OGDC to take part in bidding for Premier Oil acquisition

KARACHI: The Oil and Gas Development Company (OGDC) has announced to participate in the bidding process for the corporate sale of Premier Oil Pakistan Holdings and has submitted a non-binding cash offer for its entire issued share capital, a bourse filing said on Friday.

The expected completion date for the transaction is June 30, 2016.

Premier Oil Limited, a United Kingdom (UK)-based E&P company has operations in Norway, Indonesia, Pakistan and Vietnam among others.

In Pakistan, Premier Oil currently has joint ventures in six gas producing fields.

The hydrocarbon portfolio of Premier Oil encompasses Qadirpur (stake: 4.75 percent), Bhit (stake:six percent), Badhra (stake: six percent), Kadanwari (stake: 15.79 percent), Zamzama (stake: 9.38 percent) and Zarghun South (stake: 3.75 percent).

Shahbaz Ashraf at Arif Habib Limited (AHL) said a successful acquisition of Premier Oil will provide impetus to Oil and Gas Development Company's profitability.

"However, we view the impact as nominal. Importantly, OGDC shares stake in four of the six gas fields in the Premier Oil's hydrocarbon portfolio, as it has with no stake in Zamzama and Zarghun South."

Currently, Premier Oil produces 65mmcfd of gas, which translates into six percent of the gas produced by Oil and Gas Development Company in FY15 (1,143mmcfd).

Similarly, the 110bpd of Premier Oil's production translates into a meager 0.3 percent of oil produced by OGDC (40,818bpd) in FY15.

According to 1HCY15 financial statements of Premier Oil, its assets base is less than Rs8.8 billion, whereas Oil and Gas Development Company unveiled Rs14.4 billion cash and equivalents in its latest accounts, which is more than sufficient for the aforesaid acquisition.