Gurguri field, operated by MOL, Hungarian E&P firm, has commenced gas production from January 30, 2005, and it is thought to be the largest discovery of last decade and also most eagerly awaited by stock investors due to its impact on various listed E&P firms, according to sources in capital market. Currently, Gurguri field is producing gas at the rate of 26 mmcfd, which will increase to 35-50 mmcfd in the near future.
The gas production is under trial, or 'Extended Well Testing' (EWT) phase, which will continue for the next 12-18 months. Commercial production is expected to start sometime in 2006.
The three listed E&P companies (OGDC, POL, PPL) hold major stakes in this discovery and hence would benefit from production start. POL is expected to have highest incremental impact due to its low equity base.
Abdul Rasheed, research analyst at Jahangir Siddiqui Capital Market, said that MOL discovered oil and gas reserves in Tal Block in December, 2002, during drilling of first exploration well (Manzalai-I) there. The discovery was tested for 300 bpd of oil and 63 mmcfd of gas. Due to substantial size of the discovery, SNGPL agreed to lay out 78 km pipeline from Gurguri field to Kohat.
Initially, production was expected to start in November, 2004. However, development work got delayed due to attack by local people, who were demanding gas supply to Gurguri village. This issue has been resolved and work on transmission and distribution network for gas supply to Gurguri village has started recently.
Rasheed said that three listed E&P companies, that is OGDC, POL and PPL, hold non-operating stakes of 27.8 percent, 21.1 percent and 27.8 percent, respectively, in the field. On per share basis Gurguri field will have an annualised incremental impact of Rs 0.1, Rs 2.1 and Rs 0.5 for OGDC, POL and PPL.
The impact will be highest for POL due to its lower equity base. Full year impact of Gurguri field will appear in FY06 and would be observed partially in FY05. "We believe immediate earnings impact of Gurguri field does not completely convey its significance for OGDC, POL and PPL," he said. Gurguri field has 1 trillion cubic feet gas reserves, according to various stakeholders, while there are rumours of this field being as huge as Sui and Qadirpur gas fields. Even assuming 1 tcf reserves, gas commercial production is expected to increase to 200 mmcfd within the next 2 years. To enhance production, MOL is planning to drill four additional wells in the field. Drilling of first development well will start once Makori-I well is completed. At 200 mmcfd gas production Gurguri field will increase OGDC, POL and PPL earnings by Rs 0.4, Rs 8.5, and Rs 2.1.