KARACHI, June 30: The oil and gas exploration companies (E&P) activities in the financial year 2012 continued to limp, which marked the third successive year when the drilling fell far short of the target for the year.

The drilling target for the entire FY12 was set at 76 wells, but all companies in the field together managed to spud 50 wells.

However, in the face of such gloom, the silver lining was that the numbers represented improvement over the earlier year.

Energy sector watchers contended that the first half of the FY11 had reflected particularly dismal picture as the 28 E&P companies in the country, that held operator licences, together drilled only 19 wells (both exploratory and development) as compared to 80 wells targeted for entire FY11.

The Pakistan Petroleum Information Service (PPIS) that keeps an eye on the industry activity contended that the sector's E&D (Exploration and Development) activity had picked up pace in the financial year 2012, compared to the earlier year.

It, however, compared unfavourably with preceding five years (FY06-10) performance.

The sector drilled 50 wells (against a target of 76 wells), representing considerable improvement over 47 wells drilled in FY11, against the target that year of 80 wells.

Nauman Khan, analyst at Topline Securities, who follows the energy sector, observed that the nagging problem of circular debt together with heightened security perception, particularly in the provinces of Khyber Pakhtunkhwa and Balochistan, were probably the major reasons that were keeping the E&P activity at low ebb.

As far as discoveries were concerned, FY12 remained largely uneventful.

Though, six discoveries were made during the year compared with four the earlier year, none of them was big enough to excite the energy sector watchers or the investors in stocks of those companies.

“The augmented discovery in Makori East offered some reason for the investors to celebrate but subdued flows from the biggest story of the year Zin field was a disappointment", says the analyst.

The E&P sector, despite its muted performance, was being watched with interest as the materialisation of additional flows in FY13 was expected to dilute the impact of sharp decline in international oil prices.

A notable feature of the activity in E&P sector was said to be the focus on maximising the yield from its existing reservoir rather than drilling for new reserves.

In FY12, 66 per cent drilling target was achieved, which was about of the average of FY10 and 2010 achieved drilling targets of 59 per cent and 69 per cent, respectively.

The stock market listed heavy-weight, Oil and Gas Development Company (OGDC) — the largest E&P company in Pakistan — drilled only two new exploratory wells during the FY12 against target of 13 for the year; the company focus remained on its existing fields.

The company drilled 12 development wells as against the target of 15. Thus, in FY12, the company has drilled total of 14 wells against a target of 27 wells.

OGDC also made only one discovery during the year — Zin which, owing to its low discovery size was a disappointment.

Another well Jabbi is in testing phase. Despite being in the Kohat region, energy sector watchers showed little enthusiasm over probability of discovery from Jabbi well. Another stock marked listed bigger O&G company, Pakistan Petroleum Limited, had spudded 3 wells, one short of the target of 4 while Pakistan Oilfields Limited, drilled one exploratory well at Sadrial.

Analyst said that the well was still in drilling phase, but was thought to have low probability of any material discovery.