E&P activities remain sluggish: analysts

The exploration and development (E&P) activities in the country continued to remain sluggish, as only 9 percent of the total drilling target set for the current year has been achieved in the first three months, analysts said. According to data, only 3 exploratory wells have been drilled as against 4 wells in the comparable period last year, while 4 developments well have been spudded versus 6 last year. The full year target for FY12 is 76 wells.
Amongst the listed companies, Pakistan Oilfields Limited (POL) has initiate its first exploratory well of the year, while Oil and Gas Development (OGDC) and Pakistan Petroleum Limited (PPL) has yet to drill for new hydrocarbon reserve this year. "Pakistan's exploration and development (E&D) activities, continue to remain sluggish due to circular debt issue, security challenges in rich hydrocarbon basins of KPK and Balochistan and continuation of carry over well of last year", Nauman Khan, an analyst at Topline Securities said.
As per Pakistan Petroleum Information Services (PPIS) latest drilling update, sector has drilled 7 E&D wells achieving 9 percent of the full year target of 76 wells. In the same period last year, the sector accomplished 13 percent target by drilling 10 wells versus target of 80 wells.
Further bifurcation of the numbers reveals that E&D activity continues to be tilted towards development activities, with 4 development well (full year target 45 well) and 3 exploratory well (target 31 well). "Major reasons behind the muted E&D activity continue to remain the unending circular debt and high risk environment in KPK and Balochistan", he added.
Noteworthy, is the conviction of operator (MOL) in country's one of the most promising, hydrocarbon basin -Tal block. In addition to development plan of Manzalai, the operator has initiated appraisal well in its latest discovery Makori-east. Any positive news flow from the fields would primarily bode well for POL but will also augment PPL and OGDC earnings going ahead, Nauman said.
Amongst the last year wells, Chak Naurang South, supped by OGDC, is in production testing phase. However, the progress on the highly anticipate, Zin Block, continue to progress on slow pace as the operator (OGDC) encountered with hard/difficult formation, he said. "We expect the news flow from the field by mid-to-end December, 2011", he added.