In 1957 when Mari gas field was discovered, the company operated as Esso Eastern Inc In 1983, Fauji Foundation, OGDCL and Government of Pakistan acquired Esso Eastern Inc Later in 1984, Mari Gas Company Limited was formed which overtook the entire Mari gas field with headquarters in Islamabad.
Now as Mari Petroleum Company Limited, the company presently has seven exploration licenses and working interest in seven non-operated blocks with OGDCL, PPL and TDPL. It owns interests in the Harnai Ziarat and Hanna exploration blocks in Balochistan; Sukkur and Sajawal situated in Sindh; and Karak exploration block located in NWFP.
It also has 25 percent working interest as joint venture partner in overseas ventures with MOL in Oman. In addition, the company also operates two development and production leases with 100 percent ownership of Mari gas field and a 35 percent stake in Zarghun South.
OPERATIONAL HIGHLIGHTS FY12 During FY12, natural gas production by the Mari Petroleum Company Limited from its own blocks increased by 11 percent YoY with a daily average of 561mmcfd. Whereas, the major shift in production came from the oil production from the company's own operated fields with Karak and Mari fields' significant contribution.
The company made a significant crude oil discovery while drilling of Halini at Karak well during the period, with the additional potential of associated gas. The Halini well has been under production since January 2012 and has produced and sold 103,153 barrels of oil during FY12, 60 percent of which was MPCL's share.
Production of oil and gas from joint ventures stepped down by 73 percent and 64 percent YoY respectively during FY12. Also during the year, the company's collaboration with SNGPL and the end user PEPCO resulted in the addition of 44mmcfd pf gas from Deep Mari.
FINANCIAL PERFORMANCE FY12 Gas is the largest source of revenue for Mari Gas Company Limited representing a 97 percent share in its total sales.
Overall the gross revenues during FY12 accentuated by more than 50 percent during the FY12 versus FY11 on account of not only larger gas volumes, but also increase in average selling price. The gas sales volume increased from 188bcf to 207bcf during FY12.
Sales from Mari gas field that represents around 99 percent of the total gas sales were up during the said period by more than 1.5 times that of FY11. The Sukkur Block also performed well registering a rise in gas sales. However, the sales from Kohat and Hala Block did not do much for gas sales.
Moreover, FY12 was also memorable due crude oil sales from Karak block. On the other hand, sales of LPG did not contribute to the overall revenues much. Around 80 percent of the gross revenues of MPCL during FY12 became the fate of government levies, duties and taxes. The imposition of Gas Infrastructure Development Cess during FY12 chargeable from the gas consumers, other than the domestic sector consumers, accounts for 17 percent of the gross sales. Besides MGCL, other companies included in the schedule for GIDC are Sui Southern Gas Company, Sui Northern Gas Pipeline Limited, Tullow Pakistan Development Limited and Pakistan Petroleum Limited.
All in all, net revenues increased by six percent YoY during FY12, whereas the bottom line contracted by a significant 35 percent YoY. Exploration and production expenditure galloped by more than four times on higher seismic activity by the company, accounting for 22 percent of the net sales.
LIQUIDITY AND OPERATIONS In order to finance drilling and development activity for Mari Deep and Zarghun gas field, the company has arranged two term finance loans. The company does not have any short term loan on its books which appeases any short term liquidity concerns.
Additionally, the cost plus price formula for the gas produced from Mari gas field provides profitability at a guaranteed level and ensures the financial liquidity of the Company. Moreover, the announcement of issuance of one for every four bonus shares by the company during FY12 impacted the company's image in the stock market positively, strengthening its share price.
OUTLOOK One achievement for the company was the phased enhancement of its annual exploration fund from $20 to $40 million in four years time. This provides MPCL with the opportunity to boost its exploration activities. Accordingly, the company has planned to raise its own 3D seismic unit which is likely to be executed through JV partnership. Mari Gas network does not undergo extended periods of gas curtailment for fertiliser plants. Recently, many fertiliser plants have switched or shown interest to switch to Mari Gas for their feed stock.
Amongst the challenges faced by the company, the urgency in the energy market is the most important issue for not only the company but the entire E&P sector. One major obstacle hindering an exploration and production company from going full throttle is the security situation in various oil and gas rich areas. The responsibility gets even more pronounced for a public sector E&P that has to play a major role in addressing the energy crisis.
The imminent issue of well head pricing continue to inflict the entire E&P sector. The E&P companies have been demanding competitive wellhead prices that could attract foreign investment and increase the drilling and exploration activities. The Petroleum Policy 2012 provides better prices, and if the policy is implemented to its heart, it will serve as a major incentive in fluttering foreign direct investment in the country.
================================================
Mari Petroleum Company Limited
================================================
FY10 FY11 FY12
================================================
Profitability
------------------------------------------------
Operating margin 25.34% 38.98% 22.84%
Net margin 22.63% 24.20% 14.76%
ROCE 20.55% 21.90% 12.90%
------------------------------------------------
Liquidity
------------------------------------------------
Current ratio 1.40 1.33 1.26
D/E 0.19 0.12 0.08
------------------------------------------------
Turnover
------------------------------------------------
Total asset turnover 0.24 0.28 0.23
Fixed asset turnover 1.15 1.49 1.69
------------------------------------------------
Market
------------------------------------------------
Dividend Yield 2.40% 3.11% 3.59%
EPS(Rs) 16.14 18.78 12.14
P/E 28.25 25.93 18.99
================================================
Source: Company accounts