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Business strategy

Our primary objective as a leading Exploration and Production (“E&P”) company in Pakistan is to enhance our reserves and production profile and, ultimately, to maximise value for our shareholders. In order to achieve this goal, we are seeking to execute the following strategic goals:

   
Accelerate Production Growth: We plan to continue increasing production growth, which will allow us to utilise our significant reserves base and capitalise on the economic growth and energy demand in Pakistan. More specifically, we plan to increase our average net gas production from 1,173 MMscfd in FY 2014 to 1,311 MMscfd in FY 2015; and our average net oil production from 41,330 bpd in FY 2014 to 44,732 bpd in FY 2015.

We intend to achieve this goal through our on-going projects, and increased capital expenditure on new development projects which will create a foundation for long-term growth. We are committed to fast tracking completion of our on-going development. To support that we are planning to increase the number of rigs that we contract from third parties to supplement those we currently own and hire. We believe that these activities will enhance our production capacities. We expect to achieve total average production of 283,096 boepd in FY 2015, an 11% increase compared to FY 2014, when we achieved total average production of 254,603 boepd. This anticipated increase is primarily a result of our main development projects.
   
Exploit Exploration Opportunities: Our exploration-led growth strategy is based on increasing our resource portfolio of large exploration assets and pursuing an early commercialisation of development projects in order to enhance our production growth. In FY 2014, we added 29 new licences across the country to our exploration portfolio and completed eight exploration and appraisal wells and nine development wells. For FY 2015, we have set targets for drilling of at least 19 exploration and appraisal wells, and 16 development wells. Our achieving this target is dependent on a number of factors, including the security situation in the area where the well is to be drilled, our acquisition of necessary land rights in a timely manner, and other factors. The Company has drilled three wells so far during the current FY 2015. We also plan to significantly increase our efforts in seismic survey, utilising the latest technology, in order to build upon our existing technical understanding of our sizable exploration acreage. In particular, we plan to increase our 2D and 3D onshore seismic surveys in FY 2015 to 2,745 L. kms and 2,075 sq. kms, respectively (of which 1,550 L. kms and 420 sq. kms respectively, are contingent on our evaluation of the need and potential value of additional data).
While our exploration activities to date have been predominantly onshore, we are also increasingly focusing on offshore exploration, which presents large unexplored opportunities. Our offshore programme involves working with new and existing strategic partners. Historically this has allowed us to increase our in-house technological know-how and share associated costs and risks in exploration projects. We recently commissioned CGG, the geosciences firm, to conduct a study of two offshore exploration licences, and are currently reviewing their report
   
Pursue International Opportunities: We aim to pursue growth both organically and through selective international acquisitions, maintaining flexibility under differing market conditions. We intend to build upon our technical and operational expertise in order to increase our chances of capitalising on new opportunities outside Pakistan. We also intend to use the knowledge of our producing and exploration assets in exploring geologically similar fields in the Middle East, North Africa and Central Asia regions. This selective acquisition-led growth will be supported by the financial and transactional experience of our senior management and will focus on those international opportunities that involve high-quality assets in our target basins with value growth potential.
   
Strive to implement International Best Practice: We strive to implement international best practices which seek to bring about an efficient organizational structure and business processes that are focused on production. The Company has established an in-house technical services division, the Petroserv Directorate, which separates technical support services from core E&P activities. In addition, we strive to follow international best practice for the maintenance and quality control of our equipment to ensure uninterrupted and safe operations. We continuously monitor and evaluate our performance focusing on continuous improvement in areas, such as safety of operations, reliability and efficiency and security of our personnel. We are also subject to various environmental regulations imposed both by the Government of Pakistan and provincial governments, which monitor and enforce rules regarding environmental, health and safety compliance.
   
Maintain High Shareholder Returns: We aim to maintain the attractive returns we have been able to deliver to our shareholders over the long-term. Our well-established position within the oil and gas sector in Pakistan and our track record for project delivery have enabled us to provide shareholders with stable and growing earnings per share and attractive returns on capital. Although we expect a short-term decrease in our after-tax profit margins as a result of increased E&P expenditure, based on the Company’s successful track record in efficient operations and achieved production growth, we believe that we will be able to retain our financial performance and maintain the current levels of shareholder returns.
 
 
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