OGDCL discovers gas in Kohat

KARACHI: Reserves of high quality natural gas have been discovered by the Oil and Gas Development Company Limited (OGDCL) in the Kohat District of Khyber-Pakhtunkhwa. The methane content of the gas is estimated to be around 96 per cent.

“Significant reserves of gas have been found at Sheikhan Well # 01,” declared a letter of disclosure sent to the Karachi Stock Exchange (KSE) by Eram Ali Aziz, the company secretary.

The exact size of reserves that may be obtained from this discovery is not known. However, the notification disclosed that 15MFCD gas is flowing at a pressure of 2,500 psi from the well currently.

The well is jointly operated by OGDCL along with 3 other companies. Tullow Pakistan holds 40 per cent ownership of the venture while Mari Gas and Saif Energy hold 20 per cent and 10 per cent respectively. OGDCL owns a stake of 30 per cent.

Analysts commented that gains to company earnings from the discovery could materialize within the next two years. “Based on preliminary numbers, we estimate a positive impact of Rs0.03 on earnings per share,” said Hammad Aslam, a research analyst at BMA Capital.

Drilling and volume targets

The new fiscal year 2011 lacks any high-profile development projects or increased drilling for the exploration and production (E&P) sector, said Muhammad Fawad Khan in his research report.

Volume growth of seven per cent is expected for listed E&P companies in 2011, Khan added.

Pakistan Oilfields and Pakistan Petroleum Limited will benefit from high profile exploration in the Kohat region, Khan predicted.

Exploration to pick up in fiscal 2012

While the area under exploration and number of leases have increased by 14 per cent and 16 per cent, respectively, drilling will pick up with a lag of two years as exploration targets are firmed after survey activities, said Khan.

The total exploration drilling of 26 wells against a target of 42 in fiscal year 2010 is encouraging and may also serve as a drag on the fiscal year 2011 drilling target of 60 wells, said Khan.

Offshore exploration, though, will remain a highly prospective area and well drilling may be pushed back to 2012, Khan informed.

Published in The Express Tribune, July 17^th, 2010.