Oil shock to spark new bull run in Pakistan E&P sector

May 19, 2026 (MLN): Pakistan's exploration and production sector is poised for a strong earnings cycle as a confluence of elevated global oil prices, tightening LNG markets, and a domestic production revival reshapes the outlook for listed E&P companies.

In a research note published by Insight Securities, it is flagged that geopolitical tensions have sent Arab Light crude soaring to approximately $120 per barrel, with disruptions near the Strait of Hormuz adding a sustained risk premium to global energy markets.

Fuel prices domestically have climbed more than 60% since hostilities began a dramatic shift that has amplified the earnings potential of Pakistan's oil producers, whose realized prices move in lockstep with international benchmarks based on physical crude deliveries.

The tightening of global LNG supply has had an unexpected silver lining for Pakistan's domestic gas sector as well.

With imported LNG becoming harder to source, forced curtailments that had weighed on local production are gradually being lifted, driving a meaningful recovery in hydrocarbon output.

Gas production has climbed to 3,079 mmcfd from 2,732 mmcfd in February 2026, while oil output has risen to 72,167 barrels per day compared to 60,684 bbl/day just three months prior.

Beyond the macro tailwinds, a field-level story is quietly building momentum.

The Baragzai development, a shared asset for both OGDC and PPL has yielded five discoveries to date, with cumulative production already reaching approximately 13,470 bbl/day of oil and 36.46 mmcfd of gas.

Current oil output from the field stands at around 6,000 bbl/day, but that figure is expected to scale dramatically, with projections pointing to 25,000 bbl/day of oil and 60 mmcfd of gas at peak capacity, a meaningful and largely company-specific earnings uplift for two of the sector's largest names.

Insight Securities maintains a BUY stance across its entire E&P coverage universe PPL, OGDC, POL, and MARI with target prices of Rs412, 433, 737, and 742 respectively, implying upsides ranging from 22% to as high as 92% for PPL.

On valuations, the broker projects P/E multiples compressing to as low as 5.3x for PPL and 6.4x for OGDC by FY28.

Source: Insight Research

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