first offshore drilling venture in the first quarter of FY27. Additionally, management announced that gold and copper extracted from the Reko Diq project would be exported rather than processed locally due to excess global smelting capacity and low margins.
The company achieved a 2P Reserve Replacement Ratio of 129% in FY25, maintaining a "BUY" stance with projected price-to-earnings ratios of 6.8x for FY26 and 6.1x for FY27.