Promising returns, strategic triumphs await investors: OGDC

November 30, 2023 (MLN): The management of the Oil & Gas Development Company Limited (PSX: OGDC), a leading Pakistani oil and gas company has painted a bright picture for its shareholders during today’s corporate briefing session mainly on back of their willingness to embrace high-return, high-risk projects.

On the back of the gas price hike, the cash position of the company is set to improve as the management is expecting a meeting with Sui Companies in days to come. At present oil receivables collection currently stands at 100%.

At present, the company is also working on spudding two more wells, including WaliDeep, which will likely be completed by June 2024 and the production is anticipated to commence within 6-8 months, the management informed the house.

In a noteworthy milestone, the company has completed the installation of an Early Production Facility (EPF) at the Wali-1 Compression Project (Bettani field) in June 2023. This move will help increase the monetization of hydrocarbons at the site.

Responding to the query about the capital expenditures, the management outlined that the compression projects will cost $150 million, while the Uch project is estimated to cost between $60-70mn and the KPD-TAY project requires over $15mn.

KPD-TAY simulation study resulted in an enhancement of recovery by more than 30% resulting in an additional 397 bcf of gas. 80 MMBOE was added as reserves during the reporting period which resulted in an RRR of 149%.

On the circular debt, the management highlighted that it has a good track record of collecting gas receivables, with a collection rate of approximately 85%. Sui Companies in the previous quarter, however, have been slower to pay, with a collection rate of only 50%.

With regards to the green field refinery project, the company has hired financial advisors and the feasibility report is underway.

The company has also signed MOUs with PARCO, GHPL, MPCL and PPL, to consider and enter into areas of cooperation and JV projects to pursue Green Hydrogen opportunities within and outside Pakistan. However, the development of these memorandums is in the initial stages.

For the Reko Diq mining project, the management informed that Pakistan Minerals Pvt. Ltd. has been incorporated with its Board in place. Project feasibility is in progress and is expected to be completed by end of CY 2024.

The company holds exploration acreage covering an area of 87,002 Km2.

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