THREE months ago, before the political turmoil had just started to brew, the government went ahead with its second privatisation transaction after that of UBL. Around 70.06m shares of Pakistan Petroleum Limited, or 5pc stake, were offered to international and domestic institutional investors in a secondary public offering at the strike price of Rs219.

The offer, which raised Rs15.3bn, was oversubscribed. As would be expected, Prime Minister Nawaz Sharif lauded the event as showing the ‘faith and trust of investors in the economy’.

PPL is a ‘blue chip’ company that currently trades at Rs230 per share of par value Rs10. By the quarter ending March 31, the company’s balance sheet footing showed Rs224bn in total assets, against paid-up capital of Rs20bn. It also had built up reserves of Rs149bn.

It was listed on the stock exchanges on September 16, 2004. Its current market capitalisation stands at Rs433bn. The government holds 68pc shares in the company, followed by 25pc equity held by the public and 7pc stake vested in the PPL Employees Empowerment Trust. Its estimated free float stands at 410m shares or 21pc of total shares, according to JS Global analyst Syed Atif Zafar.

New discoveries continue to replenish dwindling output from old wells. Last week, PPL announced the discovery of hydrocarbons from the exploratory well Adam West X-1 in Hala Block

The company claims to be a pioneer of the natural gas industry in the country. Its website states that it contributes over 20pc of the country’s natural gas supplies today, besides producing crude oil, natural gas liquid and liquefied petroleum gas.

Hasan Raza, an analyst at Taurus Securities, recalled in a research report last month that “PPL was incorporated on June 5, 1950, with the main objective of conducting exploration, developentand production of oil and natural gas resources. The company inherited all the assets and liabilities of the Burmah Oil Company (Pakistan Concessions) Limited and commenced business on July 1, 1952”.

The Taurus report added that in September 1997, the government purchased the entire equity interest of Burmah Castrol PLC, formerly the Burmah Oil Company, representing 63.91pc of the capital, hence increasing its holding in the company to 93.35pc.

In June 2004, the government divested 15pc of its equity in the company through an initial public offering. In an August 25 report by Global Securities, analyst Sana Abdullah stated that the company operates six producing fields at Sui, Kandhkot, Adhi, Mazarani, Chachar and Hala. It also has working interest in 15 partner-operated producing assets, which include Sui, Kandhkot, Adhi, Mazarani, Chachar, Sawan, Miano, Block 22, Manzalai, Makori, Latif and Qadirpur — the last being the country’s second largest gas field after Sui.

The PPL Group comprises the holding company (PPL), and its subsidiary companies, i.e. PPL Europe E&P Limited (formerly MND Exploration and Production Limited), PPL Asia E&P B.V. and the Pakistan Petroleum Provident Fund Trust Company (Pvt) Ltd. The

The holding company had established a subsidiary, PPL Asia DMCC, in February last year, which was subsequently liquidated this January 27.

In FY13, PPL acquired an exploration block in Iraq, becoming the first state-owned enterprise with transnational operations. PPL Chairman Javed Masud stated in the third quarterly report that the company “has assigned its 100pc interest in Block-8, Iraq, to its wholly owned subsidiary PPL Asia E&P B.V. The registration of PPL Asia E&P B.V’s Iraq branch has also been completed and planning for conducting 2D and 3D seismic acquisitions is underway”.

The chairman added in the directors’ report that “the company’s exploration strategy is aimed at replenishing and enhancing its existing hydrocarbon reserves through exploration and production optimisation in order to maintain its position as a premier E&P company in the country”.

Yet, the company has had some false starts. Back in September 2011, it had told investors that it was seeking to enter into a joint venture with Iranian companies. The company’s secretary stated that PPL was interested in entering into exploration and production activities in Iran as a part of its strategy. Yet many energy experts said they were not exactly thrilled by the news.

“Such intentions have continued to be expressed, but the question is how many of them have truly materialised,” asked an expert.

But for all that, new discoveries continue to replenish the dwindling output from old wells. Last week, PPL announced the discovery of hydrocarbons from the exploratory well Adam West X-1 in Hala Block. The company’s secretary, Saqib Ahmed, asserted that it was the second discovery made by PPL in the Hala Block.

PPL unveiled results for financial year 2014 late last month, recording a profit-after-tax (PAT) of Rs51.4bn and earnings-per-share (eps) of Rs26.08, representing a 23pc improvement over FY13’s PAT of Rs42bn and eps of Rs21.28.

In addition to the already paid cash dividend of Rs5 per share, the board announced a final cash payout of Rs7.50 per share. The company has improved its performance by making up for the decline in gas production from Sui and Sawn gas fields by increasing its crude oil production.

Vahaj Ahmed, an analyst at Topline Securities, agrees that over the last few years, PPL has gradually shifted its revenue mix with higher contribution from oil.

Published in Dawn, Economic & Business, September 22nd, 2014