By: Arif Habib Limited
Discovered 468 bpd of oil in Dhok Sultan X-1: Pakistan Petroleum Limited (PPL) in latest disclosure to KSE announced the discovery in its exploratory well Dhok Sultan X-1. The company has 75% stake in the well with 25% stake residing with Government Holding Private Limited. According to the company notice the well flowed 468 bpd of oil coupled with 0.617 mmcfd of gas.
Impact Insignificant: According to our preliminary calculations the bottom line will be augmented by meager PKR 0.12/share assuming the annualized production (0.91% of FY16E EPS). Even though the gas discovered is not substantial compared to company’s current gas production, however it is pertinent to note that as per the recent announcements the new discovery lies in Petroleum Policy 2012. For calculation purpose, we have assumed an oil price of USD 40/bbl.
Recommendation: Based on our Jun’16 TP of PKR 148.73/share the script merits a “BUY” with an upside potential of 21%.