PACRA maintains Entity Ratings of Orient Petroleum Inc. (Pakistan Branch)
Orient Petroleum Inc. (Pakistan Branch) is engaged in upstream Oil and Gas business in Pakistan, it includes exploration, development and production of oil and natural gas reserves. Currently, OPI has six production leases which comprise of Ratana, Dhurnal, Bhangali, Sinjhoro, Mehar & Sofiya and seven exploration licenses namely Sakhi Sarwar, Marwat, Harani South, Saruna, Kohlu, Sinjhoro & Mehar. Orient Petroleum Inc. (OPI) is part of the group which includes Zaver Petroleum Corporation (Pvt) Limited (Zaver “ZPCL”) and Orient Petroleum Pty Ltd. (The Group). The group is one of the oldest and established oil and gas business unit in Pakistan. OPI’s reported segmental production of Crude Oil, Gas & LPG for period Jul21-Jun22 is 160,433 BBL; 2,593 MMSCF and 5,533 MT respectively. OPI’s management is pursuing an expansion strategy as it aims to make additions to its revenue stream, to support the bottom-line profit. In CY21, OPI reported topline of PKR 2,936mln (CY20: PKR 2,385mln) highlighting a sales growth of 23%. During CY21, gross profit margin has improved to PKR~2,178mln, a surge of 74% as compared to previous correspondence period, CY20: PKR~1,602mln. Similarly, the effect has translated into Operating Profit margin which stood at PKR~860mln, up by 30%, however couldn't translate it into net profit due to depreciation, amortization, unrealized exchange loss and unwinding of deferred labilities amounting to PKR 591mln, PKR 238mln, PKR 198mln and PKR 298mln respectively being non cash items. The strength of the entity lies in risk-adjusted recoverable reserves both from its production and development assets and exploration assets. With the increased volume, the profitability will improve as the synergies and efficiencies will take effect due to the aggressive work program currently the Company is pursuing. OPI has significantly improved its leverage structure to 37% CY21 as compared to 52% in CY20. Long-term borrowings of the Company stood at PKR~2,642mln (CY20: PKR: ~2,112mln) and short-term borrowing reported to PKR~442mln (CY20: PKR~316mln). Equity of the Company stood at PKR~6,560mln, hence supplementing the Company’s ability to meet its obligations. The financial discipline has been good and would be pivotal to future fiscal management.
The ratings are dependent on the sustained relative positioning of the Company in the oil & gas industry. Volatility in topline and profitability remains key areas for considerations. However, financial discipline, sponsors strength and better business dynamics are considered core to the ratings, with enduring emphasis on maintaining relevant coverages.
Orient Petroleum Inc. is incorporated in Cayman Islands with limited liability and is operating in Pakistan through its Pakistan branch office. Occidental of Pakistan Inc. A USA based company which has been functioning in Pakistan since 1979. In 1995 it was acquired by Hashoo group and was renamed to Orient Petroleum Inc (OPI). Ultimate beneficial ownership lies with Mr. Sadruddin Hashwani, a renowned Pakistani businessman.
The Board of Directors of OPI comprises four members, supported by Technical Advisory Committee, consisting of well-established names in the industry. The management team is headed by Mr. Kamran Ahmed as Chief Executive Officer who has over 30 years of experience in investment banking, oil & gas upstream and downstream industry including working with Shell Pakistan and the Islamic Investment Bank Ltd. He is assisted by competent team of industry professionals.