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PPL finds new gas reserves in Kalat

QUETTA: Pakistan Petroleum Limited (PPL) has found new gas reserves of over 1 Trillion Cubic Feet (tcf) in Kalat Block.

The development was announced by Punjab Food Minister Abdul Aleem Khan in a tweet post on Wednesday. “Discovery of 1 trillion+ cubic feet of gas in Kalat, Balochistan, brings good news in controlling Pakistan’s energy crisis for the residential and commercial sector,” said the minister.

The discovery was made by the state-owned multinational petroleum company back in December 2019 from Margand X-1 Field, however, the PPIS reserve sheet of Dec-2019 does not contain any reserve information pertaining to Margand as reserve prospects develop gradually.

Shankar Talreja, a research analyst at Topline Securities, said that as per the company’s notice to the stock exchange, gas flows from the field were 10.7mmcfd at 64/64 inches choke size, which has annualised earnings impact of Rs0.7 per share.

He added that while news reports suggest this field can potentially add 300-400mmcf on a daily basis, experts believe it will take time as more development wells would be needed to extract such flows. Nevertheless, 300mccfd will double PPL’s current earnings.

He said that the accurate size of reserves will also be confirmed after drilling more appraisal wells.

“This reserve size will bring a new life to Pakistan E&Ps space, as no significant discovery has been announced in the recent past, especially in the Baluchistan region where a major sui gas discovery was announced earlier,” Talreja maintained.

The research analyst added that as per Topline Securities channel checks, this field can take more than a year to come online as the infrastructure needed for gas processing will take time.

“Assuming 1Tcf reserve size and EV/barrel (reserve) of US$2.5, this size can add Rs27 per share to our PPL’s valuation (TP: Rs130),” Talreja said.

He added that the company has a ‘buy’ stance on Pakistan Petroleum (PPL) whereas the confirmation of reserve size will provide an upside to our the target price.

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