Oil&gas Regs Regulatory News (OGDC)

21 Feb 2007 10:05

Oil & Gas Development Company Ltd21 February 2007 Islamabad 21 February 2007 FOR IMMEDIATE RELEASE OGDCL ANNOUNCES UNAUDITED HALF YEAR RESULTS TO 31 DECEMBER, 2006 Oil and Gas Development Company Limited (OGDCL), (Ticker: OGDC), today announcesits unaudited financial results for the six months ended 31 December, 2006.Financial Statements have been prepared in accordance with InternationalFinancial Reporting Standards. Half year to 31 December, 2006 highlights include: • OGDCL's net sales increased by 15.2% to Rs 49,676 million from Rs. 43,115 million for the same period last year. • Net profit before tax increased to Rs 31,511 million, an increase of 8.3% from the same period last year, underpinned by higher realized price and sales volumes. • Net profit after tax increased to Rs 22,925 million, resulting in a 14.5% increase in earnings per share to Rs 5.33. • Operating profit margin and net profit margin increased to 59% and 46% respectively. • Payable interim dividend of Rs 1.75 per share. • Net crude oil production of 39,578 barrels per day, net gas production was 894 MMcf per day, net LPG production 366 tons per day and net sulphur production was 61 tons per day. • Average net realized price of crude oil sold was US$ 55.19/bbl as against US$ 48.32bbl during the same period last year. • Average net realized price for natural gas sold was Rs 146.68/ Mcf, compared to Rs128.51/Mcf in the same period last year. • 1,951 km of 2D and 248km of 3D seismic acquired. • 15 wells spudded as at 31 December 2006 - on target to achieve target of 41 wells spudded by year end. • Four discoveries made during the first six months 2006 at Mela-1, Pasakhi North East-1, Nim West-1 and Unar-1, will increase daily production by 5,895 barrels of oil, 32 MMCF of gas and 150 barrels of condensate Half year ended 31 December Q2 2005 Q2 2006 H1 2005 H1 2006 %2006 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Change Net sales 22,857,025 24,362,207 43,115,321 49,676,384 15.2Profit before tax 15,380,094 14,296,078 29,094,081 31,510,791 8Profit after tax 10,952,466 10,888,668 20,020,710 22,925,360 14.5Earnings per share 2.55 2.53 4.65 5.33 14.6Net cash from operating 19,984,749 12,922,849 -35.3activities Chairman's statement Commenting on OGDCL's half year results, the Chairman and CEO of OGDCL, Mr.Arshad Nasar, said: "The period under review was characterized by a strong growth in sales whichwas, in part, offset by higher costs relating to the increase in exploration andprospecting activity. This was in line with management expectations. "A strict control of operating and general and administrative expenses meantthat half year profitability was unaffected, actually increasing during thefirst half of the year against the comparable period in 2005/06. This has beenachieved despite prevailing industry cost pressures. "We continue to work hard to further improve operational performance, whichremains positively underpinned by the strong oil and gas price environment. Theprompt completion of annual turnaround work at the Qadirpur, Bobi, Dakhni andUch facilities positions these sites well to capitalize on their full potential. "The delivery of sustainable future production growth is the cornerstone of ourstrategy and, as such, the acceleration of capacity enhancement projects and newexploration activities have combined to form a strong operational trend duringthe quarter. The skill of our exploration teams, who continue to maintaindrilling success rates that are among the highest in the industry, and are ontrack to spud 41 new wells by the year end." - Ends - For further information: Investor Relations Contacts Usman Bajwa Investor Relations Officer Telephone: +92 51 920 9888 Fax: +92 51 920 9858 Email: Usman_Bajwa@ogdcl.com Notes to Editors OGDCL is the largest petroleum exploration and production, or E&P, company inthe Pakistan oil and gas sector, with a primary focus on gas. It holds thelargest portfolio of the recoverable hydrocarbon reserves of Pakistan, at 32% ofgas and 37% of oil, respectively, and contributed 29% of the country's totalnatural gas production and 64% of its oil production as at 31 December on agross basis. With a portfolio of 40 exploration licences, the Company has the largestexploration acreage in Pakistan, covering 33% of the total awarded acreage as ofDecember 2006. While its focus to date has been on onshore exploration, theCompany has also recently begun conducting offshore exploration activities, anarea which the Company believes has significant untapped potential. OGDCL had a net profit after tax of Rs 22.9 billion for the six months endedDecember 31, 2006 and Rs 10.9 billion for the three months ended December 31,2006. Summary Results Half year sales revenue increased by Rs 6.6 billion to Rs 49.7 billion a growthof 15.2% over the same period last year. This was driven by higher crude and gasprices in addition to the increased sales volume of crude oil and LPG from theCompany's owned and operated joint venture fields. Net realized prices of crudeoil and gas averaged US$ 55.19/bbl and Rs 146.68/Mcf respectively as against US$48.32/bbl and Rs 128.51/Mcf during the same period the previous year. Operating expenses were 18.9% higher at Rs 8.2bn compared with Rs 6.9bn duringthe corresponding period last year. The major components were: • Exploration and prospecting expenditure also increased by Rs 2,024m, due to higher exploration charge reflecting increased drilling activity and increased seismic acquisition activity • Amortization of development and production assets, which increased by Rs 296 million due to the capitalization of nine new wells • Increase of Rs 332 million due to a higher share of expenditure in non-operated joint ventures • Increase of Rs 217 million due to the major overhaul of various plants and fields • Increase of Rs 181 million due to higher consumption of stores, spares and supplies resulting from the acceleration of operational activity Profit after taxation increased by Rs 2.9bn to Rs 22.9bn, resulting in improvedearnings per share of Rs 5.33 verses Rs 4.65 in the previous year. Net cash flow from operating activities fell Rs 7.1 billion to Rs 12.9 billionfor the six months ended December 31, 2006. This was partially off-set by anincrease of Rs 1.8 billion in fixed capital expenditure relating to investingand financing activity. Dividend The Board of Directors is delighted to announce a second interim dividend of Rs1.75 per share. This is in addition to the first interim dividend of Rs1.75pershare already declared for the year totalling (Rs 3.5 per share) for the yearending June 30, 2007. Production In pursuing its strategy of enhancing its production base, the Company is ontarget to achieve its CAGR targets of 13% for gas production and 14% for oilproduction for the three years ending June 2009. OGDCL's daily production,including its share from operated and non-operated joint ventures, was asfollows: Oct - Dec 2005 Oct - Dec 2006Crude oil 38,139 Barrels/day 39,578 Barrels/day Gas 926 MMcf/day 894 MMcf/day LPG 343 Tons/day 366 Tons/day Sulphur 52 Tons/day 61 Tons/day Daily production has been worked out at 365 days / year. Gas production includes subsidiarycompany production The slight decline in gas production was due to the shut down of the Loti andPirkoh fields because of security concerns. Gas production was subsequentlyresumed during the period under review. The Company is determined to achieve further operational efficiencies in thefields /wells through regular maintenance and repair. Consequently, eightworkover jobs have been completed at various fields/wells. The annualmaintenance at Uch, Qadirpur, Dakhni and Bobi fields was completed. Chanda-2, Sono-8 and Pasakhi North East-01 have been put into regularproduction. The Company accelerated production at Qadirpur, following its major workover atthe plant. As a result, a further 100mmcfd extra production is expected to comeon stream from this site in 2008 to meet demand from a new fertiliser plantbeing constructed by Engro, Pakistan's premier fertilizer manufacturer. Aresolution to the Qadirpur pricing question remains unresolved and furtherdiscussions with the Regulator are ongoing. Some delay is expected to the development of the Tando Allah Yar (TAY) andSinjhoro fields due to a contractual dispute. This will push back the expecteddate that these fields will enter production from the 2008 to the 2009 financialyear. Planned capex will therefore be lower for the 2006/7 financial yearreflecting the revised development schedule. In the near-term, this delay willbe offset by the recent new discoveries expected to be online before year-end. Exploration and Development Activities OGDCL's strong commitment to exploration, appraisal and production hascontinued. During the first half of the year, 1,951 linear Kms of 2D seismicSurvey was carried out in on-shore areas. 248sq.Kms of 3D seismic survey workwas carried out in Indus Delta-A block of off-shore area. The Company is makingan all out effort to achieve its seismic acquisition targets of 8,550 linear Kmsof 2D (which includes 4,000 linear Kms of off-shore, subject to the award ofblocks) and 1,455sq.Kms of 3D (includes on shore and off-shore 3D). In line with the Company's objectives, 15 wells were spudded during the firsthalf of the year, including eight exploratory, three appraisal wells and fourdevelopment wells at Rajian-04A, Lashari centre-06, Dhodak-10A and Thora-05.These wells are currently under drilling and upon completion will contribute tothis year's production targets. This means that OGDCL is on course to meet itstarget of 41 spudded wells for the full year 2006/7. The high level of exploration activity has had a knock on effect on the costs ofdry and abandoned wells which have increased from Rs 917m to Rs 2.24bn, togetherwith the cost of wells transferred to development and production assets whichhave increased from Rs 276m to Rs 1.8bn. Only five wells were declared dryduring the period. Phase IV of the Basin Studies Project, covering a detailed study of Sulaiman andKirthar Fold belts was completed in October 2006. This study, which is financedby OGDCL, will update the basin map of Pakistan, improving understanding ofPakistan's complex geology and is being finalised by Fugro Robertson. The PhaseV of the basin study covering Lower Indus and Indus offshore is in progress andwill be completed by March 2007. During the period under review, four discoveries made at Mela-1, Pasakhi NorthEast-1, Nim West-1 and Unar-1, will increase daily production by 5,895 barrelsof oil, 32 MMCF of gas and 150 barrels of Condensate. Mela-1 is estimated torepresent the most sizeable discovery with first production expected before theend of the 2006/7 financial year. The Company continued to look at ways of exploring and developing its offshoreacreage, in particular in respect of its joint venture with Shell. An offshorerig, Transocean D534, has been sourced which is expected to commence drillingoperation during May / June 2007. While expected to increase, OGDCL's average finding and development costs ofrecoverable reserves and production costs of net production are currently amongthe lowest in the industry. Secondary Offering A significant event during the period under review was the divestment by theGovernment of Pakistan (GOP) of 10% of its shareholding in OGDCL and the listingof the Company's GDSs on the London Stock Exchange. At the Offering size, thetransaction was approximately twice subscribed. Unconditional trading of theGDSs started on the LSE on December 6 2006. Following the Offering theshareholding of the GOP stand at 85.02% of the total paid up capital of theCompany. Outlook OGDCL expects its recent production growth to improve in the near/medium termdue to the development of already discovered fields and new exploration. Thisincreased activity is reflected also in its drilling and exploration efforts,where it has substantially increased its drilling success. Based on the operational and financial achievements in the first half of theyear, OGDCL expects to stabilize further its production activities through themaintenance of existing well bores, drilling of new development wells and wellwork-over. It remains on track to reach its CAGR targets of 13% for gasproduction and 14% for oil production for the three years ending June 2009. Continued seismic acquisition both on-shore and off-shore, aggressiveexploratory drilling and completion of development projects remain the keyfocus. Production growth and continuing high oil and gas prices will generatestrong operating cash flow which will assist in achieving the operationaltargets in the business plan. While OGDCL's principal objective is to first expand onshore activities, it isalso committed to exploring selected offshore activities to augment its oil andgas reserves. Further to a joint venture with Shell announced last year, OGDCLhas announced a joint venture between OGDCL and Petrobras, to develop anotheroffshore block, following the end of the period. OIL AND GAS DEVELOPMENT COMPANY LIMITED CONSOLIDATED BALANCE SHEET (UN-AUDITED) AS AT DECEMBER 31, 2006 Un-audited Audited Un-audited Audited December 31, June 30, December 31, June 30, Note 2006 2006 Note 2006 2006 (Rupees '000) (Rupees '000) SHARE CAPITAL AND RESERVES NON CURRENT ASSETS Property, plant and 7 20,363,569 20,096,218 equipment Share capital 3 43,009,284 43,009,284 Development and 8 24,840,996 22,651,837 production assets Exploration and 9 2,631,677 2,551,149 evaluation assets-intangible Capital reserve 4 3,166,632 3,055,027 Stores held for capital 810,101 677,441 expenditure 48,646,343 45,976,645 Un-appropriated profit 54,559,192 55,400,544 Long term investments 10 2,488,579 2,373,330 100,735,108 101,464,855 Long term loans and 1,731,365 2,154,705 receivables Long term prepayments 41,444 58,022NON CURRENTLIABILITIES 52,907,731 50,562,702 CURRENT ASSETS Deferred liabilities Stores, spares and 16,644,456 13,214,614 loose tools Taxation 10,420,928 10,195,201 Stock in trade 73,166 65,608 Employee benefits 1,482,490 1,420,245 Trade debts 11 29,988,401 24,500,791 Provision for 5,558,131 5,036,478 Loans and advances 2,047,911 2,152,141 decommissioning cost 17,461,549 16,651,924 Deposits and 345,595 305,636 prepaymentsCURRENTLIABILITIES Interest accrued 420,957 556,018 Trade and other payables 5 17,330,220 7,269,645 Other receivables 223,468 239,229 Provision for taxation - 3,824,189 Advance tax 2,546,878 - 17,330,220 11,093,834 Short term investments 25,662,513 36,209,932 Cash and bank balances 4,665,801 1,403,942CONTINGENCIESANDCOMMITMENTS 6 82,619,146 78,647,911 135,526,877 129,210,613 135,526,877 129,210,613 OIL AND GAS DEVELOPMENT COMPANY LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE HALF-YEAR ENDED DECEMBER 31, 2006 Quarter ended December 31, Half-year ended December 31, 2006 2005 2006 2005 Note (Rupees '000) Net sales 12 24,362,207 22,857,025 49,676,384 43,115,321 Royalty 2,633,829 2,555,346 5,477,008 4,824,557 21,728,378 20,301,679 44,199,376 38,290,764 Operating expenses 13 4,749,927 3,448,844 8,192,583 6,891,632 Exploration and prospectingexpenditure 2,298,897 1,212,363 3,864,784 1,841,028 Transportation charges 250,796 259,212 511,960 462,252 7,299,620 4,920,419 12,569,327 9,194,912 14,428,758 15,381,260 31,630,049 29,095,852 General and administrationexpenses 244,822 272,092 461,286 477,773 Finance cost 133,197 2,539 262,310 3,596 Workers' Profit Participation Fund 751,792 828,824 1,670,835 1,550,543 1,129,811 1,103,455 2,394,431 2,031,912 13,298,947 14,277,805 29,235,618 27,063,940 Other income 986,847 1,093,629 2,252,087 2,012,822 Share of profit in associatedcompany 10,284 8,660 23,086 17,319 PROFIT BEFORE TAXATION 14,296,078 15,380,094 31,510,791 29,094,081 Provision for taxation 3,407,410 4,427,628 8,585,431 9,073,371 PROFIT AFTER TAXATION 10,888,668 10,952,466 22,925,360 20,020,710 Earnings per share - basic and diluted (Rupees) 14 2.53 2.55 5.33 4.65 The annexed notes from 1 to 16 form an integral part of these financial statements. Chairman and Chief Executive Director OIL AND GAS DEVELOPMENT COMPANY LIMITED CONSOLIDATED CASH FLOW STATEMENT (UN-AUDITED) FOR THE HALF-YEAR ENDED DECEMBER 31, 2006 Half-year ended December 31, 2006 2005 (Rupees '000)Cash flows from operating activities Profit beforetaxation 31,510,791 29,094,081 Adjustments for: Depreciation 1,463,052 1,549,882 Amortization of development and production assets 1,904,069 1,608,426 Royalty 5,477,008 4,824,557 Workers' Profit Participation Fund 1,670,835 1,550,543 Provision for employees' benefits 212,323 233,272 Interest income (2,079,437) (1,721,468) Un-realized loss on investments at fair value 15,210 - through profit or loss Un-winding of discount factor - provision for 259,206 - decommissioning cost Profit on disposal of property, plant and equipment (18,062) (9,505) Dividend received from NIT units (26,334) - Interest income on long term receivables (67,517) (56,981) Share of profit in associated company (23,086) (17,319) 40,298,058 37,055,488Working capital changes(Increase)/decrease in current assets Stock in trade and stores, spares and loose tools (3,437,400) (1,349,558) Trade debts (5,487,610) (2,911,338) Deposits and prepayments (39,959) (39,993) Loans, advances and other receivables 578,814 285,581 Increase/(decrease) in current liabilities: Trade and other payables 337,858 (113,070) Cash generatedfromoperations 32,249,761 32,927,110 Royalty paid (4,478,013) (4,664,432) Employees' benefits paid (150,078) (905,204) Received from Workers' Profit Participation Fund 31,949 121,051 Taxes paid (14,730,770) (7,493,776) (19,326,912) (12,942,361) Net cash from operating activities 12,922,849 19,984,749 Cash flows from investing activities Fixed capital expenditure (5,774,680) (4,047,874) Interest received 2,323,920 1,392,721 Dividend received 33,684 7,350 Purchase of investments (250,000) (200,000) Proceeds from encashment of investments 41,065 12,140 Proceeds from disposal of property, plant and 18,370 9,546 equipment Long term prepayments 16,578 (38,797) Net cash used in investing activities (3,591,063) (2,864,914) Cash flows from financing activities Dividend paid (16,602,136) (19,095,868) Net cash used in financing activities (16,602,136) (19,095,868) (Decrease) incash and cashequivalents (7,270,350) (1,976,033) Cash and cashequivalents atbeginning ofthe period 37,394,351 42,379,876 Cash and cashequivalents atend of theperiod 30,124,001 40,403,843 The annexed notes from 1 to 16 form an integral part of these financial statements. Chairman and Chief Executive Director OIL AND GAS DEVELOPMENT COMPANY LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE HALF-YEAR ENDED DECEMBER 31, 2006 Share Capital reserve Unappropriated capital Bonus shares Contingency profit Total (Rupees '000) Balance as atJune 30, 2005,as previouslystated 43,009,284 836,000 1,995,996 44,475,756 90,317,036 Effect ofdiscountinglong termreceivable - - - (248,151) (248,151) Balance as atJune 30, 2005,as restated 43,009,284 836,000 1,995,996 44,227,605 90,068,885 Profit for thehalf-yearended December31, 2005 - - - 20,020,710 20,020,710 Transfer tocontingencyreserve - - 199,805 (199,805) - Final dividend2005 (Rs 2.75per share) - - - (11,827,553) (11,827,553) First interimdividend 2006(Rs 1.25 pershare) - - - (5,376,161) (5,376,161) Balance as atDecember 31,2005 43,009,284 836,000 2,195,801 46,844,796 92,885,881 Profit for thehalf-yearended June 30,2006 - - - 25,782,688 25,782,688 Transfer tocontingencyreserve - - 23,226 (23,226) - Second interimdividend 2006(Rs 1.75 pershare) - - - (7,526,625) (7,526,625) Third interimdividend 2006(Rs 2.25 pershare) - - - (9,677,089) (9,677,089) Balance as atJune 30, 2006 43,009,284 836,000 2,219,027 55,400,544 101,464,855 Balance as atJune 30, 2006 43,009,284 836,000 2,219,027 55,400,544 101,464,855 Profit for thehalf-yearended December31, 2006 - - - 22,925,360 22,925,360 Transfer tocontingencyreserve - - 111,605 (111,605) - Final dividend2006 (Rs 3.75per share) - - - (16,128,482) (16,128,482) First interimdividend 2007(Rs 1.75 pershare) - - - (7,526,625) (7,526,625) Balance as atDecember 31,2006 43,009,284 836,000 2,330,632 54,559,192 100,735,108 Chairman and Chief Executive Director The annexed notes from 1 to 16 form an integral part of these financial statements. To access the notes to the financial statements paste the following link into your web browser: http://www.rns-pdf.londonstockexchange.com/rns/6052r_-2007-2-21.pdf This information is provided by RNS The company news service from the London Stock Exchange