Mari Petroleum and Pakistan State Oil (PSO) have so far outperformed the benchmark Karachi Stock Exchange 100-Share Index and have also led the overall oil and gas sector, which falls slightly short of the returns posted by the benchmark index, according to a report prepared by Topline Securities on Thursday.
Oil and gas is the largest listed sector on the Karachi Stock Exchange with a weight of 29%. It posted an annual return of 47% at the close of market on Thursday, falling slightly short of the 50% return given by the benchmark index in the same period, according to the report.
The sector gained on the back of above-average foreign inflows, clearance of circular debt, smooth government change and the new government’s efforts to promote investment in the energy sector.
The report stated that among 12 listed oil and gas companies, Mari Petroleum and PSO outperformed the broader index by 79% and 24%, respectively. Byco Petroleum, on the other hand, posted a negative return of 40% and remained the worst performing stock.
Within the oil and gas subsectors, energy and power performed almost in line with the benchmark index, refineries lagged behind while oil marketing companies outperformed the index.
Within the energy and power subsector, Mari Petroleum, Pakistan Oilfields (POL), Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company (OGDC) provided an overall return of 49% in 2013, which is almost in line with the benchmark index’s return.
Mari outshined in this sector with 129% total return amid volumetric growth mainly from the Mari gas field.
PPL and OGDC that cumulatively comprise 20% of the KSE-100 index posted returns of 53% and 49%, respectively. PPL’s performance was fuelled by three discoveries in 2013 while OGDC gained on the back of volumetric growth mainly from Nashpa field.
Contrary to energy and power, the oil marketing sector – three listed companies – posted a return of 52% supported by 74% return from PSO. Other two players, Shell and Attock Petroleum Limited posted returns of 40% and 28% respectively.
PSO benefited the most from the resolution of circular debt issue, resulting in improved operational leverage and cash flow. The company’s share in the benchmark index increased from 2.4% to 2.9% in 2013.
The refinery sector, which comprises four listed companies, underperformed the broader index by 51% primarily on account of volatile gross refinery margins and heightened risk environment surrounding the sector.
The report pointed out that with 26% return, Attock Refinery was the biggest gainer among refineries. Being the third largest refinery in terms of market capitalisation, Byco held back the refinery sector performance as other peers offered 15% return on average.
Published in The Express Tribune, December 27th, 2013.