Pakistan Petroleum Ltd (PPL)

Pakistan Petroleum Ltd (PPL) reported consistent cuts in its dividend payouts as
witnessed by market since FY08. The company had announced a dividend payout of
Rs12/sh in FY11 as against a payout of Rs9/sh and Rs13/sh in FY10 and FY09 respectively.
Years FY11 FY10 FY9 FY8 FY7 FY6 FY5
Div. % 120 90 130 155 110 90 55
Bonus % 10 20 20 10 10 ‐ ‐
Source: www.scstrade.com
Due to the concerns of circular debt coupled with the consistent flat growth observed in
Oil and Gas Sector, analysts did not expected much from PPL. The recent news updates
delineated apparent management’s intentions to discontinue dividend cuts. Thus
management is trying not to deprive its shareholders from dividend especially when
Government of Pakistan is the major shareholder and beneficiary.
PPL despite of undertaking large‐scale exploration and production activities together
with the strategic shift of focus to drilling its own oil and gas wells instead of relying on
joint venture partners to shore up the company’s depleting reserves; it is yet seems to
have its financial and liquidity position in a comfortable zone. This financial stability could
be a good omen and a trigger for the attractive cash payouts along with the customary
bonus of 10% ‐ 20%.
The biggest trigger in PPL is any news which is related to privatization since company
needs injection of investment in technology and latest equipments which could only be
possible if some able foreign partner take a direct control of the company. PPL, for many
years, is having flat gas production and its proportion of oil production is minimal in
overall ‘production mix’. At present the PPL has got weak triggers. The main trigger for
PPL is ‘price increase’ announced by the regulator OGRA on PPL’s depleting assets.
Rumors on Qadirpur subsided
We have had a discussion with many people in the company (OGDC) wherein we could
not find any thing negative happening at big gas producing field Qadirpur since it is
a perforated land in Sindh province and cannot be in any way equated with Pindori like
water log problem at Khyber Pakhtoonkhwa.
In fact a new compression plant installed is at the testing stage. The gas field reported
satisfactory sale of 501mmcfd till 6' o clock morning yesterday (which is last sale
reporting time). Any good result in testing would result in addition to gas production.
We consider this to be good news for OGDC (major stakeholder) and PPL (minor
holdings).

PPL is seeking Joint venture with Iranian oil companies

PPL is seeking Joint venture with Iranian oil companies

According to KSE notices, PPL is seriously considering Joint venture operation in oil and gas exploration sector of Iran with Iranian oil companies (Joint venture will lead stake in different blocks of Pakistan and Iran). Company is evaluating different options in oil and exploration sector. However, company has not finalized any agreement with Iranian oil companies. If any contract finalized between PPL and Iranian oil companies it will have huge positive impact on PPL as Iran have huge oil and gas reserves.

We maintain our Buy stance on PPL with target price of PKR 259/share.

Thanks and Best Regards,

Research Department

Phone : 0092-21-35317703

Fax : 0092-21-5895328

M.M. Group of Companies

MM Tower, 3-C, Khayaban-e-Ittehad

Phase – II extension

D.H.A, Karachi

PPL is seeking Joint venture with Iranian oil companies

PPL is seeking Joint venture with Iranian oil companies

According to KSE notices, PPL is seriously considering Joint venture operation in oil and gas exploration sector of Iran with Iranian oil companies (Joint venture will lead stake in different blocks of Pakistan and Iran). Company is evaluating different options in oil and exploration sector. However, company has not finalized any agreement with Iranian oil companies. If any contract finalized between PPL and Iranian oil companies it will have huge positive impact on PPL as Iran have huge oil and gas reserves.

We maintain our Buy stance on PPL with target price of PKR 259/share.

Thanks and Best Regards,

Research Department

Phone : 0092-21-35317703

Fax : 0092-21-5895328

M.M. Group of Companies

MM Tower, 3-C, Khayaban-e-Ittehad

Phase – II extension

D.H.A, Karachi