Balochistan: Large new gas reserves found in Kalat
Pakistan Petroleum Limited (PPL) has discovered new gas reserves of over 1 Trillion Cubic Feet (tcf) in the Kalat Block.
The Punjab Food Minister, Abdul Aleem Khan, announced the development in a tweet on Wednesday saying “Discovery of around 1 trillion cubic feet of gas in Kalat brings positive news in controlling Pakistan’s energy crisis for the commercial and residential sector.”
Discovery of 1 trillion+ cubic feet of gas in Kalat, Balochistan, brings good news in controlling Pak's energy crisis for residential & commercial sector. This discovery will also help revitalize economy as foreign exchange reserves are disturbed by hefty $15-16 bn LNG imports.
— Abdul Aleem Khan (@aleemkhan_pti) September 9, 2020
The discovery was made by the state-owned multinational petroleum company in December 2019 from Margand X-1 Field. Nevertheless, the PPIS reserve sheet of Dec-2019 does not contain any reserve information about Margand as reserve prospects develop slowly.
Shankar Talreja, a research analyst at Topline Securities, said that according to the company’s notice to the stock exchange, gas flows from the field were around 10.7mmcfd at 64/64 inches choke size that has an annualized earnings impact of Rs0.7 per share.
He added that while news reports predict this field can potentially add 300-400mmcf daily, experts believe it will take time as further development wells would be needed to extract such flows. Nonetheless, 300mccfd will double PPL’s current earnings.
He said that the accurate size of reserves would also be established after drilling more appraisal wells.
“This reserve size will bring new opportunities to Pakistan E&Ps space, as no significant discovery has been declared in the recent past, especially in Balochistan where a major Sui gas discovery was announced earlier,” Talreja maintained.
The research analyst added that this field could take more than a year to come online as the infrastructure needed for gas processing will take time, as per Topline Securities channel checks.
“Assuming 1Tcf reserve size and EV/barrel (reserve) of US$2.5, this size can add Rs27 per share to our PPL’s valuation (TP: Rs.130),” Talreja explained.
He added that the company has a ‘buy’ stance on Pakistan Petroleum (PPL), whereas the confirmation of reserve size will provide upside to our target price.
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