Oil and Gas Development Company (OGDC) is poised to deliver strong volume growth in the financial year 2012 and beyond (3-year volume CAGR of 13 percent) after the addition of 100 mmcf of gas per day from Kunnar Pasakhi Deep (KPD) from January 12.
According to KASB Securities and Economics Research team here on Friday, the production of 100 million cubic feet per day (mmcfd) of gas from KPD represents 10 percent of OGDC's total gas volumes and will have annual impact of Rs 1.3 per share on company's bottom line (6 percent of FY12 earning per share).
KPD adds 3 percent to the country's production and comes online at a time when the government is struggling to meet a large deficit in gas supply in peak winter season. Prime Minister Yousuf Raza Gilani had inaugurated the first phase of KPD in Deh Shah Bukhari, near Hyderabad on January 12. KPD will also produce 387 tons of LPG per day, 400 tons of LNG after the installation of a processing plant, enhancing the production of natural gas by another 200 mmcf per day in the second phase.
While OGDC's scrip has seen a correction of 12 percent since January 2, "We believe recent volume addition coupled with 2nd quarter strong results can calm the nerves with the focus shifting to the company's fundamentals," the research team observed. KASB research team sees another quarter of strong earnings in 2Q for Oil and Gas Development Company (OGDC) with EPS estimated at Rs 4.98 (1H Rs 10.07, up 37 percent YoY). Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Company (SNGPL) will get 50 mmcf of gas per day each from KPD.
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