PACRA maintains Entity Ratings of Orient Petroleum Inc. (Pakistan Branch)

Pakistan's E&P segment, including 10 domestic and 14 foreign companies, operates with 24 rigs actively deployed for drilling with ~124 active exploration licenses as of FY22 by the Ministry of Energy and Petroleum. There is an average of ~3 wells per 1,000 sq. km for exploratory acreage. Currently, ~1,114 exploration wells and ~1,484 appraisal/development well drilled as of Dec-21. Oil production and Gas production in Pakistan stood at 81,496bbl per day and 3,403mmcfd per day, respectively.
Orient Petroleum Inc. ('Orient' or 'the Company') drives its strength from its Group companies that include Orient Petroleum Pty Limited (OPPL), Zaver Petroleum Corporation (ZPCL), OPI Gas (Pvt.) Limited and Hashwani Hotels Limited (HHL) which owns and operate chain of Marriott hotels in Pakistan. Orient is engaged in the exploration, development and production of oil and natural gas reserves. Currently, the Company holds a working interest in six production lease agreements - Ratana, Dhurnal, Bhangali, Sinjhoro, Mehar & Sofiya - and eight exploration licenses - namely Sakhi Sarwar, Marwat, Harani South, Saruna, Kohlu, Sinjhoro, Waziristan & Mehar block. Recent discovery in Waziristan block is the major breakthrough for the Company. In Waziristan Block Company holds 10% non-operated working interest. Furthermore, the Company successfully secured plant rental agreement for two years, where the Company shall provide its plant on a rental basis to Waziristan block along with its operations and management. The Company achieved growth of 78% in its top line which is mainly attributable to a conducive business environment in E&P sector worldwide. On the operational front, Orient production reports identified crude oil, gas & LPG production of 153,234bbl; 2,505mmbtu and 6,811MT, respectively, from Jul-22 to Jun-23. Overall, the Company’s business margins posted growth. However, net margins remain low due to higher interest cost along with exchange loss. The Company drives strength from risk-adjusted recoverable reserves both from its production and development and exploration assets. As conceived, increase in volumes, going forward, will lead to better profitability. However, executional strategies and expected synergies remain crucial. On the financial risk front, the Company is adequately leveraged, with a moderate working capital cycle. However, coverages remain strong. Going forward, financial discipline along with better governance framework remains pivotal for the ratings.
The ratings are dependent on the sustained relative positioning of the Company. Volatility in topline and profitability remains key concerns. The ratings would take positive benefit from the increase in volumes handled by the Company. However, financial discipline along with the sponsor's support are imperative to ratings, while maintaining the coverage ratios.

About the Entity
Orient Petroleum Inc. (Pakistan Branch) (‘Orient’ or ‘the Company’) was incorporated in Cayman Islands and is operating in Pakistan through its branch office. The Company is engaged in exploration, development and production of oil and natural gas reserves.
The ownership of the Company lies with two holding companies owned by Hashoo Group; Zaver Petroleum Corporation ~55% and First Global Investment Holding Ltd ~45%. The Board, comprising the sponsoring family, is Chaired by Mr. Sadrud-din-Hashwani. While, Mr. Kamran Ahmed heads the Company as the CEO. He is aided by a team of seasoned professionals.