daily check

· As per the latest industry reserve figures from the PPIS for Dec’25, rising by 6%/4% for oil and gas, respectively. 

· We reiterate our ‘BUY’ stance on OGDC, PPL, MARI and POL, with Dec’26 target prices of PkR522/412/935/850 per share, respectively.

Industry reserves see modest upgrade in Dec'25: As per the latest reserve figures published by PPIS for Dec'25, the industry's balance recoverable reserves improved on both fronts, with oil balance recoverable rising to 253mn bbls (+6%YoY) from 238mn bbls and gas balance recoverable increasing to 18,854 bcf (+4%YoY) from 18,142bcf. The aforementioned increase during the period is behest of the accelerated exploration and appraisal activity, leading to estimate reserve replacement ratio of 1.2x/1.5x for oil and gas, respectively (assuming latest production levels). Critically, oil reserve depletion improved to 81% (vs. 82% in Dec'24), the first improvement in several years, while gas depletion stabilized at 72%, indicating breakeven reserve replacement after a period of structural decline.

Baragzai and Mari anchor field-level reserve additions: On a field-wise basis, the standout oil reserve addition was Baragzai (Kingriali & Datta formations), which contributed a substantial 21mn bbls, accounting for the bulk of the industry's oil reserve accretion, showcasing OGDC's recent discovery success in the Nashpa block. Other notable oil reserve increases were observed in Soghri North (+3.1mn bbls), Sharf (+2.3mn bbls), Shahdadpur (+2.3mn bbls), Shewa (+2.3mn bbls) and Pindori (+2.2mn bbls). These additions were partially offset by downgrades, most notably in Kausar/Usman field (-5.7mn bbls), alongside smaller declines in Mazari, Takhat and Makori Deep. On the gas side, the dominant contributor was Mari, which added a significant 545bcf YoY to the reserve base, led by Mari Ghazij, Deep/Tipu and HRL reservoirs. Further meaningful gas additions came from Shewa (+226 bcf), Sharf (+174 bcf), Soho (+131 bcf), Soghri North (+125 bcf) and Bettani (+125 bcf), while declines were concentrated in Kandhkot (-34 bcf), Tolanj West (-31 bcf), Sui (-16 bcf) and Makori Deep (-16 bcf), majorly due to natural maturation of legacy producing assets.

Company-wise reserve performance mixed: OGDC's oil reserves rose to 134.0mn bbls (+7%YoY) on Baragzai and Bettani East additions, while gas reserves increased to 5,197 bcf (+4%YoY), retaining a comfortable reserve life of 9.2/15.0 years for oil/gas. MARI strengthened across both streams, with gas reserves rising to 5,577 bcf (+11%YoY) due to 545bcf Mari field upgrade (led by Deep/Tipu, Ghazij and HRL reservoirs) and oil at 7.96mn bbls (+8%YoY), with the country’s biggest gas producer boasting longest reserve life at 15.3 years. PPL saw oil reserves surge to 26mn bbls (+29%YoY) led by increases in Sharf, Dhok Sultan, Pateji, Tal and Nashpa blocks. However, recoverable gas reserves fell to 2,119 bcf (-3%YoY), resulting in production life of 6.5/8.9 years for oil and gas. POL’s producing oil reserves stayed flat on YoY basis, ending Dec’25 at ~14.4mn bbls, while gas reserves stood at 206bcf during the period.

Investment Perspective: For domestic E&Ps, improving E&P activity driven by rising sectoral liquidity is increasingly evident through fresh discoveries and expansion into previously unexplored blocks (including offshore acreage). Moving forward, we anticipate growth in bottom-line and higher cash payouts, while sustaining capex in exploration. Furthermore, we remain bullish on the sector as evident by sharply improving cash collection ratios for OGDC and PPL, where we also see influx of further cash flows as authorities finalize the multi-pronged gas sector circular debt settlement plan to clear past-due receivables. We reiterate our ‘BUY’ stance on OGDC, PPL, MARI and POL, with Dec’26 target prices of PkR522/412/935/850 per share, respectively.

 

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