OGDC bonds to trade on Singapore bourse
KARACHI, June 20: The government is in the process of issuing Bonds Exchangeable into shares of Oil & Gas Development Company Limited (OGDC), an announcement at the Karachi bourse on Monday said.
“The bonds”, the company announced “would be traded on the Singapore Stock Exchange.”
The worth of the bonds to be floated or pricing was not revealed, but the market was in the knowledge of government’s intention to float OGDC exchangeable bonds backed by 10 per cent shares of the oil and gas giant.
The bonds are targeted to generate $500 million.
Analysts said, the government was determined to restrict fiscal deficit to 5.3 per cent for the year to end on June 30.
Considering the anxiety to raise the sum before the end of year, some senior finance ministry officials had put up June 26 as sale date of OGDC exchangeable bonds.
Two separate teams, each comprising finance division officials, members of the Privatisation Commission and OGDC personnel, were said to have proceeded overseas to market the bonds and raise the sum before year end.
Late last week, the teams flew to Singapore and Hong Kong and Abu Dhabi and London. The ‘road shows’ were earlier planned for June 19 to 21.
In order to fulfill exchangeable bond issue requirements, the OGDC had recently released financial figures for the year 2011 on the London Stock Exchange, showing an increase of 11 per cent in the company’s earning per share to Rs12.28 as against Rs11.07 in the same period last year.
“The government is trying to raise funds through securitisation of its strategic holding in the country’s biggest oil & gas company,” says analyst Farhan Bashir at InvestCap Securities. But for all its frantic efforts, most analysts were skeptic of government’s ability to collect subscription of $500 million in the OGDC exchangeable bonds and close the transaction before the first quarter of next year.
On Monday, some useful documents were placed by the Oil & Gas Company on its website.
A statement said: “OGDCL Reserves Evaluation Report is being prepared by TRACS (UK) and final complete report is expected by end June, 2011.
Preliminary Results of Reserves are being presented in the form of Executive Summary.”
Latest operational highlights of OGDC included the following: Production (10 months FY2011) at 37,327 bbl/day and 1,001 mmcf/day; 34 Exploration licences (out of which five licences in which OGDCL owns 95pc and GHPL owns 5pc, eight licences operated as joint ventures); 35 gas processing plants for dehydration, LPG, sulphur recovery, H2S removal, gas sweetening, condensate stabilisation, refining and compression; Total 68 producing fields: 39 operated producing fields (23 gas/condensate fields and 16 oilfields) and 29 non-operated producing fields; Total number of non-operated D&P Leases (32), further divided into regional breakdown of five Punjab, 26 Sindh, Balochistan (Nil) and one KPK; Total number of wells spudded for 10M FY2011 was 13, of which four were appraisal / exploration and nine development; Average total production for 10M FY11 (204 mboe/day), of which 82pc is gas and 18pc is oil; Exploration success rate was 1:2.5 over last five years. The KPD / TAY gas processing plant was projected to treat 312mmcfd of raw gas.
On Monday, the Privatization Commission also invited expressions of interest (EoI) from lead managers for public offer of shares in Pakistan Petroleum Limited (PPL), the second largest oil and gas explorer of Pakistan.
Approximately 21.1 million shares are to be sold, which would amount to 2.5 per cent of the state holding of 70.56 per cent in the company.
“Based on current price, the government could raise Rs4.6bn ($53m) at a time when it desperately needs funds to finance the record high fiscal deficit.
This may help revival of much awaited privatisation process through the stock market,” commented Nauman Khan at Topline Securities.
And he added that it was still to be seen whether the offering would be through the book building process or Initial Public Offering or a mix of both.
The kick-start to a kind of stagnant ‘privatisation’ process of government-controlled entities was thought to be a good omen.
Many investors, however, worried that increased supply of shares, in the case of OGDC share exchangeable bonds and POL offer of further equity could dilute the current market prices of their stocks.