Oil&gas Regs Regulatory News (OGDC)

22 Aug 2007 09:30

Oil and Gas Development Company Ltd22 August 2007 Annex III Islamabad 22 August 2007 FOR IMMEDIATE RELEASE "OGDCL ONLY" AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE, 2007-------------------------------------------------------------------------------- Oil and Gas Development Company Limited (OGDCL), (Ticker: OGDC), today announcesits financial results for the year ended 30 June, 2007. Financial Statementshave been prepared in accordance with International Financial ReportingStandards. Highlights of the year include: • OGDCL's net sales increased by 3.6% to Rs 100,261 million from Rs. 96,755 million for the last year. • The Company set an all time high record of ten discoveries made during the year at Mela-1, Pasakhi North East-1, Unar-1, Nim west-1, Chak 66 North East-1, Dhachrapur-1, Dakhni Deep-1, Kunnar West-1, Thora Deep-1 and Chandio-1. • Net profit before tax stood at Rs 61,059 million, • Net profit after tax stood at 45,630 million resulting earnings per share Rs 10.61. • Operating profit margin and net profit margin were 57% and 46% respectively. • Payable final dividend of Rs 3.50 per share. • Net crude oil production of 41,503 barrels per day, net gas production was 947 MMcf per day, net LPG production 386 tons per day and net sulphur production was 66 tons per day. • Average net realized price of crude oil sold was US$ 51.86 / bbl as against US$ 50.78 / bbl during previous year. • Average net realized price for natural gas sold was Rs 144.12 / Mcf, compared to Rs 152.88/Mcf in the last year. • 3,282 L. km of 2D and 661 Sq. km of 3D seismic acquired. • Achieved drilling target by spudding 41 wells during the year. Half year ended 31 December H1 2006 H1 2007 2006 2007 %2006 Rupees '000 Rupees '000 Rupees '000 Rupees '000 ChangeNet sales 42,668,202 49,526,162 96,755,382 100,261,191 3.6Profit before tax 29,313,972 31,659,680 65,911,327 61,058,726 -7.4Profit after tax 20,305,069 23,112,620 45,967,723 45,629,964 -0.7Earnings per share 4.72 5.37 10.69 10.61 -0.7Net cash from operating 19,602,447 12,777,373 44,635,523 36,972,733 -17.2activities OGDCL CONSOLIDATED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE, 2007-------------------------------------------------------------------------------- Oil and Gas Development Company Limited (OGDCL), (Ticker: OGDC), today announcesits financial results for the year ended 30th June, 2007. Financial Statementshave been prepared in accordance with International Financial ReportingStandards. Highlights of the year include: • OGDCL's net sales increased by 3.5% to Rs 100,733 million from Rs. 97,309 million for the last year. • Net profit before tax stood at Rs 60,755 million, • Net profit after tax stood at 45,255 million resulting earnings per share Rs 10.52. • Operating profit margin and net profit margin were 56% and 45% respectively. • Payable final dividend of Rs 3.50 per share. • Net crude oil production of 41,503 barrels per day, net gas production was 947 MMcf per day, net LPG production 386 tons per day and net sulphur production was 66 tons per day. • Average net realized price of crude oil sold was US$ 51.86 / bbl as against US$ 50.78 / bbl during previous year. • Average net realized price for natural gas sold was Rs 142.73 / Mcf, compared to Rs 150.95/Mcf in the last year. • 3,282 L. km of 2D and 661 Sq. km of 3D seismic acquired. • Achieved drilling target by spudding 41 wells during the year. Half year ended 31 December H1 2006 H1 2007 2006 2007 %2006 Rupees '000 Rupees '000 Rupees '000 Rupees '000 ChangeNet sales 43,115,321 49,676,384 97,309,036 100,733,011 3.5Profit before tax 29,094,081 31,510,791 65,757,228 60,754,509 -7.6Profit after tax 20,020,710 22,925,360 45,803,398 45,254,786 -1.2Earnings per share 4.65 5.33 10.65 10.52 -1.2Net cash from operating 19,984,749 12,922,849 43,501,477 37,212,618 -14.5activities Chairman's statement Commenting on OGDCL's FY 2007 results, the Chairman and CEO of OGDCL, Mr. ArshadNasar, said: "I am pleased to report on another very successful year for OGDCL. The periodunder review was characterized by 3.5% growth in sales which was, in part,offset by higher costs relating to the increase in exploration and prospectingactivity. This was in line with management expectations." "The delivery of sustainable future production growth remains the cornerstoneof our strategy and, as such, new exploration activities have combined to form astrong operational trend during FY 2007. During this period, a challengingtarget of spudding 41 wells was achieved, which was a first in our Group'shistory. Furthermore, oil production rose by 6.5% year-on-year while gasproduction remained stable compared with FY 2005/06. These discoveries will addconsiderable amount of oil and gas to Group's reserve base. Some of the newlydiscovered fields including Mela have been put on regular production. Worldwidethe oil and gas industry is in a growth phase with high energy prices. This haspositively impacted our production revenues during the past year." "A strict control of operating and general and administrative expenses ensuredthat full year profitability was unaffected, actually increasing during 2006/07against the comparable period in 2005/06. This has been achieved despiteprevailing industry cost pressures." "I am proud to be associated with a work force that is second to none andgreatly appreciate their devotion, enthusiasm and dedication in contributing tothe results achieved by OGDCL. I see a very bright future of OGDCL in years tocome." - Ends - For further information: Investor Relations Contacts Usman Bajwa Investor Relations Officer Telephone: +92 51 920 9888Fax: +92 51 920 9858Email: Usman_Bajwa@ogdcl.com Notes to Editors OGDCL is the largest petroleum exploration and production, or E&P, Group in thePakistan oil and gas sector, with a primary focus on gas. It holds the largestportfolio of the recoverable hydrocarbon reserves of Pakistan, at 32% of gas and30% of oil, respectively, as at 31st December 2006. It contributed 24% of thecountry's total natural gas production and 61% of its oil production as at 30thJune 2007 on net basis. With a portfolio of 42 exploration licences, the Group has the largestexploration acreage in Pakistan, covering 33% of the total awarded acreage as ofJune 2007. While its focus to date has been on onshore exploration, the Grouphas also recently begun conducting offshore exploration activities; an areawhich has significant untapped potential. OGDCL had a net profit after tax of Rs 45.25 billion for the year ended June30th, 2006 and Rs 22.9 billion for the six months ended December 31, 2006. Summary Results During the year under review, sales revenue of the Group grew by 3.5% to Rs100.733 billion due to combination of increased sales volume of crude oil andLPG and higher realized prices of crude oil, Naphtha and LPG. Sales volume ofcrude oil and LPG increased by 7.5% and 8.4% respectively which contributedincrease of Rs 3.157 billion towards sales revenue. Increase in net realizedprices of crude oil, Naphtha and LPG contributed Rs. 3.305 billion to the salesrevenue. However, net sales revenue from gas decreased by Rs. 2.850 billion dueto unfavorable price change and decreased sales volume. During the year, netrealized prices of crude oil and gas averaged at US$ 51.86 / BBL and Rs 142.73 /Mcf compared with US$ 50.78/BBL and Rs 150.95/Mcf during the previous year. Despite increase in sales revenue, profit before tax decreased by 7.6% to Rs60.755 billion compared with Rs 65.757 billion in 2005-06. This decline inprofit is mainly due to higher costs relating to the increase in exploration andprospecting activity. Operating expenses also increased by 21% to Rs 19.167billion compared with Rs 15.816 billion during previous year. Within operatingexpenses amount of Rs 1.054 billion increased on account of charges related tominimum supply of gas i.e liquidated damages pertaining to Uch Gas Field and Rs1.478 billion increased on account of provision made in respect of sales revenueof crude oil for prices in excess of US $ 50/BBL for which discount table is yetto be finalized with the Ministry of Petroleum and Natural Resources. Thisprovision reflects an adjustment made for incremental discounts for last year.Current year revenue has already been booked on higher applicable discounts.Expenses like depreciation, amortization and maintenance / repair increased dueto additions in property, plant and equipment, capitalization of new wells,enhanced production and major overhauls including annual turn around at variousfields / plants. Within exploration and prospecting expenditure increase of Rs2.688 billion resulted on account of cost of dry / abandoned wells and amount ofRs 1.037 billion on account of prospecting expenditure. Higher exploration andprospecting expenditure is in line with Group's strategy of extensiveexploratory efforts which will contribute new discoveries, reserves additions,enhanced production and strengthening of financial position. Other income during the period was Rs 3.986 billion compared with Rs 4.364billion in the previous period. Increased operating and exploration expensesresulted into profit after tax of Rs 45.255 billion against Rs 45.803 billionduring 2005-06, resulting in earnings per share (EPS) of Rs 10.52 compared withRs 10.65 in the previous year. During the year under review, net cash from operations, after payment ofcorporate tax of Rs 24.141 billion, was Rs 37.213 billion, a decrease of Rs6.289 billion over 2005-06. Net cash used in investing activities increased byRs 5.673 billion to Rs 12.715 billion against Rs 7.042 billion in the previousyear mainly due to increase of Rs 6.319 billion in fixed capital expenditurewhich was Rs 16.477 billion in the year under review as against Rs 10.157billion in 2005-06. Net cash used in payment of dividend was Rs 38.154 billionas against Rs 41.445 billion resulting in net decrease of Rs 3.291 billion incash used for financing activities. Decrease in cash flow from operatingactivities, and net cash utilized in investing and financing activities resultedin a net cash decrease of Rs 13.657 billion to ending cash balance of Rs 23.738billion. Discoveries The Group made ten oil and gas discoveries at Mela-1, Pasakhi North East-1,Unar-1, Nim west-1, Chak 66 North East-1, Dhachrapur-1, Dakhni Deep-1, KunnarWest-1, Thora Deep-1 and Chandio-1 during the year 2006-07. These discoverieswill add considerable amount of oil and gas to Group's reserve base. Some of thenewly discovered fields including Mela have been put on regular production.Other new finds are also expected to substantially enhance oil and gasproduction in the near future. Production OGDCL has adopted strategy of extensive exploratory and development drilling inorder to make additions in oil and gas reserves and ensure sustained growth inits oil and gas production. Accordingly, an aggressive exploratory anddevelopment drilling programme is under way and in order to ensure growth inproduction, the Management of the Group is focusing on early and expeditiousproduction from discovered fields in the close proximity of existing producingfields and facilities and also making efforts to maintain and enhance productionfrom existing fields through workovers. Additionally, efforts are also beingmade to employ latest technology and different secondary recovery techniques tooptimize production from existing fields. During the year, OGDCL spudded 13 development wells in addition to completion ofworkover jobs on another 13 wells. This on going development programs isexpected to continue to deliver further substantial production growth during theyears ahead. During the year under review, OGDCL accomplished the target date of completionof Mela Project located in District Kohat, NWFP Province. The project wascompleted in a record time of 19 weeks in spite of an unexpected delay of 4weeks caused due to unprecedented rains. The infrastructure laid for thisproject is capable of handling 10,000 barrels of oil per day and 20 MMcfd ofgas. All phases of the project were efficiently handled using the JITE (Just-inTime Engineering) approach. The well was put on extended testing during May 2007after laying 12 kms pipeline in a very difficult terrain and by installingprocessing plant and surface facilities. Mela-1 well is currently producing5,000 barrels per day of oil and 8 MMscfd gas. Pasakhi North East-01 was put onregular production during December 2006. The well is currently producing 1,300barrels of oil per day. Chanda Well-02 which was put on regular production inSept 2006, an acid stimulation job was carried out on this well which resultedan increase in daily oil production by 1,400 barrels. Dhodak-10-A after directcompletion was put on production with 8.6 MMscfd gas and 270 barrels per day ofcondensate. Testing and successfully completion of Dakhni Deep-01 and Dakhni-10was also achieved during the year. Sale of 10 MMcfd of gas to M/s. SSGCL alsostarted in May 2007 after completion of 42 kms gas pipeline at Bobi. Annual bottom hole pressure (BHP) survey at Qadirpur wells completed during theyear and multifinger imaging tool (MIT) survey carried out in order to check thecondition of tubing of 10 wells. Additionally acid stimulation jobs were carriedout at Qadirpur-26 and 28 along with drilling of another development well i.e.Qadirpur - 29 which is in progress. In order to effectively run the processingplants, annual turnaround were carried out at six gas / condensate plants duringthe year. OGDCL maintained its status as leading national oil and gas producing Group inthe Country and it produced 54% of total Crude Oil and 22% of total Gas during2006-07. OGDCL's average daily net production including share in joint ventures duringthe year was as follows: Share in Operated Share in Non-Operated JVs JVsProducts Own Fields TotalCrude Oil (Barrels / day) 28,720 5,443 7,340 41,503Gas (MMcf / day) 332 388 227 947LPG (M. Tons / day) 307 - 79 386Sulphur (M. Tons / day) 66 - - 66 • Daily production has been worked out at 365 days per annum. • Gas production includes production of 19 MMcfd from subsidiary company, Pirkoh Gas Company (Private) Limited. 2006 2007Crude oil 38,966 Barrels/day 41,503 Barrels/dayGas 946 MMcf/day 947 MMcf/dayLPG 353 Tons/day 386 Tons/daySulphur 59 Tons/day 66 Tons/day Daily production has been worked out at 365 days / year. Gas production includessubsidiary company production which was 19 MMcf/day against 23 MMcf/day during2005-06. Exploration and Development Activities OGDCL's exploration strategies include maintaining balance portfolio ofexploration concessions in order to hedge risk, accelerating explorationactivities in offshore, extending exploratory efforts to unexplored frontierareas and maintaining acceptable success ratio for reserves addition. OGDCL's exploration team is committed to encourage out-of-the-box thinking inall aspects of its operations; seek new ideas and alternatives that reduce costsor enhance operational efficiencies; quickly incorporate new technologies thathave proven effectiveness; continually seek improvements in all areas of itsoperations. The sustained and concerted efforts have resulted in meeting drilling targets ofthe year with the accomplishment of ten discoveries in different provinces ofthe country, including major ones at Mela, Pasakhi, Bahu and Dakhni Deep. Perusing aggressive exploration strategy, the Group acquired two new explorationconcessions namely Offshore Indus-S and Offshore Indus-R covering an area of3,622.14 Sq. Kms OGDCL has also signed an agreement on February 09, 2007 with GHPL and PetrobrasOil & Gas B.V for assigning 50% working interest from its share to PetrobrasOil & Gas B.V over Block No. 2,265-1 (Offshore Indus-G) for under takingexploration activities in the block covering an area of 7,466.02 Sq. Kms. OGDCL acquired 70% working interest along with the operator ship in Guddu Blockfrom Messers IPR Transoil Corporation (IPRTOC), under an assignment agreementexecuted on February 17, 2007 between GHPL, OGDCL and IPRTOC. Guddu Block coversan area of 2,093.4 Sq.Kms over the Sindh and Punjab provinces of Pakistan. OGDCL presently holds the largest acreage position in Pakistan and as on June30, 2007, was operating in 42 exploration blocks covering an area of 80,584.48Sq. Kms. which constitute 33% of total exploration area granted to various E&Pcompanies working in Pakistan. OGDCL also holds working interest in another 5exploration concessions which are operated by other joint venture partners. The Group regularly evaluates opportunities, domestic and overseas, to expandOGDCL's activities to other areas that may offer attractive exploration anddevelopment potential, with a particular interest in those areas with plays thatcomplement our current exploration, development and production activities. A study aimed at having updated data analysis and geological synopsis ofPakistan's sedimentary basins is being carried out in collaboration with FugroRobertson of UK. The project focuses on integrated geological and geophysicalstudies for identifying new hydrocarbon potential areas and plays to promotepetroleum exploration within the country. Secondary Offering Another significance of the year was the divestment of 10% of total shares ofOGDCL by the Government of Pakistan (GoP) through secondary offering and thelisting of the Company on the London Stock Exchange (LSE). Government of Pakistan (GoP) divested 9.5% of total shares of the Company inDecember 2006 through Secondary Offering in the form of Global Depository Shares(GDS) to international and local institutional investors. The transaction washandled by a consortium of companies, as underwriters / joint lead managers,which included Goldman Sachs, Citigroup and BMA Capital. The offer was priced atRs 115 per ordinary share and US$18.90 per Global Depositary Share (GDS), witheach GDS representing 10 ordinary shares of OGDCL. At the offering size, thetransaction was approximately two times oversubscribed. Unconditional trading ofthe GDSs started on the LSE with effect from December 6, 2006. The demand wasgenerated from a broad range of institutional investors from United States,United Kingdom, Asia and the Middle East, as well as from the domestic Pakistaniinstitutional market. Approximately 95% of the institutional offer was allocatedto international institutional investors. In addition, GoP also divested 0.5% of total shares to the general public inFebruary 2007. The domestic retail offer of 21,505,000 shares of OGDCL was on afixed price subscription basis, with the offer price set at Rs 110 per share.The shareholding of GoP in OGDCL now stands at 85.02% of the total paid upcapital of the Company. Dividend The Board of Directors is pleased to recommend a final cash dividend at 35 % (Rs3.50 per share) in addition to 55% (Rs 5.50 per share) interim cash dividendsdeclared earlier during the year on the basis of interim results. This makes atotal of 90% (Rs 9.00 per share) for the year ended June 30, 2007. The dividendrecommended is subject to approval by the shareholders in the Annual GeneralMeeting. Outlook The year 2006-07 represents a period of record operating and stable financialperformance. Our operational achievements are driven by Company's strategies ofadding oil and gas reserves through accelerated exploration and timelydevelopment of discovered fields. Discoveries made during the recent past willstrengthen the oil and gas production base and with favorable price environmentwe anticipate strong financial results in the years to come which will help theGroup in carrying out its exploration and development activities set out in itsbusiness and strategic plan. Initiatives are being taken to enhance OGDCL's business canvas. OGDCL intends tomaintain a balance portfolio of exploration blocks and accelerate explorationactivities in offshore areas and extend exploratory efforts to unexplored andfrontier areas in addition to exploring old areas with new ideas andinnovations. The Group will also avail opportunities to acquire overseas acreageby buying stakes in existing viable producing fields. OGDCL is looking into thepossibility of E&P opportunities and joint venture collaborations outsidePakistan and aims to follow an aggressive business development strategy tostrengthen its positions in its core business areas. Our strategy of strengthening the production base and focusing on high impactexploration, backed by strong financial position will add significant value forthe shareholders in the years ahead. This information is provided by RNS The company news service from the London Stock Exchange