It is an integrated oil and gas exploration and production company, formerly known as Mari Gas Company Limited. It enjoys around 70 percent exploration success rate, which is much higher than industry averages of 33 percent national and 14 percent international, as per the company's annual accounts.
In addition to Mari Gas Field, it holds development and production leases over Zarghun South, Sujawal, and Halini X-1 and has operatorship of eight exploration blocks (Sujawal, Karak, Ghauri, Sukkur, Ziarat, Harnai, Peshawar East, and Bannu West). MARI is also a non-operating joint venture partner with leading national and international E&P companies D&P leases and exploration blocks.
The E&P firm is also a key supplier of gas to the fertilizer manufacturers, power generation companies and gas distribution companies, while its crude oil and condensate are supplied to the refineries. Around 80 percent of fertilizer production depends on gas supplied by Mari Petroleum. Its customers include Engro Fertilizer Limited, Fauji Fertilizer Company Limited, Fatima Fertilizer Company Limited, Foundation Power Company Daharki Limited, Central Power Generation Company Limited, Sui Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, Attock Refinery Limited, National Refinery Limited, Pakistan Refinery Limited, Pak Arab Refinery Limited, Western Power Company (Pvt) Limited, Petrosin CNG (Private) Limited and Foundation Gas.
Shareholding pattern at Mari Petroleum
The government of Pakistan has around 18.39 percent shareholding in Mari Petroleum, with divestment plans on the cards since some time now. It is finally on the active privatization list again. Apart from the GoP, Mari has two key shareholders: Fauji Foundation with 40 percent shareholding; and OGDCL with a share of 20 percent.
Mari Petroleum in the past
Over the last few years, Mari Petroleum Company Limited has seen better crude oil production and even the gas flows have notched up when overall domestic natural gas production continued to remain flat.
MARI has seen its revenues and profits grow over the last five years. In FY16, the company's net revenues increased by 12 percent year-on-year due to sale of 60 mmcfd additional gas under incentive price provided to Guddu Power Station and increased hydrocarbon production. At the same time, the company's aggressive exploration and production resulted in twice the increase in its exploration and prospecting expenditure on a year-on-year basis.
FY17 was another good year as revenues continued to increase by 30 percent year-on-year along with 51 percent, year-on-year increase in profits that also came from its cost cutting measures and improved efficiency. This has been a key feature of the company's performance over the years where the E&P player has seen its operating expenditure come down consistently - from 46 percent of sales in FY12 to 26 percent in FY17.
The company's strategy has been to increase production of oil and gas to take maximum benefit of the incentive offered in the 2012 Petroleum Policy on enhanced production of gas from the existing reservoirs, by at least 10 percent. In FY17 for Mari Petroleum witnessed 18 billion cubic feet of incremental gas and earned the incentive revenue. It drilled 8 out of 9 planned wells, while only one non-operated well was deferred to next year due to land acquisition issues and not on technical grounds. These 8 wells included 5 explorations, 2 appraisals and 1 development well that resulted in the discovery of 123 BCF of new reserves addition and production enhancement, according to the company's annual report. Moreover, the firm also successfully finalized a three years' exploration programmer and a five years' exploration vision.
The goodness continued in FY18 as the company witnessed highest ever production rates and profits. During the year, MARI made one new hydrocarbon discovery in its operated blocks and also completed one appraisal and one development well during the year. In terms of production, MARI produced a total of 34.02 million barrels of oil equivalent (MMBOE) in FY18 compared with 32.32 MMBOE in FY17. The company was able to further enhance incremental production as planned. Total incremental production of gas reached 27,797 MMCF compared with 17,999 MMCF in FY17.
In FY18, Mari Petroleum's gross sales exceeded Rs100 billion for the first time in the history of the company. Its net profit jumped by 68 percent year-on-year. In addition, the finance income also supported the earnings for FY18. All this has resulted in higher rate of return to the shareholders for the year, which increased to 44.4 percent in FY18 against 42.59 percent in FY17.
MARI in FY19
The latest fiscal year has seen higher crude oil prices on average. But what has been the key factor to increase the oil and gas exploration and production companies' profitability has been the currency depreciation. Mari Petroleum Company Limited announced a hefty increase in its earnings for FY19 - 58.2 percent year-on-year to be exact - which was due to increase in net sales and finance income, and somewhat controlled operating expenditure.
Growth of 17.5 percent year-on-year in gross sales came from better gas volumes sold as well as increase in wellhead/consumer gas price. And the increase in exchange gains further lifted the bottom-line. Growth in profits however, was cut short by increase in royalty expenses and exploration and prospecting expenditure, which were higher due to higher drilling activity.
Outlook
Mari Petroleum has been performing well in the E&P sector. The firm has plans to go global and has signed an MoU with MOL Group of Hungary for increased collaboration. It has announced a strategic cooperation initiative with Kuwait Foreign Petroleum Exploration Company (KUFPEC) to explore opportunities in both local and international upstream exploration and production. It has also signed an MoU with a Polish oil and gas exploration company on strategic cooperation.
The government has added Mari Petroleum Company Limited to the active list of entities for privatization. Recall that the E&P Company's offloading of government shares has been delayed since 2016 due to difference of opinion. Now the government decided to increase its earnings by offloading 18.39 percent of its shareholding in Mari.
The company's future plans are about going aggressive in exploration and drilling activity that include the acquisition of two new blocks in Sindh and the tribal areas that have been acquired during the government's bidding round for 10 exploration blocks.
It also plans to go global and had signed an MoU with MOL Group of Hungary for increased collaboration. It has announced a strategic cooperation initiative with Kuwait Foreign Petroleum Exploration Company (KUFPEC) to explore opportunities in both local and international upstream exploration and production.
It has also signed an MoU with a Polish oil and gas exploration company on strategic cooperation.
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MPCL-Pattern of Shareholders as on June 30, 2018
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Major shareholders %
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Fauji Foundation 40.0
OGDCL 1.0
Govt of Pakistan 18.4
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Source: Annual Accounts FY18
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Mari Petroleum Company Limited -
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Rs(mn} FY19 FY18 YoY
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Gross Sales 117,542 100,043 17.5%
Gas Development Surcharge 9,280 11.030 -15.9%
General Sales Tax 12.098 11,663 3.7%
Excise Duty 1,333 1,907 -10%
GIDC 34,327 34,762 0.2%
Net Sales 59,443 40,676 46,1%
Royalty 7,575 5.131 46.2%
Operating Expenditure 11.713 9,935 17.3%
Exploration and Prospecting Expenditure 4,303 3,315 30.0%
Other charges 2,436 1.443 63.2%
Other income 326 -532
Operating Profit 33,743 20,166 67.3%
Finance income 1,767 766 130.3%
Finance Cost 302 640 25.3%
PAT 24,327 15,374 58.2%
EPS[Rs/share; 200.59 126.77 53.2%
Operating margin 56.76% 49.53%
Net margin 40.92% 37.30%
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Source: Company Accounts