Reko Diq on track despite security concerns, says OGDCL

The Oil and Gas Development Company Limited has assured investors that development of the Reko Diq project remains on track, despite security-related concerns flagged by partner Barrick Gold Corporation.

Speaking at a corporate analyst briefing held a day earlier, company officials clarified that Barrick’s review of security conditions and project timelines does not signal any halt or slowdown in progress. Management said the first production target for Reko Diq remains intact for fiscal year 2028-29.

Separate reports from JS Global and Ismail Iqbal Securities said that OGDCL continues to fund its share of project development, investing approximately $24.75 million during January and February alone, management said.

During the ongoing fiscal year, Pakistan Minerals Private Limited invested about $75 million in the project, of which $24.5 million represents OGDCL’s share.

“There are security concerns, but project timelines are intact,” management said, according to analysts present at the session.

Exploration and production update

During the first half of fiscal year 2026 (1HFY26), OGDCL acquired 352 line kilometers of 2D seismic data — 54% of the national total — and 110 square kilometers of 3D seismic data, accounting for 22% of the country’s total, despite weather and security-related challenges.

Additionally, 607 line kilometers of 2D and 2,013 square kilometers of 3D seismic data were processed or reprocessed in-house.

The company spudded five wells — three exploratory, including shale, and two development wells — compared with four in the same period last year. Total drilling reached 29,903 meters versus 13,009 meters a year earlier.

OGDCL announced four hydrocarbon discoveries during the period: Chakar-1, Bitrism East-1 and Baragzai X-1 (in the Kingriali and Datta formations), with combined expected potential of 7,345 barrels per day (bpd) of oil and 39 million cubic feet per day (MMcfd) of gas. A subsequent discovery at Baragzai X-1 in the Samana Suk and Shinawari formations added potential output of 3,100 bpd of oil and 8 MMcfd of gas.

The management said Baragzai X-1 has so far yielded discoveries across four formations, with a fifth formation currently under testing. The immediate plan is to complete the well in one formation to bring it into early production, while evaluation of remaining zones continues.

Production and curtailments

Average daily net saleable production during 1HFY26 stood at 31,848 bpd of oil (versus 31,477 bpd a year earlier), 626 MMcfd of gas (versus 672 MMcfd), and 636 tons per day of LPG (versus 629 tons). The company contributes roughly 50% of Pakistan’s oil output, 27% of gas and 32% of LPG production.

Forced curtailments by Sui Northern Gas Pipelines Limited and Uch Power Limited reduced daily production by about 3,384 bpd of oil, 152 MMcfd of gas and 51 tons of LPG. Without curtailments, oil production would have averaged 35,232 bpd and gas output 778 MMcfd, management said.

Financial performance

OGDCL reported profit after tax of PKR73 billion (earnings per share: PKR16.98) for the quarter, reflecting an 11% year-on-year decline. The company announced a cash dividend of PKR4.25 per share, taking cumulative payout for 1HFY26 to PKR7.75 per share.

Topline revenue stood at PKR193 billion, down 7% year-on-year during 1HFY26, primarily due to lower oil prices and production curtailments.

Operating costs increased during the period, driven mainly by salary increments and higher joint venture-related expenses in the Waziristan block.

Development projects and outlook

The management outlined the following timelines for key development projects:

• Uch Compression Project, targeted for June 2026, with raw gas production capacity of 480 MMcfd
• KPD-TAY Compression Project, expected by April 2026, adding 100 MMcfd of incremental gas output
• Bettani Project, anticipated by December 2027, contributing 85 MMcfd of gas and 3.8 thousand bpd of condensate
• Sinjhoro Phase-2, projected for June 2027, with incremental gas production of 30 MMcfd

On shale and tight gas initiatives, the company is advancing horizontal well KUC-1 with consultancy support from Baker Hughes, has executed hydraulic fracturing at Gajawah-1 and Katiar-1, and expects a regional tight gas study awarded to SLB to conclude by January 2027.
Regarding a recent Super Tax ruling, the management said a detailed order has yet to be issued. A short order indicated the matter will be reviewed under the relevant schedule and in light of the position of the Federal Commissioner Inland Revenue. The company has not reversed any Super Tax provision in its financial statements.Looking ahead, the management expects oil prices to remain range-bound in 2026. The company’s focus remains on mitigating the impact of curtailments, enhancing recovery of receivables, sustaining production levels and accelerating development projects, analysts said.