Production from Mari’s Shewa-2 well to Commence Soon

Staff Report
According to the detailed annual accounts, production from the Shewa-2 well (North Waziristan) is set to begin soon, with estimated gas volumes of up to 70 mmcfd. Currently, hydrotesting of the pipeline is underway.

The project faced delays due to the incomplete SNGPL pipeline, which was hindered by the security situation in the area. The pipeline was successfully completed in August 2024. Up to 70 mmcfd of gas will be injected into the national grid after the commissioning of the Early Production Facilities (EPF) and subsequent ramp-up. To highlight, Shewa gas reserves as of the June 2024 reserve reports are estimated at 351.2 BCF (approximately 14 years of reserves at a production rate of 70 mmcfd).

MARI is the operator of the Waziristan Block with a 55% working interest, along with Oil & Gas Development (OGDC) and Orient Petroleum Inc. (OPI) as joint venture partners, holding 35% and 10% working interest, respectively.

The annualized impact on MARI would be Rs60-65/share (11-12% of annual earnings for FY25), and on OGDC, it would be Rs1.2/share, based on oil price and gas price assumptions of US$80/bbl and US$5.9-6.0/mmbtu, respectively.

In the Waziristan Block, several appraisal and exploration wells are planned to optimally explore its hydrocarbon potential. Among these, the Spinwam-1 exploratory well was spudded on May 28, 2024, with drilling expected to be completed by 3QFY25.

Other takeaways from the FY24 Annual report:

MARI’s trade receivables stand at Rs81bn as of June 2024, which is almost similar to the Rs82bn reported in March 2024. This suggests a nearly/over 100% collection ratio in 4QFY24.

The Reserve Replacement Ratio has improved to 423% compared to 114% in FY23. The total reserve-to-production ratio currently stands at 17 years.

MARI’s cash and cash equivalents stand at Rs75bn (16% of market cap) as of June 2024, compared to Rs61bn in March 2024.