Pakistan Petroleum Limited's cash collection ratio improves to 81% in FY24

Pakistan Petroleum Limited (PPL) saw its cash collection ratio improve to 81% in fiscal year 2023-24 (FY24), up from 53% in the previous year, its management shared on Thursday.

In the first quarter of the new fiscal year, the collection ratio reached 100%, with the management expecting it to remain at this level for the rest of FY25.

PPL's Kandhkot field has the potential to produce 150 million standard cubic feet per day (mmscfd) from the current 90 mmscfd. The company has requested the Pakistani government's approval to sell additional gas to a third party. If approved, the price for the extra gas would follow the PP12 policy or could be even higher.

The management forecasts that production will be around 0.7 billion cubic feet per day (bcfd) in FY25, similar to FY24 levels. The natural decline of 8-10% will be managed through new discoveries. The Jhim field will be added to the system once the government approves its allocation.

PPL has to pay PKR 52.5 billion for the grant of Development and Production Lease (D&PL) for the Sui Field. This lease is valid until May 31, 2025. After it expires, PPL will apply for a new lease with new terms and conditions to be negotiated with the government.

Management informed the feasibility study for the Reko Diq project is expected to be completed by December this year. Moreover, in FY25, PPL plans a seismic campaign covering approximately 900 line km for 2D and 50 sq. km for 3D acquisition.

In FY24, 61% of PPL's revenue came from gas, 32% from oil, and 7% from LNG and other sources. By gas field, Sui contributed 43%, Kandhkot 16%, Adhi 2%, Gambat South 16%, and 26% came from partner-operated fields and others.

For oil fields, Adhi contributed 19%, Tal 35%, Nashpa 29%, Dhok Sultan 8%, and the remaining 9% came from other sources.

Request to issue bonds

Separately, Pakistan Petroleum Limited's management has suggested to the government to issue bonds or TFCs (Term Finance Certificates) as they did in the past to clear the backlog of circular debt.

At Pakistan Energy Conference 2024 hosted by Topline Securities, PPL senior management suggested that in case of crude oil prices decline, government should keep gas prices unchanged, and pass the excess cash to clear the backlog.

Pakistan's natural gas circular debt was recorded at PKR 2.083 trillion (2.0% of GDP) as of January, while power sector debt is expected to reach PKR 2.8 trillion by the end of fiscal year.