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December 27, 2013

Oil & gas sector performed in line with KSE-100 in 2013


December 27, 2013

KARACHI: The country’s largest listed sector, oil and gas, with a 29 percent weight in KSE-100 index, has posted a return of 47 percent, including dividends, in 2013.
However, the sector’s performance fell slightly short of the 50 percent returns of the benchmark KSE-100 index.
“The sector gained on the back of above average foreign inflows, resolution of circular debt, smooth political transition and the new government’s efforts to promote investment in the energy sector,” Vahaj Ahmed at Topline Securities, said.
Among the 12 listed companies, Mari Petroleum (MARI) and Pakistan State Oil (PSO) outperformed the benchmark index by 79 percent and 24 percent, respectively. Byco Petroleum (BYCO) was the worst performing stock that posted negative returns of 40 percent.
Within the oil and gas sector, listed E&P sector (MARI, POL, PPL and OGDC) provided an overall return of 49 percent in 2013, which is in line with the benchmark returns.
With 129 percent total returns, MARI outperformed other firms in the E&P sector amid volumetric growth mainly from its self-operated Mari gas field.
On the other hand, PPL and OGDC – cumulatively comprise 20 percent of the KSE-100 index – posted returns of 53 percent and 49 percent, respectively.
PPL’s performance was fuelled by three discoveries during 2013, while OGDC gained on the back of volumetric growth, mainly from Nashpa.
In contrast to E&Ps, the oil marketing sector posted a return of 52 percent due to 74 percent returns provided by PSO. Meanwhile, SHEL and Attock Petroleum posted 40 percent and 28 percent returns, respectively.
PSO benefitted most from the circular debt resolution, resulting in improved operational leverage and cash flow.
Furthermore, the refinery sector underperformed the broader index by 51 percent in 2013 so far, primarily on account of volatile gross refinery margins and heightened risk environment surrounding the sector.
With 26 percent returns,

Attock Refinery was the biggest gainer among refineries. Being the third largest refinery in terms of market cap, BYCO held back refinery sector performance as other peers offered 15 percent returns on average.

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