IGI Securities Limited - Day Break.

Karachi -- October 11, 2019 (PPI-OT)

Oil and Gas Exploration Companies - Pakistan Oil reserves up by +63% while gas reserves ramp up by +10% by Jun-19 end; POL and MARI stand out as utmost beneficiary

As per latest data published by Pakistan Petroleum Information Service (PPIS), Pakistan's total oil reserves are up by +63%YoY to 568mnbbls as at Jun-19 compared to 348mnbbls at Jun-18. Gas reserves are up by +10%YoY to 21.45tcf as at Jun-19 compared to 19.54tcf at Jun-18.

Adhi field oil reserves have been revised upwards by +38%YoY in FY19 (+53% compared to Dec-18) to 26mnbbls,

The primary reason for a two-fold jump in oil reserves over Dec-18 is the addition of Ayesha, Ayesha North, Aminah (Badin IV South) and Zainab (Badin IV North) cumulatively adding 282mnbbls,

Nashpa oil field's reserve has been revised down by 58%YoY to 54mnbbls in FY19,

Uch and Qadirpur gas field reserves have been revised upwards increasing by +72%YoY and +5%YoY to 3.3tcf and 1.2tcf respectively,

MARI and PPL remain our top picks among IGI E and P Universe with our Dec-20 target prices of PKR 1,770.66/share and PKR 207.35/share offering +59% and +52% upside respectively, from last close. We also have BUY stance on OGDC and POL with Dec-20 target price of PKR 186.01/share and PKR 503.72/share.

Pakistan Oil reserves skyrocketed by +63%YoY while gas reserves are up by +10%YoY as at Jun-19

As per latest data published by Pakistan Petroleum Information Service (PPIS), Pakistan's total oil reserves are up by +63%YoY to 568mnbbls as at Jun-19 compared to 348mnbbls at Jun-18. Gas reserves are up by +10%YoY to 21.45tcf as at Jun-19 compared to 19.54tcf at Jun-18. Compared to Dec-18, oil reserves are up by +2.1x owing to addition of 4 wells in Badin IV block - North/South (PEL operator) cumulatively adding 282mnbbls to Pakistan's Oil Reserves while Gas reserves are down 2% compared to 21.90tcf as at Dec-18.

Earnings are Target prices revised to reflect FY19 financial accounts and Reserves data

Base on the revision in oil and gas reserves during FY19 and after incorporating FY19 financial statements we have revised upwards our earnings estimates on average for OGDC by +5-9%, whereas earnings are revised down for PPL, POL and MARI by 1-4%, 1-2% and 3-5% respectively. This bring our revised and rolled over (Dec-20) target prices of PKR 186.01/share (up +2%), PKR 207.35/share (up +1%), PKR 503.72/share (up +6%) and PKR 1,770.66/share (up +1%) respectively.

Major revision in...