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Significant oil discovery by Mari gas – Alfalah Securities Limited

Karachi: Mari Gas Company Limited (Mari) has discovered 1,700 barrels a day crude oil with the additional potential of associated gas during the drilling of Halini Well in its operated Karak Block.

According to Alfalah Securities Limited, the block is located at the boundaries of Khyber Pakhtunkhwa and Punjab provinces (between the districts of Karak and Mianwali). The Halini Well was spud on January 7, 2011 and during the initial short duration tests carried out, the well flowed at the average rate of 1,700 barrels per day crude oil. The Karak Block was granted to Mari, as operator and 100 % ownership, on April 14, 2005, out of which MOL Pakistan later acquired 40% interest in the block from Mari.

Mari is engaged in drilling, exploration, production and sale of natural gas. The gas price mechanism is governed by Mari Gas Well Head price agreement. As per the agreement, the well head gas price will be at the minimum level to ensure revenue from gas and other income are sufficient to provide shareholders a minimum return of 30% net of taxes and deductibles. The return is escalated by 1% if gas production is additional 20 mmcfd above 425mmcfd up to a maximum of 45%. This means that the DPS can rise to a maximum of PKR 4.5 where the remaining profit would go to undistributable reserve. Mari supplies gas to Engro’s old plant, FFC, WAPDA, SSGC and Fatima Fertilizer. Major shareholders include Fauji Foundation (40%), OGDCL (20%), GoP (20%). In FY11 Mari announced total EPS of PKR 23.47 of which the distributable EPS was PKR 5.17 and bonus of 25%.

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