According to information being made available phase-I of Sinjhoro development project, located near district Sanghar (Sindh province) has been completed successfully. Oil and gas production flows of 1,100bpd and 12mmcfd respectively have been confirmed.
OGDC Commence Production from Sinjhoro Phase-I
According to a brokerage house report (BMA Capital) the annualized impact on OGDCL profitability stands at PKR0.50-0.55/share. The impact on earnings will be visible in 2HFY13 and onwards.
The project is a joint venture between OGDCL (62.5%), OPI (15%) and GHPL (22.5%), with OGDCL serving as the operator. The company further plans to add another 1,600bpd of crude oil and 9mmcfd gas upon completion of phase-II at Sinjhoro (targeted in 2QFY14).
Based on BMA valuation methodology, the TP of OGDC stands at PKR215 per share representing a total return of 10% justifying an ADD stance on the stock. At current trading levels, the stock is trading at a PER of 7.8x and 6.9x to our FY13E and FY14E EPS respectively