PPL finds hydrocarbon reserves in Balochistan’s Kalat
Pakistan Petroleum Limited (PPL) has announced the discovery of hydrocarbon reserves, with potential deposits of one trillion cubic feet, in the Margand block in Kalat Plateau of Balochistan.
“The discovery of hydrocarbon reserves at Margand X-1 well is a historic milestone,” PPL said in a statement.
It is the first find of hydrocarbon reserves in the westernmost area of Pakistan, which will set the future course of the oil and gas exploration in the country.
PPL operates the block with 100% working interest, has announced that the hydrocarbon discovery could have more reserves than the assessment made earlier.
The extent of hydrocarbon reserves could be confirmed after digging of appraisal wells, the company said.
Margand X-1 reached a depth of 4,500 meters inside Chiltan limestone. On the basis of wireline logs, Modular Dynamics Testing (MDT) was carried out, which proved the presence of hydrocarbon.
Drill Stem Test (DST) of the well showed a flow of 10.7 million cubic feet of gas per day.
“Initial estimates based on the structure of the Margand block reveal that this block has one trillion cubic feet of reserves,” an official earlier said, adding that drilling of more wells would support the estimate.
He added that while news reports suggest this field can potentially add 300-400mmcf on a daily basis, experts believe it will take time as more development wells would be needed to extract such flows. Nevertheless, 300mccfd will double PPL’s current earnings.
He said that the accurate size of reserves will also be confirmed after drilling more appraisal wells.
“This reserve size will bring a new life to Pakistan E&Ps space, as no significant discovery has been announced in the recent past, especially in the Baluchistan region where a major SUI gas discovery was announced earlier,” Talreja maintained.
The research analyst added that as per Topline Securities channel checks, this field can take more than a year to come online as the infrastructure needed for gas processing will take time.
“Assuming 1Tcf reserve size and EV/barrel (reserve) of US$2.5, this size can add Rs27 per share to our PPL’s valuation (TP: Rs130),” Talreja said.
He added that the company has a ‘buy’ stance on Pakistan Petroleum (PPL) whereas the confirmation of reserve size will provide upside to our target price.
