Move aimed at benefiting state-owned PPL and SSGC, enhancing exploration & production. PHOTO: FILE
PPL’s announcement at the Pakistan Stock Exchange (PSX) on Friday said that the Oil and Gas Regulatory Authority (Ogra) had issued a notification stating the new wellhead price of natural gas from Sui gas field being sold to the government-nominated buyers, on July 6.
“The [newly] determined price is now equivalent to 55% of the natural gas price under the Petroleum Exploration & Production (E&P) Policy, 2012,” the notification said.
“Earlier, Sui field’s gas prices were pegged at 50% of natural gas prices under the 2001 E&P Policy. The new notification means the company will be able to charge 70-75% higher gas prices on gas assets, which accounts for over 20% of the company’s revenue (29% based on new pricing),” BMA Capital Management’s analyst Muhammad Fawad Khan said while explaining salient features of the deal.
PPL currently has complete extraction rights over Sui Gas Field while SSGC is the main buyer. Both PPL and SSGC are listed at the PSX.
PPL-share price increased 3.95% or Rs6.19 to Rs163.07 with a volume of 617,200 shares on Friday. SSGC-share price hit upper limit of 5% or Rs1.83 to reach Rs38.47 with a turnover of 3.07 million shares.
“We estimate the revision will have an incremental impact of Rs3.7-4.0 per share (20% impact on FY18 expected) on PPL earnings (already incorporated in our estimates) in addition to one-off retrospective impact of Rs5.4 per share (likely to be booked in 2018),” the analyst said.
The revision in gas prices will allow PPL to implement much-needed development plans and arrest the production decline in one of Pakistan’s oldest gas fields discovered in 1954.
Published in The Express Tribune, July 9th, 2017.
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