Bid rejected

PPL expected to be more affected than OGDCL: analyst.

KARACHI: The joint bid by Oil and Gas Development Company (OGDCL) and Pakistan Petroleum Limited (PPL) for British Petroleum’s Pakistan assets has been rejected, according to Topline Securities. Official details have not been disclosed as yet.

OGDCL, the largest listed company of the country, and PPL made a joint bid for the assets a day earlier, according to a notice sent to the stock exchange a day earlier.

It was anticipated that the two largest exploration and production companies in Pakistan having a combined share of over 60 per cent of  country’s oil reserves would likely acquire BP assets.

PPL will be the most affected from the rejection as it was the most hungry for new oil reserves since it only has a 7 per cent share in the country’s oil production.

Moreover, production from PPL’s premier gas field Sui has also been declining annually by an average five per cent in the last few years which is a major risk for its future earnings growth, added

Hence, the company was eying on ready oil assets to offset the Sui impact.

Had PPL acquired 50 per cent of BP assets, its earnings per share would have gone up by Rs3 to 5 per share, according to preliminary estimates of Topline Securities.

BP Pakistan with a daily oil production of 64,000 barrels, 16 per cent in country’s daily oil production, is the second largest in the sector after OGDC.

BP announced its plans to sell its upstream assets in Pakistan in July, as part of a $10 billion global asset sale aimed at raising cash to pay for its Gulf of Mexico oil spill.

UBS analysts estimated in a July research note that BP’s fields in Pakistan are worth $690 million.

Published in The Express Tribune, December 11^th, 2010.