Oil and gas output falls in Q1 due to disruptions

KARACHI: Pakistan’s oil and gas production witnessed an 8.0 per cent and 7.0 per cent decline, respectively, in the first quarter of the current fiscal year, due to annual turnarounds (ATAs) and forced curtailments at major fields.

In terms of oil production, the most significant declines were observed at the Nashpa, Mela, Dhok Sultan, Adhi, Makori East, Maramzai, Mardenkhel and Pasakhi fields. Meanwhile, the reduction in gas production was attributed to decreased output from fields such as Sui, Qadirpur, Uch, Nashpa, Maramzai, Kandhkot and Naimat West, according to a report by Arif Habib Limited (AHL).

During the quarter under review, exploration and production (E&P) companies operating in Pakistan spudded six exploratory wells and nine appraisal/development wells, against a target of 27 exploratory wells and 40 appraisal/development wells for the current fiscal year.

Exploration efforts by local E&P companies resulted in nine discoveries during the first quarter, including the Razgir, Chak 202-1, Baloch-2, and Akhiro-1 wells.

Based on the decline in oil and gas production, the brokerage house projected a drop in earnings for Pakistan Oilfields Limited (POL), attributing it to a 6.0 per cent and 4.0 per cent year-on-year (YoY) decline in oil and gas production, respectively, a 6.0 per cent YoY decrease in average realized oil prices, a 5.0 per cent YoY appreciation of the Pakistani rupee against the US dollar, and increased exploration costs.

The report also projected a decline in earnings for Oil & Gas Development Company Limited (OGDC) during the first quarter, due to a 3.0 per cent and 13.0 per cent YoY decline in oil and gas production, respectively, a 10.0 per cent YoY decrease in oil prices, and the depreciation of the US dollar against the rupee.

Exploration costs are expected to rise by 57 per cent YoY, reaching Rs 4.14 billion in 1QFY25, mainly due to the dry well Tando Allahyar NE-1 reported during the quarter. Meanwhile, other income is expected to decrease by 1.0 per cent YoY due to a projected decline in interest income.

During the first quarter, AHL also projected a decrease in earnings for Pakistan Petroleum Limited (PPL), citing an 11 per cent and 7.0 per cent YoY contraction in oil and gas production, respectively, and a 10 per cent YoY decline in oil prices. Exploration expenses are expected to increase, driven by the dry well Rizq-5 reported during the quarter. However, other income is estimated to grow by 41 per cent YoY, due to higher anticipated returns from short-term investments.

Arif Habib, the brokerage house, has also projected growth in earnings for Mari Petroleum Company Limited (MARI), supported by an 11 per cent YoY increase in gas production. The wellhead price of Mari gas field fell by 5.0 per cent YoY, while the rupee strengthened against the US dollar. Exploration costs are expected to decrease by 20 per cent YoY, reflecting lower seismic activity during the quarter compared to the previous year.