Oil and Gas Development : Nine Month Interim Report and Financial Information 2022-23

Interim Report and Financial Information

Nine Months ended 31 March 2023

Corporate Information

Board of Directors

ŸCapt. (Retd.) Muhammad Mahmood appointed as Director w.e.f. 18 October 2022 in place of Mr. Ali Raza Bhutta ŸMr. Sajid Mehmood Qazi appointed as Director w.e.f. 1 November 2022 in place of Mr. Muhammad Haroon-ur-RafiqueŸMr. Ahmed Hayat Lak assumed the charge of MD/CEO w.e.f. 22 February 2023 in place of Syed Khalid Siraj Subhani

Chief Financial Officer

Mr. Muhammad Anas Farook

Acting Company Secretary

Mr. Wasim Ahmad

Auditors

M/s KPMG Taseer Hadi & Co., Chartered Accountants

M/s A.F. Ferguson & Co., Chartered Accountants

Legal Advisor

M/s Khokhar Law Chambers

Tax Advisor

M/s A.F. Ferguson & Co., Chartered Accountants

Registered Office

OGDCL House, Plot No 3, F-6/G-6, Blue Area,

Jinnah Avenue, Islamabad.

Phone: (PABX) +92 51 9209811-8

Fax: +92 51 9209804-6, 9209708

Website: www.ogdcl.com

Email: info@ogdcl.com

Registrar Office

CDC-Share Registrar Services Limited,

CDC House, 99-B,Block-B, S.M.C.H.S.,

Main Shahrah-e-Faisal,Karachi-74400.

Phone: +92 21 111 111 500

Fax: +92 21 34326053

Website: www.cdcsrsl.com

Email: info@cdcsrsl.com

02 Oil & Gas Development Company Limited

Directors' Interim Review

The Board of Directors of Oil & Gas Development Company Limited (OGDCL) is pleased to present a concise review of the Company's operational and financial performance accompanied with condensed interim financial information for the nine months ended 31 March 2023.

Amidst the prevalence of global recession, international crude oil prices in comparison to the corresponding period last year were higher primarily on the back of ongoing geopolitical unrest and continued oil supply discipline by OPEC+coalition. Average basket price of crude oil was US$ 89.07/barrel against US$ 80.60/barrel in the comparative period. The favorable crude oil price environment led the Company to register a growth of 29% and 42% in its top and bottom line financials respectively. On the operational front, OGDCL's E&P activities were impacted by heavy rains/floods, security clearance and prevailing import compression/rationing.

Exploration and Development Activities

OGDCL being the market leader in E&P sector of Pakistan holds the largest exploration acreage and portfolio. Owing to grant of a new exploration license Chah Bali, Company's exploration acreage during the period under review increased to 89,459 sq. km (30 June 2022: 87,290 sq. km), which represents 41% of Country's total area under exploration (source: PPIS). The exploration portfolio comprises 49 owned and operated joint venture exploration licenses (30 June 2022: 48 exploration licenses). The Company also possesses working interest in 9 exploration blocks operated by other E&P companies.

In an effort to discover oil and gas reserves, OGDCL acquired 1,239 Line km of 2D seismic data (9M 2022-23: 1,426

Line km) and 482 Sq. km of 3D seismic data (9M 2021-22: 120 Sq. km) representing 64% and 34% of total 2D and 3D seismic data acquisition in the Country respectively. Moreover, the Company using in-house resources processed/reprocessed 2,861 Line km of 2D and 360 Sq. km of 3D seismic data. Additionally, 394 Line km of geological field work was carried out in Nowshera and Hazro blocks. However, seismic activities during the reporting period were affected by the torrential rains/ flood (295 days out of 1,370 days of seismic operations lost), non- availability/late delivery of imported ground electronics and security concerns. However, the Company is making all out efforts to recover most of the deferred seismic activities with-in the current fiscal year.

On the drilling front, OGDCL spud 4 wells (9M 2021-22: 13 wells) including 3 exploratory wells; Shahpurabad-1, Chak 20-1 & Gaja Wah-1 and 1 development well; Chanda-7. Moreover, drilling and testing of 9 wells pertaining to previous fiscal year was also completed. Total drilling recorded during the nine months was 23,959 meters (9M 2021-22: 33,663 meters). However, drilling activities were impacted by non-availability of spare parts for mud pumps and other critical items; drilling line, bridal line and engine parts on account of LC issues leading to shutdown of 2 owned rigs since February 2023. Likewise, delays in procurement of LLIs for Uch wells also impacted the drilling activity.

Development Projects

The current status of ongoing development projects is tabulated below:

Nine Months Report 2022-2303

Discoveries

OGDCL's exploratory efforts to locate new reserves during the period under review yielded 3 oil and gas discoveries having an expected cumulative daily production potential of 3,007 barrels of oil and 2.7 MMcf of gas. Aforementioned discoveries include Toot Deep-1 in district Attock, Punjab province and Chak 5 Dim South-3 and Kot Nawab-1 in district Sanghar, Sindh province.

Wali Field Development

OGDCL has embarked upon the initiative for development of early production facilities at Wali-1 so as to bring Wali field into production. OGDCL holds 100% working interest in the Wali exploration block. The recoverable 2P reserves are estimated to be around 13 million barrels of oil and 219 billion cubic feet of gas, equivalent 55 million BOEs. The early testing is expected to be completed in May 2023 and the facility will produce 10 MMcf per day of gas and 1,000 barrels per day of oil. Furthermore, field development is being undertaken to access the full potential of the field.

Production

OGDCL's production during the period under review contributed around 46%, 29% and 36% towards Country's total oil, natural gas and LPG production respectively (source: PPIS). The average daily net saleable crude oil, gas and LPG production clocked in at 33,034 barrels, 765 MMcf and 732 tons in comparison to 36,173 barrels, 828 MMcf and 822 Tons in the comparative period respectively. The decline in hydrocarbon production was partially mitigated by injection of 2 operated wells in the production gathering system viz., Lala Jamali-2 and Chak 5 Dim South-3, which cumulatively yielded gross crude and gas production of 124,301 barrels and 1,628 MMcf, respectively.

During the period under review, production output was impacted due to natural decline at KPD-TAY, Bobi, Chanda, Mela, TOC, Bitrism, Sinjhoro and Nashpa fields combined with forced production curtailment owing to torrential rains/flood at Palli, Mangrio and KPD-TAY fields. Likewise, lower gas production was observed due to less gas intake by UPL from Uch field due to technical issues at Uch power plant as well as on account of rupture incident at the 26'' gas pipeline (Uch field to UPL plant). The reduction in production from NJV fields also contributed towards lower hydrocarbon output.

In an effort to arrest natural decline and sustain production from matured wells, OGDCL during the period under review carried out 57 work-over jobs comprising 11 with rig and 46 rig-less. Moreover to induce improvement in the current well flow parameters, pressure build-up survey jobs were completed at various wells of Uch, Qadirpur, Maru-Reti, Kunnar, Pasakhi and Nashpa fields. Additionally, electrical submersible pump was successfully installed at Sono-7 resulting in incremental oil production of 2,000 barrels per day.

During the period under review, a fire incident occurred at a warehouse located at one of the Company's non-operated JV field; Manzalai/Makori processing facility. An initial assessment of the damaged area and loss has been carried out by the operator (MOL) of the field, whereby inventory amounting Rs 3,080 million (OGDCL share Rs 867 million) has been written-off.

Business Diversification

Reko Diq Mining Project:

The Company has invested in the project company, i.e. Reko Diq Mining Company (Private) Limited (RDML) through Pakistan Minerals (Private) Limited (PMPL), an entity incorporated in Pakistan in accordance with the agreements for collective representation of the Company, PPL and GHPL. RDML is engaged in the mineral exploration activities in Pakistan. The Company's equity interest in PMPL is 33.33% with an effective interest of 8.33% in RDML. Project feasibility is in progress. The operator i.e. M/s Barrick Gold Corporation has mobilized its professionals.

04 Oil & Gas Development Company Limited