KARACHI, March 1: Earlier this week, Mari Gas Company Limited announced financial figures for the six months ended December 31, 2002, posting after tax profit of Rs475.6 million, which was over six times the taxed profit of Rs70.2 million earned in the corresponding period of the previous year.

The board also announced its first ever interim dividend at Rs2 per share (20 per cent) out of the profits for the year ending June 30, 2003. The results and interim dividend announcement was greeted by the market with an increase of Rs3.45 in the price of Mari Gas stock on Monday, with closing seen at Rs49.45, from the overnight value of Rs46.00. The company also announced that the Share Transfer Books of the company would remain closed from March 19, 2003 to March 25, 2003, both days inclusive, for entitlement of interim dividend.

Mari Gas Company is the main supplier of gas to five plants of the three fertilizer companies and Wapda’s thermal power unit at Guddu. Pakistan ranks as the sixth largest producer of urea in the world. And 70 per cent of all urea produced in the country, uses gas supplied from the Mari Gas Field.

Gas was discovered at the Mari Gas Fields in 1967. The company boasts the largest single gas reservoir in the country. Current production is about 425 mmcfd and the reserves are estimated to last another quarter of a century; by contrast, gas reserves at the more famous Sui, are believed to be as much as to last another 10 years at a daily production of 640 mmcfd. Presently, gas production at Mari Gas, comes only from the upper (Habib Rahi) reservoir, which began in 1967. Two exploratory wells were drilled in 1997-98 and the effort resulted in discovery of a new and independent reservoir in Goru B formation of Mari Gas Field.

The company has been operating under the Gas Price Agreement (GPA) signed with the government, whereby it is allowed a fixed rate of return on shareholders’ equity, irrespective of the amount of profit it generates. With the enhancement in rate of return, shareholders would get to receive 30 per cent dividend, effective July 1, 2001, instead of the 22.5 per cent. The government has also prepared a formula by virtue of which shareholders are also entitled to rate of return on incremental production of gas at the rate of 1 per cent for every 20 mmcfd produced in excess of its present level of 425 mmcfd. The rate of return would, however, not exceed 45 per cent.

The company can generate exploration funds up to $20 million or 30 per cent of the company’s total revenue, whichever is less per annum, under the GPA. Such funds could be invested for exploration activities outside Mari Gas Field.

During the first half of the year that ended on December 31, 2002, gas sales crossed the Rs1 billion mark, at Rs1.244 billion. This represented 159 per cent growth from sales amounting to Rs480 million in the corresponding six months of the previous year. The major increase appears to have been in the second quarter of the year, since at the end of Q1, gas sales had stood at Rs358 million. Royalty amounted to Rs155.3 million for the period under review, up from Rs59.8 million in the similar six months of the previous year, both measuring to 12.4 per cent of net sales. Financial charges for the half year amounted to Rs72.1 million, which was slightly lower than Rs73.5 million in the similar six months of 2001-02.

The accounts for the latest half term carries Rs116.4 million, which has been marked as “exploration expenditure other than Mari Field”; the figure was nil in the same period last year. Paid-up capital of Mari Gas stood at Rs367.5 million. Including reserves and surplus, the shareholders’ equity amounted to Rs1,585.0 million, which produced the break-up value of Rs43.13 per share. The company carried Rs1.43 in current assets against each rupee of current liabilities.

For all of the financial year 2002-03, analysts are forecasting net earnings to make up to a billion rupee mark and as per the terms of guaranteed return, shareholders can expect another Re1 to Rs1.50 in cash dividend. Total balance sheet footing at December 31, 2002 stood at Rs5.392 billion.