Pakistan Petroleum Limited (PPL) was incorporated on June 5, 1950 in Pakistan under the then Companies Act 1913 as a public limited company in the private sector with the main objectives of conducting exploration, prospecting, development and production of oil and natural gas resources.
PPL started operations on July 1, 1952. From the discovery of the Sui gas field in June 1955 - the seventh largest in the world at that time - it made a number of other important discoveries over the years. The marking of 50 years of Sui Gas Field production in itself is an achievement. Gas from Sui field has become the second name of natural gas in Pakistan. Due to various developments, the GOP has since come to control majority ownership of PPL.
PPL on June 30, 2005 had large paid up capital at Rs 6.858 billion and its ordinary shares were held by 33,406 shareholders.
The GOP is the largest shareholder (78.40% holding), followed by individuals (7.01%), the IFC (6.09%) and the rest by the joint stock companies including public sector corporations. Number of permanent PPL employees as at June 30, 2005 was 2,557 (2004: 2,539).
PPL, in its huge paid up capital, has 15,850 convertible preference shares (2004: 16,070) of Rs 10 each, which were held by 108 shareholders, largely individuals.
These convertible preference shares shall have right to a dividend ranking pari passu with the level of dividend payable to the holders of ordinary shares subject, however, to a maximum rate of thirty percent per annum of the value of the total number of such convertible preferences shares held.
The Pakistan Petroleum Provident Fund Trust Company (Private) Limited, a wholly owned subsidiary of PPL has not made any profits or incurred any losses from the date of its incorporation to June 30, 2005.
In view of the exemption granted by the SECP through its letter dated July 6, 2004, PPL has not prepared the consolidated financial statements for the year ended June 30, 2005. Also, PPL has invested in Bolan Mining Enterprises (BME), a joint venture on 50:50 bases with the Government of Balochistan. BME mines and markets Barytes to drilling companies and iron ore to Pakistan Steel.
During the year ended June 30, 2005 the GOP disinvested its equity equivalent to 15% of paid up capital of PPL (nearly 103 million ordinary shares) through an Initial Public Offering. PPL was listed on all the three Stock Exchanges of Pakistan with effect from September 16, 2004.
According to the Chairman's Outlook, the Privatisation of PPL through sale of 51% shares has picked substantial pace with the completion of the due diligence review and prequalification of investors by the Privatisation Commission which plans to conclude the transaction by the end of 2005.
PPL had embarked upon off shore drilling during the year ended June 30, 2005 and drilled an exploratory well at Pasni. Unfortunately, the well was not successful. This, however, should not deter the determination since the exploration of oil & gas has its own risks and rewards and the success or otherwise of such complex ventures is necessarily dependent on several subjective and uncontrollable factors.
In view of the declining hydrocarbon reserves profile of the company it is intended to acquire producing reserves for which a separate assets acquisition reserve has been established and the company plans to build up the reserves in future years.
Moreover, due to difficulty in obtaining insurance policy for terrorism, sabotage and civil commotion at reasonable premiums and deductibles, PPL has established an insurance reserve for self insurance cover against these risks and plans to build up this reserve in future years.
The production during the year ended June 30, 2005 including share from joint venture producing fields averaged at 958 MMSCF/D of gas, 1,404 bpd of oil / NGL and 25 tonnes per day of LPG. Total annual production is given in the Performance Statistics below. Despite the continuous decline in production from its major producing field at Sui, the company was able not only to maintain but enhance the gas production by bringing new discoveries on stream and enhancing reservoir recovery through production optimisation and efficient operations.
FIELD-WISE REVENUE IS: Sui (50%), Kandhkot (7%), Block- 22(1%), Miano (5%), Adhi (6%), Qadirpur (7%), Mazrani (2%), Sawan (21%) and Tal (1%). PPL sells natural gas to various government controlled bulk customers such as Wapda, SSGCL and SNGPL at prices notified by the Price Determining Authority.
PPL has shown consistent growth in sales, profitability and cash flow generation for the period under review. According to the Directors' Report this has been possible due to a number of factors including higher international crude oil prices, the phased price increase under the Sui and Kandhkot Gas Price Agreement 2002; and increase in sales volume from Sawan, Kandhkot, Qadirpur and Tal fields resulting in a 32 % growth in turnover to Rs 23 billion. The company has posted the highest ever profit after tax of Rs 8.6 billion, an improvement of 30 % over last year. The company has very high liquidity and robust financial position. Performance statistics are given below.
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Performance Statistics (Rs in 000)
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Balance Sheet As on June 30, 2005 2004
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Share Capital-Paid-up: 6,858,376 6,858,376
Reserves & Surplus: 14,387,068 9,193,080
Shareholders Equity: 21,245,444 16,051,456
Long term Liabilities: 610,022 546,072
L.T. deferred, provisions, etc: 2,719,207 3,179,824
Capitalization: 24,574,673 19,777,352
Current Liabilities: 7,217,129 5,562,709
Total Liabilities and Equity: 31,791,802 25,340,061
Tangible Fixed Assets: 11,274,763 9,887,657
Other L.T. assets: 2,477,481 2,822,665
Current Assets: 18,039,558 12,629,739
Total Assets: 31,791,802 25,340,061
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Ratios:
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Current ratio: 2.50 2.27
Debt-Equity Ratio: 3:97 3:97
Book Value per Share: 30.98 23.40
Share Price-Rs (21-10-05): 189.80 -
Price/Book Value Ratio: 6.13 -
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Income Statement (Rs in 000)
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Year ended June 30, 2005 2004
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Gross Sales: 32,815,893 26,216,234
GOP levies incl. royalty (excl. IT): 12,194,870 10,502,302
Net Sales before Royalty: 23,294,169 17,667,508
Net sales after Royalty: 20,621,023 15,713,932
Operating Profit: 13,669,251 9,451,273
Profit before Taxation: 13,474,991 9,063,468
Profit after taxation, adjustments: 8,623,152 6,617,399
Earnings per share (Rs): 12.57 9.65
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Ratios: (Annual Basis)
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GOP Levies (excl. IT)/G. Sales: 37% 40%
Net sales after royalty/G. Sales: 63% 60%
Operating profit/Net sales: 59% 53%
Profit after tax/Net sales: 37% 37%
Net profit to Equity: 41% 41%
R. O. A. %: 27% 26%
R. O. C. E. %: 35% 33%
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Debt Service Coverage (times): Very high Very high
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Asset Turnover Ratio (G. Sales): 1.03 1.03
Asset Turnover Ratio (Net sales): 0.73 0.70
Receivables Turnover (Net Sales): 5.08 4.60
Days Receivables: 72 79
Cash Dividend-Ordinary shares: 55% 45%
Cash Dividends- conv. Pref.: 30% 30%
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Cash Flow Summary (FY05) 2005 2004
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Net Cash flow, Operations: 10,081,794 6,870,116
Net Cash flow, Investing: -2,631,173 -686,409
Net Cash flow, Financing: -3,423,300 -2,762,879
Net Cash flow Position for Period: 4,027,321 3,420,828
Cash and bank at beginning: 6,638,233 3,217,405
Cash and bank at end of period: 10,665,554 6,638,233
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Annual Production*
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Natural Gas (MMSCF): 349,580 343,841
Crude Oil/NGL (000, Barrels): 512 557
Condensate (000, Barrels): 90 61
LPG (Tonnes): 9,088 8,798
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* From PPL's 100% owned fields and its share from all operated and non-operated joint ventures.