OGDC Commence Production from Sinjhoro Phase-I
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.
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
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