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Mari Petroleum Company Limited
Annual Report 2018

COVER
Story
Oil and gas originate over millennia from the
organisms deposited at the sea floor or lake beds.
After thermal maturity, oil and gas are generated and
then migrate to porous rocks and are occasionally
trapped in confined reservoirs waiting to be
discovered by knowledgeable and resolute men
and women. It is commonly said that the oil and gas
traps first occur in the minds of the earth scientists
before they are discovered through a multitude of
professional experts employing sophisticated and
expensive technologies. The final act in the exploration
is of drilling a well to the target depth for the final
test. The Cover page shows the mast of MPCL’s own
rig of 2500 horse power which is the largest sized rig
in the Country. Soon after its induction into service, it
succeeded in making an oil and gas discovery at Halini
Deep in Karak Block in 2016.

On acquiring a new exploration area, an E&P company


undertakes a time-consuming and expensive
programme spread over six to eight years covering
acquisition and study of geological/geophysical data,
geological surveys, seismic data acquisition and
interpretation, drilling, testing and development of
discovered fields. Success in E&P operations results
from an integrated effort by expert geologists,
geophysicists, reservoir engineers, production and
drilling engineers, business planners, financial and HSC
experts etc. MPCL takes pride in its expert workforce
that have succeeded in making the Company a leader
of E&P industry in the Country.

No E&P company can have a future of growth and


success unless it continues to increase its rate of
production and at the same time its underground
reserves of oil and gas. It is an uphill combination
which characterises this industry as high cost and
high risk and which renders it a case of constant
endeavour. Challenges in the life of an E&P company
only increase and multiply in complexity. Operating
in this highly competitive environment, we owe it
to all our men and women who work in unison to a

2
common goal with singular commitment. It is this
factor of excellence that creates a yet more successful
story of a record setting 2018. Central Manifold, Mari Gas Field
Mari Petroleum Company Limited
Annual Report 2018

Contents
04
Company
20
Significant Changes 93
Return on Equity
(Dupont Analysis)

94
Information from Prior Years Summary of the

06
Notice of
21
Integrated Management Statement of Cash Flows

94
Annual General Meeting System Policy
109
Direct Method Free

22
Code of Cash Flow Cash Flow

95
Conduct
109
Related Parties and Related Composition of Local

23
Corporate Culture Party Transactions Vs Imported Material

96
and Core Values
110
Management's Responsibility Statement of

24
Profile of
Board of Directors
towards the Preparation
and Presentation of the
Value Added

29
Financial Statements
110
Statement of

44 Strategic Business Plan Charity Account


Organogram and Resource Allocation
96
Compliance of International
Financial Reporting Standards
111
Pattern of

30
Chairman's
Review 48
Business Overview and
Forward Looking Statements
(IFRS)
Shareholding

52
Segmental Review of 98
Cash Flows &

145
Financing Arrangements Financial
Business Performance

98
Contribution to Statements

12 Company
Profile 53
Mari Field Development
(Phase-X)
National Exchequer
147 Independent Auditors'

99
Significant Changes Report on Financial

14
Our
54
HSE and
Sustainable Development
in Financial Position Statements

152
History
100 Horizontal Analysis - Statement of

16
Key
56
Corporate Social
Responsibility
Statement of Financial Financial Position

154
Financials Position Statement of

58
Human Resource
Development 102 Vertical Analysis - Profit or Loss

155
Statement of Financial Statement of Other

66
Information
Technology
Position Comprehensive Income

68
Major
Social Events
104 Horizontal Analysis -
Statement of Profit or Loss 156 Statement of
Cash Flows

32 Managing Director's
72
Awards and 106 Vertical Analysis -
Statement of Profit or Loss 157 Statement of
Changes in Equity
Outlook Recognition
116 Directors’
Report
158 Notes to and Forming Part

38
Calendar of
Major Events 74
Implementation of
Listed Companies (Code of
138
Post Statement of
Financial Position Events
of the Financial Statements

40
Risks and Corporate Governance)
Opportunities Report Regulations 2017
139
Geographical
Presence 207 Definitions and
Glossary of Terms

76
Corporate
Governance
141
Statement of
Compliance with Listed 222 Directors' Report
(Urdu)

18 Our
Vision 88
MPCL's Operated Blocks
and D&P Leases
Companies (Code of
Corporate Governance) 223 Proxy E-Voting Form
(Urdu)

19
Our
Mission 89
MPCL's Non-Operated Blocks
and D&P Leases
Regulations, 2017

225 Form

20
Our
Commitments 90
Performance
Indicators
142
Independent Auditors'
Review Report on
Statement of Compliance
of Proxy

20
Quality
Policy 92
Variation in Results of Interim
Reports with Final Accounts 108 Ten Years
at a Glance
05
Mari Petroleum Company Limited
Annual Report 2018

COMPANY Informat ion

Head Office Quetta Liaison Office Auditors Legal Advisor Registration,


21, Mauve Area, 3rd Road, G-10/4 26, Survey-31, Deloitte Yousuf Adil, Ali Shah Associates NTN and
P.O. Box 1614, Islamabad – 44000 Defence Officers Housing Scheme, Chartered Accountants
Tel: +92 51 111-410-410 Airport Road, Quetta Advocates High Court GST Numbers
+92 51 8092200 Tel: +92 81 2821052, 18-B/1, Chohan Mansion 1-Ali Plaza, 4th Floor
Registration Number: 00012471
Fax: +92 51 2352859 2864085, 2839790 G-8 Markaz, Islamabad – 44000 1-E, Jinnah Avenue
Tel: +92 51 8734400-3 Blue Area, Islamabad National Tax Number: 1414673-8
Email: info@mpcl.com.pk Fax: +92 81 2834465
Web: www.mpcl.com.pk Fax:+92 51 8350602 Tel: +92 51 2825632 GST No: 07-01-2710-039-73
Email: aashah@deloitte.com Symbol on PSX: Mari
Field Offices/Camps shali@deloitte.com
In addition, the Company has field Bankers
Field Office Daharki Web: www.deloitte.com Allied Bank Limited
Daharki, District Ghotki offices/camps/production sites
at the following locations: Askari Bank Limited
Tel: +92 723 111-410-410 Shares Registrar Bank Alfalah Limited
+92 723 660403-30 l Sujawal (Sindh)
Corplink (Pvt) Limited Habib Bank Limited
Fax: +92 723 660402 l Sukkur (Sindh) National Bank of Pakistan
l Karak & Kalabagh (KPK & Punjab) Wings Arcade, 1-K Commercial JS Bank Limited
l Bannu West (KPK) Model Town, Lahore
Karachi Office l Ghauri (Punjab) Tel:+92 42 35839182, 35869037
Standard Chartered Bank
D-87,Block 4, Kehkashan, Clifton United Bank Limited
l Zarghun (Balochistan) Email: corplink786@gmail.com
P.O. Box 3887, Karachi – 75600
Tel: +92 21 111-410-410
Fax:+92 21 35870273

04
07
Mari Petroleum Company Limited
Annual Report 2018

NOTICE OF Annual General Meet ing

N
otice is hereby given that the 34th Annual General SPECIAL BUSINESS FURTHER RESOLVED that the bonus shares to be A statement under Section 134(3) of the Companies Act,
Meeting of the Shareholders of Mari Petroleum 5. To approve the issue of bonus shares in the ratio issued against 5% Bonus Shares which are subjudice 2017, pertaining to the Special Business referred above is
Company Limited will be held on Thursday, October of one share for every ten shares held (i.e., 10%) before Sindh High Court be withheld by the annexed to this Notice.
18, 2018 at 10:00 a.m., at the Registered Office of the as recommended by the Board of Directors in their Company till the final decision of SHC in the matter. By order of the Board
Company situated at 21 -Mauve Area, 3rd Road, Sector meeting held on August 30, 2018; and if thought fit,
G-10/4, Islamabad to transact the following business: pass the following Resolution as Ordinary Resolution. FURTHER RESOLVED that the Company Secretary
be and is hereby authorised to give effect to this
ORDINARY BUSINESS RESOLUTION resolution and to do or cause to do all acts, deeds
1. To receive, consider and adopt the Audited Accounts “RESOLVED that sum of Rs. 110,250,000/- (One and things that may be necessary or required for
of the Company for the year ended June 30, 2018 Hundred Ten Million Two Hundred Fifty Thousand the issue, allotment and distribution of the bonus Islamabad: Assad Rabbani
together with the Directors' and Auditors' reports Only) out of the Reserves of the Company available shares.” September 26, 2018 Company Secretary
thereon. for appropriation as at June 30, 2018, be capitalised
and applied for the issue of 11,025,000 (Eleven Million
2. To approve, as recommended by the Board of Twenty Five Thousand) ordinary shares of Rs. 10/- each
Directors, the payment of final dividend @ Rs. 2.50 per as fully paid bonus shares to the members of the
share (25%) for the financial year ended June 30, 2018. Company whose names will appear on the Register
This is in addition to interim dividend @ Rs. 3.50 per of Members as at the close of business on October
share (35%) already paid. 11, 2018 in proportion of one share for every ten
shares held (i.e. 10%), and that such shares shall rank
3. To appoint Auditors for the year 2018-19 and fix their pari passu in every respect with the existing ordinary
remuneration. shares of the Company.

4. Any other business with the permission of the Chair. FURTHER RESOLVED that the fractional entitlement of
the Members shall be consolidated into whole shares

06
and sold in the Stock Exchange. The sale proceeds
thereof shall be donated as deemed appropriate by the
Board.
09
Mari Petroleum Company Limited
Notice of Annual General Meeting Annual Report 2018

NOTES: The individual members or http://mpcl.com.pk/corp-forms. of income tax returns are therefore advised to ensure that their names are entered into ATL to enable the Company to
1. Book Closure representatives of corporate All those shareholders of the withhold income tax from payment of cash dividend @ 15% instead of 20%.
The Share Transfer Books of the members of the Company in Company in CDC who have
Company will remain closed from CDC must bring original CNIC also not provided their IBAN Further, according to clarification received from FBR, withholding tax will be determined separately on 'Filer/Non-
October 12, 2018 to October or Passport, CDC Account and bank account details are also Filer' status of Principal Shareholder as well as Joint-holder(s) based on their shareholding proportions in case of joint
18, 2018 (both days inclusive). Participant ID Numbers to prove requested to provide the same accounts held by the shareholders.
Transfers, in order, received at identity and verification at the to their Participants in CDC and
the Company's Shares Registrar, time of meeting. CDC account ensure that their IBAN bank In this regard, all shareholders who hold shares jointly are requested to provide the shareholding proportions of
M/s Corplink (Pvt) Limited, Wings holders will further have to follow account details are updated. In Principal Shareholder and Joint-holders in respect of shares held by them to our Shares Registrar, in writing as follows:
Arcade, 1-K Commercial, Model the guidelines as laid down in case of unavailability of IBAN, the
Town, Lahore, at the close of Circular No.1 dated January 26, Company would be constrained to MARI PETROLEUM COMPANY LIMITED
business on October 11, 2018 2000 issued by the Securities withhold dividend in accordance FORM OF JOINT SHAREHOLDING PROPORTION
will be treated as in time for and Exchange Commission of with the Companies (Distribution
Folio/CDC Names of Principal and Total Shareholding CNIC No.
the purpose to determine the Pakistan. of Dividends) Regulations, 2017.
Account No. Joint Shareholders Shares Proportion (Copy attached) Signatures

entitlement for the payment of


Final Dividend, issue of Bonus 3. Payment of Cash Dividend 4. Deduction of Income Tax from
Shares and to attend the Annual through Electronic Mode Dividend and Exemptions from
General Meeting (AGM). The provisions of Section 242 of deduction
the Companies Act, 2017 require The current prescribed rates for The joint accounts information must reach our Shares Registrar within 10 days of this notice. In case of non-receipt of
2. Attending AGM in person or that the dividend payable in the deduction of withholding tax the information, it will be assumed that the shares are equally held by Principal Shareholder and the Joint-holder(s).
through Proxy cash shall only be paid through under Section 150 of the Income
A member entitled to attend and electronic mode directly into Tax Ordinance, 2001 from payment The corporate shareholders of the Company in CDC are advised to ensure that their National Tax Numbers (NTNs) have
vote at the above meeting may the bank accounts designated of dividend by the companies are been updated with their respective Participants, whereas corporate physical shareholders must send a copy of their
appoint a person/representative by the entitled shareholders. as under: NTN Certificate with their Folio Numbers mentioned thereon to the Company or its Shares Registrar.
as Proxy to attend and vote Therefore, for making compliance
on his behalf at the Meeting. to the provisions of the law, all For filers of income tax returns: 15% Members seeking exemption from deduction of income tax or are eligible for deduction at a reduced rate are
The instrument of Proxy duly those physical shareholders who For non-filers of income tax returns: 20% requested to submit a valid tax certificate or necessary documentary evidence as the case may be.
executed in accordance with have not yet submitted their
the Articles of Association of the IBAN bank account details to The income tax is deducted from
Company must be received at the the Company are requested to the payment of dividend according
Registered Office of the Company provide the same on the Dividend to Active Tax-Payers List (ATL)
not less than 48 hours before the Mandate Form available on provided on the website of FBR. All
time of holding the meeting. Company website at those shareholders who are filers

08 Mari Seismic Crew at Work at Bannu West Block


11
Mari Petroleum Company Limited
Notice of Annual General Meeting Annual Report 2018

5. Consent for Video Conference


Facility
In accordance with Section
7. Transmission of Annual Audited
Accounts and Notice of Annual
General Meeting
For this purpose, we hereby give
you the opportunity to send us
your written request alongwith
Statement Under
132 (2) of the Companies Act,
2017, Members can avail video
The Company shall place the
financial statements and reports
your valid email ID to provide you
the same via email. Section 134(3) of the
Companies Act, 2017
conference facility for this Annual on the Company's website: http://
General Meeting at Karachi and mpcl.com.pk/investor-relations/ For the convenience of
Lahore, provided the Company financial-reports at least twenty shareholders, a Standard Request
receives consent from the one (21) days prior to the date of Form for the provision of Annual
members holding aggregate the Annual General Meeting. Audited Accounts has also been
10% or more shareholding and
residing at above locations, at As approved by the shareholders
made available on the Company's
website http://mpcl.com.pk/corp-
This statement sets Issue of Bonus Shares
least 7 days prior to the date of in Annual General Meeting held forms. out the material The Directors are of the view that the Company's financial position and its
undistributed reserves justify the capitalisation of free reserves amounting to
meeting. on September 27, 2016, Annual facts concerning the Rs. 110,250,000/- (One Hundred Ten Million Two Hundred Fifty Thousand Only)
Audited Accounts of the Company 8. Change of address
In order to avail video conference for the year ended June 30, Members are requested to notify Special Business, out of the Reserves of the Company available for appropriation as at June 30,
2018 be capitalised and applied for the issue of 11,025,000 (Eleven Million
facility and to vote through
e-voting, please fill the requisite
2018 are being dispatched to
the shareholders through CD.
the changes, if any, in their mailing
addresses to the Company's
given in agenda item Twenty Five Thousand) ordinary shares of Rs.10/- each as fully paid bonus
forms and submit to company However, in accordance with Shares Registrar as soon as No. 5 of the Notice shares in the ratio of one bonus share for every ten ordinary shares held (i.e.
10%). The Directors directly or indirectly are not personally interested in this
within the time frame mentioned Section 235 (1) of the Companies possible.
in the forms. The forms are Act, 2017, the shareholders may to be transacted issue except to the extent of their shareholding in the Company.
available in Annual Report-2018. request a hard copy of Annual
Audited Accounts, which shall
9. Contact Details
For any query/information,
at the 34th Annual Pursuant to Rule 6 (iii) of the Companies (Issue of Capital) Rules, 1996, the
6. E-Voting be provided free of cost within the shareholders may contact General Meeting of Auditors have certified that the Free Reserves retained after the issue of the
seven days of receipt of such Corporate Affairs Department, bonus shares will not be less than 15% of the enhanced Paid-up Capital after
Pursuant to SECP’s Companies
(E-Voting) Regulations, 2016, request. Further, in terms of SRO Phone: 051-111-410-410, Email:
the Company. the issue of 11,025,000 bonus shares of Rs.10/- each.
Members can also exercise their No 787(I)/2014 dated September info@mpcl.com.pk or to the By order of the Board
right to vote through e-voting by 8, 2014, shareholders can also Company’s Shares Registrar,
giving their consent in writing opt to obtain Annual Statement of M/s Corplink (Pvt.) Limited,
atleast 10 days before the date Financial Position and Statement Wings Arcade, 1-K Commercial,
of the meeting to the Company of Profit or Loss, Auditors' Report Model Town, Lahore. Phone:
on the appointment of Execution and Directors' Report etc. along 042-35916714, 042-35916719. Islamabad: Assad Rabbani
Officer by the Intermediary as with the Notice of the Annual Email: shares@corplink.com.pk or September 26, 2018 Company Secretary
Proxy. General Meeting through email. corplink786@gmail.com.

10
13
Mari Petroleum Company Limited
Annual Report 2018

COMPANY Profile
M
ari Petroleum is an integrated financial and operational performance and
exploration and production reporting but also for its management, HR,
company, currently managing HSE, and CSR practices.
and operating Pakistan’s largest gas
reservoir at Mari Gas Field, Daharki, Principal Business Activities
Sindh. MPCL is primarily an exploration and
production company in the upstream
With 18% market share, Mari Petroleum segment of the petroleum industry. Its
is the second largest gas producer in the principal business activities include oil and
Country with cumulative daily production gas exploration, drilling, field development,
of 100,000 barrels of oil equivalent. production and distribution of hydrocarbons
(including natural gas, crude oil, condensate
The Company’s exploration and and LPG) as well as provision of E&P related
production assets are spread across services on commercial basis.
all the four provinces of Pakistan. The
Company enjoys the highest exploration Major Brands, Products
success rate of 70%, much higher than and Services
industry average of 33% (national) and MPCL is a major producer of natural gas.
14% (international). At the same time, it It also produces crude oil, condensate and
is the most cost efficient E&P Company LPG. All the products of the Company are
in the Country with lowest operational generic and are supplied to midstream
cost of only 10% of the gross sales. and downstream customers without any
specific brand name. The Company also
The Company plays a pivotal role in provides 2D/3D seismic data acquisition,
ensuring food security of Pakistan as seismic data processing, drilling rigs and
around 80% urea production in the allied services.
Country is based on MPCL supplied
gas. The Company also supplies gas Major Customers/Markets
for power generation and domestic The gas produced by the Company is
consumers. supplied to fertiliser manufacturers, power
generation and gas distribution companies,
To its credit, Mari Petroleum has while crude oil and condensate are supplied
the unique record of maintaining to the refineries for further processing. The
uninterrupted gas supply to its Company only caters to local customers
customers from Mari Field for the last with no activity in the export market.
fifty years without availing even the
permitted outages. Ownership, Operating Structure and
relationship with Group Companies
Mari Petroleum is an ISO certified Mari Petroleum is a Public Limited Company
Company for Quality, Environment, operating in the Private Sector. The
Information Security, Occupational Health Management of the Company is vested in
& Safety and has achieved Advanced Fauji Foundation. The Company is listed
Level in ISO Certification for Social on Pakistan Stock Exchange with current
Responsibility. market capitalisation of around Rs. 170
billion. Major Shareholders of the Company
MPCL has emerged as a blue-chip include Fauji Foundation (40%), Government
company at the stock exchange. During of Pakistan (18.39%), OGDCL (20%), and
the last two years, the Company also General Public (21.61%). All Fauji Foundation

12
won a number of awards from various group companies as well as OGDCL are the
independent bodies not only for its associated companies of MPCL.
15
Mari Petroleum Company Limited
Annual Report 2018

OUR History
M
ari Gas Field was originally 40%, 40%, and 20% shareholding, In 2001, the Company achieved a other E&P companies. However, in by MPCL Management, a major and avail gas price incentive on
owned by Pakistan Stanvac respectively. The Company took new milestone when it was granted a 2013 the Company decided to set-up milestone was achieved in November incremental field production offered
Petroleum Project, a joint over the assets, liabilities and license for exploration of oil and gas, a services division comprising of a 2014, when Economic Coordination in 2012 Petroleum Policy.
venture formed in 1954 between operational control of Mari Gas Field in addition to the production activities. 2D/3D seismic data acquisition unit, Committee of the Cabinet approved
Government of Pakistan and M/s and commenced business in its own Since then, MPCL has emerged as a 2D/3D seismic data processing dismantling of Mari GPA and its Mari Field marked its Golden Jubilee
Esso Eastern Incorporated, having name in 1985 under the Mari Gas a successful E&P company with a centre and a fleet of three on-shore replacement with an international on December 22, 2017. These were
49% and 51% ownership interests, Wellhead Price Agreement (Mari proven track record in the field of drilling rigs. Thus, MPCL became a crude oil price linked market 50 years of meticulous operations
respectively. The first gas discovery GPA). exploration and production. fully integrated E&P company in the oriented formula. Dismantling of Mari and true professionalism as
was made by the Joint Venture in Country. GPA has allowed the Company to evidenced by uninterrupted supply
1957 when the first Well in lower In 1994, the Government divested The Company has grown from the operate on commercial terms and of hydrocarbons to the Company’s
Kirthar ‘Zone-B’ Limestone Formation 50% of its share and the Company sale of natural gas from an inherited In 2014, an extension of five years become competitive to realise its full downstream customers.
was drilled. Production from the field became listed on all the stock field, to the exploration, production, in Mari lease period was approved potential.

2018
started in 1967. In 1983, M/s Esso exchanges of Pakistan. and sale of gas, oil and other by the Government, extending
Eastern sold its entire share to the petroleum products from a number of the development and production In October 2015, the Company
Fauji Foundation. Consequently, it was The Company operated only as a fields in all the provinces of Pakistan. rights in the Lease Area till 2019. opted for conversion of Mari D&P
decided to set up a wholly owned gas production company and was The name of the Company was The extension has enabled MPCL to lease to 2012 Petroleum Policy to Golden Jubilee of
Public Limited Company for the engaged in developing the already changed from “Mari Gas Company enhance the recovery and produce avail the price incentives offered un-interrupted gas
purpose of acquiring the assets and discovered Habib Rahi Reservoir in Limited” to “Mari Petroleum Company more natural gas, which is critically by the Government on production supply from Mari Field
liabilities of the Project. Mari Gas Field for supply of gas to Limited” (MPCL) in November 2012, needed in the Country. enhancement initiatives.
new fertiliser plants. The Company to reflect its diversified business
In 1984, Mari Gas Company Limited pursued appraisal activities within its operations and expanded activities. Since its inception, the Company In February 2016, MPCL became
(MGCL) was incorporated with Fauji Mari D&P Lease area by drilling step- had been operating on a cost-plus the first Pakistani E&P Company
Foundation, Government of Pakistan out wells to determine the extent of The Company had been outsourcing fixed-return formula under Mari GPA to implement its incremental gas
and OGDCL as its shareholders having Habib Rahi Reservoir. seismic and drilling business like 1985. Pursuant to consistent efforts production project (Mari Field)

1984
Business reorganised
2001
Entry into oil and gas
2016
• Start of Incremental
and incorporated as exploration
Production from
Mari Gas Company
Mari Field
Limited
• Conversion of Mari
Field to 2012 Petroleum

2012 2014
Policy

1957
MGCL renamed as Mari GPA dismantled
Mari Petroleum and replaced with
Company Limited a market-oriented

1967 1994
formula
Mari Field

1983
discovered by
Esso Eastern with
original gas in place Production of natural Listing on all Stock
estimated at 2.38 gas commenced Exchanges of
TCF, later enhanced Pakistan
to 10.751 TCF Fauji Foundation,
OGDCL & GoP
acquired Esso’s entire

14
operations, including
Mari Gas Field
17
Mari Petroleum Company Limited
Annual Report 2018

KEY Financials
2017-18 2016-17
REVENUES PROFIT

15,374
100,602
95,898
96,189
Revenues Rupees in million 100,601.62 96,188.65 (Rupees in million) (Rupees in million)

88,792
Net sales Rupees in million 40,676.37 28,175.49

70,571

9,136
Profit for the year Rupees in million 15,374.34 9,136.19
Dividend Percentage 60* 52

6,051
5,650
Property, plant and equipment - at cost Rupees in million 22,345.12 20,315.85

2013-14 3,943
Number of shares issued and subscribed Shares in million 110.25 110.25

2013-14
2014-15
2015-16
2016-17
2017-18

2014-15
2015-16
2016-17
2017-18
* Final dividend of 25% for the year ended June 30, 2018 has been proposed by the Board of Directors for approval of the members in Annual General Meeting to be held on October 18, 2018.

best ever GAS OIL

257
Financial Year 2017-18 was the in the history of the Company in terms of

554,081
543,820
244
(BSCF) (Barrels)

232
Production and Profitability.

225
217

472,413
414,433
APPLICATION OF EQUITIES AND

2013-14 175,312
REVENUES EARNED LIABILITIES
2017-18 2017-18

2013-14
2014-15
2015-16
2016-17
2017-18

2014-15
2015-16
2016-17
2017-18
Gas infrastructure development cess 40.70% Current liabilities 66.60%
Other charges 1.70% Issued, subscribed and paid-up capital 0.77%
General sales tax 13.70% Undistributed percentage return reserve 0.43%
SHARE PRICE

1,575.6
Operating expenses 11.70% Other reserves 8.46%

1,506.2
Exploration & prospecting expenditure 4.30% Deferred liabilities 5.51% (Rupees)
Royalty 6.10% Profit and loss account 18.23%
Taxation 5.80%

908.2
Finance cost 0.70%
Excise Duty 2.20%
Gas development surcharge 12.90%

468.6
2013-14 373.4
Other Comprehensive loss 0.20%

2014-15
2015-16
2016-17
2017-18
ASSETS HUMAN RESOURCE
2017-18 2017-18
Current assets 79.35% Management 478
Property, plant and equipment 9.20% Non-Management 675
Long term loans & advances 0.03% Trainees 34
Development and production assets 8.25%
Long term deposits & prepayments 0.04% The above manpower includes 51 female employees
Exploration and evaluation assets 1.87% (4% higher than last year)
Deferred income tax asset 1.26%

16
19
Mari Petroleum Company Limited
Annual Report 2018

OUR Vision OUR Mission


M T
PCL envisions becoming an international o enhance exploration and production by exploiting
integrated exploration and production company breakthroughs in knowledge and technological innovations,
by enhancing its professional capacity through adopting competitive industrial practices to adequately
highly knowledgeable and talented workforce that builds replenish the produced reserves and optimising production
its petroleum reserves by consistently discovering more for maximising revenues and return to the shareholders whilst
than what it produces within Pakistan and abroad; and maintaining the highest standards of HSE and CSR.
improving financial capacity and profitability through
efficient operations, while taking environmental safeguards
and catering to social welfare needs of the communities
inhabiting the area of operations.

18
21
Mari Petroleum Company Limited
Annual Report 2018

OUR Commitments QUALITY Policy IMS Policy

I T
n order to ensure that our products and services o realise our strategic vision and to achieve professional excellence in petroleum sector, we are
are of the highest quality, we engage skilled committed to meet requirements of Integrated Management Systems for Quality, Environment,
• Providing uninterrupted and qualified personnel, employ state of the art Occupational Health & Safety and Information Security consistent with internationally recognized
technology and adhere to the best industry practices. management system standards. We are devoted to maintaining effectiveness and continual improvement
petroleum products
We have implemented a quality management system of IMS by monitoring Company objectives, customer satisfaction and complying with the legal and other
supply to customers. to ensure that all our operations and activities are in applicable requirements. Our top management is committed to provide all resources required to ensure
line with the requirements of ISO 9001:2008 (Quality compliance with its IMS Policy and to attain best international performance criterion.
• Maintaining best and safe Management System).
operational practices.

• Adopting advanced
technology, cost effective/
efficient operations,
increasing operating
efficiency and adherence
to high environmental
standards.
Significant
• Exploring and enhancing
the potential of our
human resource.
Changes
FROM PRIOR YEARS
• Aligning the interests of

T
our shareholders, human here have been no
resource, customers and significant changes
other stakeholders to from prior years
create significant business except that the term
“integrated” has been
value characterised by
added after the term
excellent financial results, “international” in the
outstanding professional Vision Statement duly
accomplishments and approved by the Board of
superior performance. Directors.

20 MD MPCL Visiting Zarghun Gas Field, Balochistan


23
Mari Petroleum Company Limited
Annual Report 2018

CODE OF Conduct

MPCL employees gathered to pay tribute to the Father of the Nation on his Death Anniversary

T
he Code of Conduct sets out Compliance with Laws, the Company shall ensure that they Health, Safety & Environment will not have any adverse effects Company’s business practices and
the Company’s objectives and Directives & Rules adopt efficient and productive time The Company, its Directors and on the Company and such activities Code of Conduct. They must commit
its responsibilities to various Compliance shall be ensured with management schedules. employees will endeavour to exercise must be within the legally permissible to individual conduct in accordance
stakeholders and the ethical standards all applicable laws, regulations, a systematic approach to health, limits. with the Company’s business
required from its Directors and directives, and rules including those Business Integrity safety and environmental management practices and Code of Conduct and
employees to meet such objectives issued by the Board of Directors and The directors and employees will in order to achieve continuous Equal Employment Opportunity observe both the spirit and the letter
and responsibilities. management. strive to promote honesty, integrity performance improvement. It is the policy of the Company to of the Code in their dealings on the
and fairness in all aspects of its provide employment opportunities Company’s behalf.
Financial Disclosure Confidentiality business and their dealings with Involvement in Politics without regard to race, gender,
All transactions should be accurately Confidentiality of the Company’s vendors, contractors, customers, joint Company shall not make payments or religion, color, age or disability subject Accountability
reflected according to accounting internal confidential information venture participants and Government other contributions to political parties to suitability for the job. Failure to adhere to the Company’s
principles in the books of accounts. must be maintained and upheld, officials. and organisations. Employees must business practices or Code of
Falsification of its books, any of which includes proprietary, technical, ensure that if they elect to take part Compliance Conduct may result in disciplinary
the recorded bank accounts and business, financial, joint venture, Gifts, Entertainment in any form of political activity in their All Company Directors and employees action, which could include
transactions are strictly prohibited. customer and employee information & Bribery spare time, such activity does not and must understand and adhere to the dismissal.
that is not available publicly. The directors and employees shall not

Culture AND CORE Values


Conflict of Interest give or accept gifts, entertainment,
The Directors and employees of the Conduct of Personnel in Dealings or any other personal benefit or
Company must recognise that in the
course of performing their duties, they
with Government Officials
The Company shall deal with the
privilege that could influence business
dealings.
CORPORATE
may be out into a position where there Government officials fairly and
is a conflict in the performance of honestly and within the ambit of the Insider Trading
such duty and a personal interest they applicable laws, in order to uphold the Every director and employee who has
may have. It is the overriding intention corporate image of the Company. knowledge of confidential material Innovative Goal Driven Ethics and Loyalty and Professional
of the Company that all business information is prohibited from trading Solutions Teamwork Transparency Commitment Excellence

22
transactions conducted by it be on Time Management in securities of the Company to which
arm’s length basis. The Directors and the employees of the information relates.
25
Mari Petroleum Company Limited
Annual Report 2018

PROFILE OF Board of Directors

Lt Gen Syed Tariq Nadeem Gilani (Retd) Lt Gen Ishfaq Nadeem Ahmad (Retd) Mr Qaiser Javed Dr Nadeem Inayat Maj Gen Javaid Iqbal Nasar (Retd) Brig Raashid Wali Janjua (Retd)
Managing Director, Fauji Foundation Managing Director/CEO Director Finance Director Investment Director Welfare (Health) Director P & D
Chairman MPCL Board Mari Petroleum Company Limited Fauji Foundation Fauji Foundation Fauji Foundation Fauji Foundation

Lt Gen Syed Tariq Nadeem Gilani (Retd) Lt Gen Ishfaq Nadeem Ahmad (Retd) is Mr. Qaiser Javed joined MPCL Board on Dr. Nadeem Inayat joined MPCL Board Maj Gen Javaid Iqbal Nasar (Retd) joined Brig. Raashid Wali Janjua (Retd) joined
joined MPCL Board on January 10, 2018 and an accomplished professional with an October 15, 1999. He is a non-executive on September 18, 2006. He is a non- MPCL Board on February 12, 2018. He is a MPCL Board on April 19, 2016. He is a
was elected as its Chairman. illustrious career spanning over 40 years. Director and member of the Audit executive Director and member of the non-executive Director and member of the non-executive Director and President
He has held various prestigious positions Committee. HR&R Committee. He is also on the Boards Board’s Technical Committee. He is also of the Technical Committee. He is also
He is the Managing Director of Fauji
within the Pakistan Army including, of Fauji Fertilizer Co Ltd, Fauji Fertilizer on the Boards of Fauji Fertilizer Company on the Boards of Fauji Fertilizer Co Ltd,
Foundation, Fauji Oil Terminal & Distribution He is a Fellow Member of the Institute
most notably, Chief of General Staff, Bin Qasim Ltd, Fauji Cement Company Ltd, FFC Energy Ltd, Fauji Fresh n Freeze Fauji Fertilizer Co Energy Ltd, FFBL
Company Ltd and the Chairman on the of Chartered Accountants of Pakistan
Director General Military Operations and Ltd, Fauji Akbar Portia Marine Terminals Ltd, Fauji Kabirwala Power Company Ltd. Power Co Ltd, Fauji Cement Co Ltd,
Boards of Fauji Fertilizer Bin Qasim Ltd, and Institute of Taxation Management of
Commander of a Strike Corps. (Pvt.) Ltd, Fauji Oil Terminal & Distribution Fauji Akbar Portia Marine Terminal (Pvt)
Fauji Fertilizer Company Ltd, Fauji Cement Pakistan. He is the CEO of Daharki Power
Company Ltd, Askari Cement Ltd, Daharki He is a Graduate of Command and Staff Ltd, Foundation Power Co Daharki Ltd,
Company Ltd, Askari Cement Ltd, Askari Known for his candid opinions, he is a Holdings Ltd. He is also on the Boards of
Power Holdings Ltd, Pakistan Maroc College Quetta and National Defence Foundation Wind Energy-I Ltd, Foundation
Bank Ltd, Fauji Kabirwala Power Company critical and creative thinker and capable Fauji Fertilizer Co Ltd, Fauji Fertilizer Bin
Phosphor S.A., Foundation Wind Energy-I University, Islamabad. He also holds a Wind Energy-II (Pvt) Ltd, Fauji Power
Ltd, Fauji Trans Terminal Ltd, Foundation of making strategic decisions in complex Qasim Ltd, Fauji Cement Company Ltd,
Ltd, Foundation Wind Energy-II (Pvt.) Ltd, Master’s Degree in War Studies from Company Ltd and Fauji Infraavest Food
Power Company Daharki Ltd, Daharki and uncertain environment for achieving Fauji Kabirwala Power Company Ltd, Fauji
Fauji Fresh n Freeze Ltd, Fauji Foods Ltd, Quaid-e-Azam University, Islamabad. Ltd.
Power Holdings Ltd, FFC Energy Ltd, sustainable results. He has been the Oil Terminal and Distribution Company
Fauji Meat Ltd, FFBL Power Company Ltd,
Foundation Wind Energy-I Ltd, Foundation architect of several critical assignments Ltd, Foundation Power Company Daharki
Askari Bank Ltd, Fauji Infraavest Foods Ltd, He was commissioned in the Army in He is a graduate of Command and Staff
Wind Energy-II (Pvt) Ltd, Fauji Akbar Portia carried out by the Pakistan Army for Ltd, Fauji Akbar Portia Marine Terminal
Foundation University and Noon Pakistan October 1979 and held various prestigious College, Quetta and National Defense
Marine Terminals (Pvt) Ltd, Fauji Meat Ltd, securing the Country’s defence. (Pvt) Ltd, FFC Energy Ltd, The Hub Power
Ltd. command and staff positions. University, Islamabad. He holds a Civil
Fauji Foods Ltd, FFBL Foods Ltd, FFBL Company Ltd, Laraib Energy Ltd, Askari
Gen Ishfaq is well versed with energy Engineering Degree from Military College
Power Company Ltd, Fauji Fresh n Freeze Bank Ltd, Askari Cement Ltd, Fauji Fresh
security vis-à-vis conventional and He is also on the boards of different public In recognition of his outstanding services, of Engineering and Master’s Degree in
Ltd, and Fauji Infraavest Foods Ltd. n Freeze Ltd, Fauji Foods Ltd, Fauji
alternate energy sources, management sector universities and has conducted he was awarded Hilal-e-Imtiaz (Military). Security and Defense Management from
Meat Ltd, FFBL Power Company Ltd,
He was commissioned in Pakistan Army on of national resources, management of various academic courses on Economics, Royal Military College Kingston, Canada.
Foundation Wind Energy-I Ltd, Foundation
26 Oct 1979 with the coveted President’s change at strategic institutions, and International Trade and Finance at
Wind Energy-II (Pvt.) Ltd and Noon
Gold Medal. During his illustrious career, negotiations and contracting at the reputable institutions of higher education He has a diversified civil engineering
Pakistan Ltd. He also serves as President
he commanded a brigade, division and a highest levels. He holds M.Sc. degree in in Pakistan. He is also a member of project management experience,
Audit Committees of many of these
Corps. He has also held the prestigious National Resource Strategy from Industrial Pakistan Institute of Development spanning over 32 years. In his capacity
organisations.
appointments of Commandant Armed College of Armed Forces (USA) and M.Sc. Economics. as Director Works and Chief Engineer
Forces War College, NDU, Islamabad degree in War and Strategic Studies from Navy, he planned and executed major
and Chief of Logistics Staff at General National Defence University Islamabad. He holds a Doctorate in Economics civil engineering projects at Karachi,
Headquarters. He also served in Saudi He is also a graduate of Command and and has over 28 years of diversified Lahore, Islamabad and the coastal belt,
Arabian Armed Forces from 1983 to 1985 Staff College, Quetta and Joint Services experience in corporate governance, in close coordination with the Engineer-
on secondment from Pakistan Army. He Command and Staff College, UK. policy formulation and deployment, in-Chief’s Branch. He also has extensive
is a graduate of US Army Artillery School, project appraisal, implementation, experience of working with diverse
He is an avid reader and a keen sportsman
Fort Sill Oklahoma, Command and Staff monitoring & evaluation, restructuring and national and international aid agencies on
with special interest in hockey and tennis.
College Camberley (UK), Armed Forces War collaboration with donor agencies. reconstruction and rehabilitation projects
College NDU Islamabad, and US Army War Gen Ishfaq assumed the charge of in earthquake stricken areas.
College, Carlisle Barracks, Pennsylvania. Managing Director/CEO of MPCL on
He holds Master’s degrees in War Studies January 26, 2017.
from Quaid-e-Azam University, Islamabad
and Strategic Studies from US Army War

24
College, USA.
In recognition of his meritorious services,
he was awarded Hilal-e-Imtiaz (Military).
27
Mari Petroleum Company Limited
Profile of Board of Directors Annual Report 2018

Mr Sajid Mehmood Qazi Qazi Mohammad Saleem Siddiqui Mr Shahid Yousaf Mr Zahid Mir Mr Ahmed Hayat Lak Mr Manzoor Ahmed
Joint Secretary Director General (Petroleum Concessions) Director General (Gas) Managing Director / CEO GM (Legal Services) Managing Director / CEO
Ministry of Energy Ministry of Energy Ministry of Energy Oil & Gas Development Company Limited Oil & Gas Development Company Limited NITL

Mr. Sajid Mehmood Qazi joined MPCL Qazi Mohammad Saleem Siddiqui joined Mr. Shahid Yousaf joined MPCL Board Mr. Zahid Mir joined MPCL Board on April Mr. Ahmed Hayat Lak joined MPCL Board Mr. Manzoor Ahmed joined MPCL Board
Board on March 26, 2018, representing MPCL Board on October 11, 2012, on September 10, 2015, representing 24, 2015, representing OGDCL. He is a on June 26, 2014, representing OGDCL. He on September 25, 2017, representing
shareholding interest of Government of representing Government of Pakistan. He Government of Pakistan. He is a non- non-executive Director and member of is a non-executive Director and member shareholding interest of General Public
Pakistan. He is a non-executive director is a non-executive Director and member executive Director and member of the the HR&R and Technical Committees. of the Audit Committee. (Minority Shareholders). He is a non-
and member of the Board’s Technical of the Technical Committee. Audit Committee. He possesses around executive director and a member of
Committee. 27 years of professional experience and A Petroleum Engineer by profession, he He holds a Master’s Degree in Law Board’s Audit Committee.
He graduated from Mehran University of has remained involved in new refineries possesses over 27 years of experience from University of Wolver Hampton and
He joined Civil Services of Pakistan in Engineering and Technology, Jamshoro and oil infrastructure projects and has in the oil and gas industry, having been Bachelor Degree in Law (Honors) from He assumed the position of Managing
1995. He was exposed to the working with a degree in Mechanical Engineering. overseen the execution of more than one involved at a senior level in all stages University of London, United Kingdom. Director NITL on September 14, 2017.
of Ministries of Economic Affairs, thousand gas expansion projects in the of onshore and offshore upstream He is also the Chief Operating Officer of
Commerce & Textile and Narcotics Control He remained associated with the sugar Country. He was also involved in looking operations. He has extensive experience He previously served in Pakistan Oilfields NITL for the last 7 years and has been
and has served at crucial positions in industry for about five years before joining after policy related work pertaining to the in oil and gas commercial negotiations Limited as Head of their Corporate and successfully managing the investment
Supreme Court of Pakistan and National Government service in November 1990. import of LNG/LPG. and business development, strategy, joint Legal Services Department. He also portfolio worth over Rs. 100 billion.
Accountability Bureau. He has also Since then, he has held various positions ventures and license management, new worked in the National Accountability
performed the duties of a diplomat at in the Ministry of Petroleum and Natural Mr. Shahid Yousaf holds a Master’s ventures, economic evaluations, mergers Bureau as Advisor to the Chairman and as He possesses over 28 years of experience
Pakistan’s Consulate in Manchester, UK, Resources. Degree in Geology with specialisation and acquisitions and HSE. Consultant in the Office of the Prosecutor of mutual fund industry and has held
as Counsellor Community Affairs. Before in Petroleum Infrastructure. In addition, General. many key positions within NITL pertaining
joining the Ministry of Petroleum, he Mr. Siddiqui is also a Director on the Board he has attended numerous local and He has significant exposure to field to capital market operations, investments,
was working as Director General in the of Sui Southern Gas Company Limited. foreign courses and trainings pertaining to operations including production, project research and liaison with industry bodies
Overseas Pakistanis Foundation. petroleum projects and management, gas development, development planning, and regulatory authorities.
pipelines and LNG projects. conceptual engineering and operational
Mr. Qazi has strong interest in Economics, support. He holds an M.B.A. degree and a D.A.I.B.P.
Public Administration and Law. He earned diploma. At present, he is a candidate
LLM from Warwick University, UK as a Mr. Zahid Mir holds B.Sc. Degree in of CFA Level III. He is a certified director
Chevening Scholar. He is an avid reader Petroleum Engineering from University of from Pakistan Institute of Corporate
of contemporary history and also follows Engineering and Technology, Lahore and Governance. He has also attended various
his passion of hiking and landscape an MBA Degree from Preston University, training courses organised by locally and
photography in his leisure time. Islamabad. internationally reputed institutions like
London Business School, UK and Financial
Markets World, USA.

He represents NITL on the Boards of


many leading national and multinational
companies.

26
29
Mari Petroleum Company Limited
Profile of Board of Directors Annual Report 2018

Organogram

EXTERNAL
SHAREHOLDERS
AUDITORS

Engr S.H. Mehdi Jamal Mr Muhammad Asif Mr Assad Rabbani


Member GM Finance / Chief Financial Officer GM Corporate Affairs / Company Secretary
MPCL Board of Directors Mari Petroleum Company Limited Mari Petroleum Company Limited

Engr. S.H. Mehdi Jamal joined MPCL Mr. Muhammad Asif is a Fellow Member Mr. Assad Rabbani is a Fellow Member of
Board on June 24, 2013 and represents of the Institute of Chartered Accountants the Institute of Chartered Accountants BOARD OF
General Public Shareholding. He is a of Pakistan with over 27 years of of Pakistan with over 20 years of DIRECTORS
non-executive, independent Director professional experience with reputable professional experience with reputable
and President of the Audit and HR&R organisations in Pakistan and abroad. national and international organisations.
Committees.
He is a Certified Internal Auditor from the He joined MPCL in 2003 and was
He holds a Bachelor of Engineering (Civil) Institute of Internal Auditors, USA and appointed Company Secretary in 2005.
Degree from NED Engineering University, a Diploma Associate of the Institute of Previously, he worked in Hydro Power
Karachi. He possesses diverse civil Bankers in Pakistan. and Textile sector. AUDIT HR&R TECHNICAL
engineering experience spanning over 38 COMMITTEE COMMITTEE COMMITTEE
years including more than eleven years He has attended numerous courses and He has also attended numerous courses
in Corps of Engineers, Pakistan Army. He trainings on Financial Management, Audit and trainings in Pakistan and abroad on
also served on secondment with Pakistan & Risk Management and Leadership Corporate Governance, Leadership and
Air Force, Kingdom of Saudi Arabia and on & Business Strategy from renowned Strategy, Upstream Economics & Risk
deputation with Port Qasim Authority. His institutes in Pakistan and abroad, Analysis, and Infrastructure Regulations
last appointment was as Deputy Surveyor including Harvard Business School. & Reforms.
General of Pakistan. He has been also a GM
member of the Local Council of Institute Corporate MANAGING
Affairs/ DIRECTOR
of Engineers, Rawalpindi from 2010 to Company
2013. Secretary
administrative relationship
functional relationship
external reporting

GM
Business GM GM GM Resident
GM GM GM GM GM GM
Finance Operations Exploration Reservoir Development & Procurement Human Admin & Mari Services
Resource Security Division Balochistan
Commercial

Head of Sr. Manager Regional


Information Manager
Internal Manager Projects Manager
Audit HSE Technology Sindh

28
31
Mari Petroleum Company Limited
Annual Report 2018

Chairman's REVIEW

M
PCL has a diverse and The essence of the performance of a proposals, the Board successfully
balanced Board which business unit is aptly reflected by its guided the Management to the
not only represents the financial performance and common approval of a power plant
shareholders proportionately but industrial indicators. In reviewing
also covers the related fields of the financial performance of the In concluding my brief review, I
its core business through a mix MPCL, the Board took cognisance want to especially compliment the
of professional expertise. The of other E&P companies operating MD MPCL for his untiring efforts,
institutional directors have been in the Country for identifying areas extraordinary commitment and
appointed for specific expertise requiring improvement and further visionary leadership of the Company
which is invaluable for overall consolidation. The Board noted to meet the expectations of the
Board performance. They also bring with appreciation the record setting shareholders.
into the Board resourcefulness, production of natural gas, the
diverse experience as they sit on principal commodity of MPCL, during I also express my deep gratitude
the boards of other business units the year of the highest ever output to the shareholders for reposing
of the Fauji Foundation, OGDCL and of 770 Million Cubic Feet of gas on confidence in me, the Board of
the Government of Pakistan. The January 30, 2018 and the highest daily Directors and the Management
Board Members bring into effect an average of 713 Million Cubic Feet of the MPCL for their cooperation
extraordinary blend of leadership, of gas during the year. This enabled and commitment for ongoing
finance, economics, engineering, legal, MPCL to achieve an increase in profit improvements.
corporate law, oil & gas exploration after tax of 68.28%. The Company has
and production disciplines, business been offering the highest dividend
management skills and experiences to the shareholders within the
covering adequately all areas of constraints of the conditions of the
MPCL’s business undertakings. dismantling of the Mari Gas Pricing
Agreement concluded in 2014.
I have urged the Board Members to
meticulously prepare for the agenda The Company has been alert to Lt Gen Syed Tariq Nadeem Gilani
items to initiate objective and the emerging trends in clean HI (M), (Retd)
in-depth discussion leading to energy driven by concerns with Chairman
optimum decision making. The carbon emissions resulting from MPCL Board of Directors
Management responds to the Board the combustion of fossil fuels. They
in proportion to the quality and have sensed the stress that may
objectivity of its deliberations and I come on upstream oil and gas
observed with satisfaction that the business for mitigation measures
queries and guidance of the Board on one hand and diversification of
Members improved the performance business activities on the other. While
of the Management. critically evaluating the diversification

30
33
Mari Petroleum Company Limited
Annual Report 2018

Managing Director's OUTLOOK

J
oining MPCL in January 2017, I beverage industry. This possibility was the perceived security threats as
reset the strategic direction of advanced during the year through a the previous operators had not been
the MPCL management on a feasibility study for taking the final able to undertake any work in the
steeper trajectory by building on the investment decision targeting the field. It gives me great satisfaction
achievements of my predecessors. start of commercial production during in reporting that the Company
The E&P industry globally had gone Summer of 2019. initiated a fast-track exploration
through a financial challenge of drive in the strategic Bannu West
reduced revenues from the sale Apart from the global challenges Block and Mari’s own Seismic Unit
of produced oil and gas due to the faced by the E&P industry, we successfully completed 98 line
2015 oil price plunge. The price continued to experience critical kilometer of 2-D seismic survey
shock, the ongoing developments of shortage of new exploration acreages covering the identified exploration
alternative fuel and greater threats of because of an ongoing delay in the leads. Based on the interpretation of
carbon emissions motivated the E&P Government's Bidding Rounds. MPCL this data, an exploration well site has
companies to assess the rising stress was specially affected in view of been selected for drilling during the
on their core business for prudent our aggressive exploration targets following year. For more drilling sites,
diversifications for augmenting rendered possible by our greater a large 3-D seismic survey covering
the revenues and supporting the
objectives in exploration and
production. Accordingly, the Company
succeeded in obtaining the approval
of the Mari Board for proceeding
with technical/commercial feasibility
of a 180 MW power plant based on
the low heating value gas produced
by it. Another area of diversification
business that MPCL had been
visualising related to the commercial
production of food quality liquid
carbon dioxide for sale to the

earnings after lifting of the Gas Price 672 sq km has been undertaken in
Agreement (GPA) constraints. The the Block which is progressing well.
Company farmed into selected blocks Preparations have also been initiated
held by other companies within the for start of field work in Block-28 that
Country and is reviewing promising remained dormant for nearly three
opportunities for farming into decades. It may be mentioned that
exploration and production assets operatorship of both these blocks
abroad. We succeeded in securing was given to the MPCL in view of its
partnership along with operatorship unmatched track record of successful
Lt Gen Ishfaq Nadeem Ahmad
HI (M), (Retd) in promising blocks of Bannu West in operations in security sensitive areas
Managing Director/CEO KPK and Block-28 in Balochistan. It of Balochistan and KPK especially the

32
is worth noting that both the blocks Waziristan.
had remained dormant because of
35
Mari Petroleum Company Limited
Managing Director's Outlook Annual Report 2018

locations within the field. A new historical benchmark of 770 MMSCF edge to MPCL compared with most operational requirements effectively
drilling campaign was therefore gas from all fields on 30 January 2018. E&P companies in the Country. It is but also enable it to compete for
initiated and the first two wells were MPCL climbed another new high essentially because of our in-house opportunities of business of other
drilled before the end of the year. of average daily production of 713 services capability that we are able E&P companies.
The Company will continue to take MMSCFD gas during 2017-18 besides to pursue ambitious exploration
appropriate measures for optimising daily production of 1,910 barrels of and drilling programmes and have Financial performance and business
the remaining production from the oil and 410 barrels of condensate. been successful in developing a growth remain as the most crucial
principal asset. Our gas production capacity has now comprehensive five year exploration factors of success for a commercial
increased to over 900 MMSCFD and schedule. entity. MPCL achieved a new
MPCL accords highest priority to during the coming year our actual benchmark when its gross sales
enhanced gas production for availing production is expected to cross 775 MSD is now running in green despite crossed the Rs. 100 billion level
the substantially higher incremental MMSCFD which will make MPCL providing for the depreciation of the during the year and the net profit
gas price. It achieved a significant the second largest gas producing expensive equipment cost. Seeing the increased by 68.28% to a record
success when the Government company in the Country. overriding advantage, MPCL has now level of Rs. 15.4 billion. Dividend to
Regulator accepted our arguments taken a decision to raise, equip and the Shareholders also increased by
for not depriving the Company of A far-reaching decision by my operationalise the second seismic 8% to 60%.
the incremental price benefit when predecessors of creating an in- data acquisition crew. This will not
the clients were not able to accept house Mari Services Division (MSD) only enable MSD to meet our own
In addition, the Company achieved Nearly 87% of MPCL’s production the gas owing to the shutting down with adequate drilling, seismic
major breakthroughs in acquiring 30% of gas comes from the Mari Habib of plants during the annual turn data acquisition and processing
working interest share in Kalchas Rahi Lime Stone reservoir which has arounds. Accordingly, the benchmark capabilities continues to give an
Block (Balochistan and Punjab), 30% been in uninterrupted production threshold was reduced from 577.5
additional working interest in Ghauri for over 50 years. Like any other to 525 MMSCFD during the declared
Block (Punjab), 25% in Bela West field, it is now declining in produced annual turnarounds, which resulted
Block (Balochistan) and 13.33% in volume and surface pressure. The in our qualifying for the incremental
Kohat Block (KPK). These acquisitions projected plateau of the committed price for the incremental production
have enabled MPCL to launch an sale volume of 640 MMSCFD was to for 337 days out of the 365 days
even more aggressive exploration end in February 2019. The Company during the year. The total volume
programme for discovery of larger undertook an in-house research of the incremental gas during the
deposits of oil and gas to arrest the based on the proven simulation year amounted to 27,797 MMSCF
historical trend of depleting reserves. model of the HR reservoir which adding Rs. 10.5 billion to annual
The Company has concluded MOUs led to the extension of the plateau revenue which at normal price would
with three international companies period of the enhanced production have been only Rs. 2.63 billion. Our
including MOL (Hungary), KUFPEC level of 650 MMSCFD by over 4 years relentless efforts in increasing the
(Kuwait) and PGNiG (Poland) for up to July 2023 through drilling of production of oil and gas led to an
strategic cooperation and joint 19 additional infill wells at selected
evaluation of business opportunities
with Pakistan and abroad.

Zarghun Gas Field, Balochistan

34
37
Mari Petroleum Company Limited
Managing Director's Outlook Annual Report 2018

An exploration well Tipu-1, in Mari by the South Asian Federation of meticulous efforts we achieved the and exposed a larger number of project the image of the Company. demand of beverage in the coming
D&P area, resulted in a substantial Accountants, First Position Award for best ever Total Recordable Case professionals to training within the 127 interns from leading universities year. We are also looking forward
discovery of 143 MMSCF gas in place. Annual Report 2016-17 in the Fuel Frequency of 0.11 for the entire country and abroad. We have also successfully completed the 6 weeks to completing the raising of the
Two other important exploration wells and Energy Sector by ICAP & ICMAP workforce including the contract introduced the practice of in-house internship during the year. second seismic crew for enhancing
of Dharian in Ghauri Block (Punjab) and the Company of the Year and labour, far exceeding our target of 0.45 seminars by distinguished leaders our capacity to undertake more
and Bolan East-1 in Ziarat Block the Fastest Growing Company of the set for the year. We continually achieve of the industry exposing maximum In my Company-wide address aggressive exploration schedule.
(Balochistan) were at an advanced Year Awards by the RCCI. The growing greater and greater international number of professionals to the guest- recently, I have invoked a few Committing ourselves to greater
stage of drilling at the close of the recognition of MPCL corporate certifications and have been lectures. In addition to sharpening the strategic questions to the achievements, we are poised for an
year with expectations of positive achievements is inspiring all members recognized with Awards for excellent individual skills we have introduced management staff on protecting the exciting new year!
results. of its team to continue to exert their HSE practices. team building workshops and use interests of the shareholders and on
best efforts for greater achievements. of psychometric techniques for increasing and optimally spending I assure our worthy Shareholders of
MPCL received distinction and MPCL has taken another far reaching improved matching of the individual the profits for the best interest of our highest commitment to serving
encouraging recognition by multiple Our operations extend over the step to embrace a growing global trend capacity with the job requirement. the stakeholders. I hope to conduct a their interest and bringing them
national and international corporate far-flung remote areas in all the of Enterprise Risk Management (ERM) Work stress is a well-known cause brainstorming session to discuss the maximum possible benefits. Our
institutions and won a number of provinces. Personnel or equipment practice. Although various departments of lack of competitiveness and lower emerging responses for realignment constant endeavour to improve
prestigious awards notably the accidents can have debilitating of the Company have been observing morale in the corporate world. We of management direction. our performance is an indicative
First Prize in Oil & Gas Sector for effects on successful continuation of a relevant checklist of risks inherent introduced interesting techniques measure of our commitment to the
The Best Management Practices the expensive E&P operations. HSE, in their departmental functions and for stress release especially for Looking ahead we aim at Shareholders.
by the Management Association of therefore, assumes a paramount operations, there had been no policy the senior cadre with useful consolidating the gains of this year,
Pakistan, Joint Second Runner-up in importance in MPCL. We regularly of integrating departmental risks results. Gender equality remains an completing the Phase X of the Mari
the category of SAARC Anniversary organise training workshops and into a holistic undertaking at the important commitment in MPCL and Field development, drilling the high
Award for Corporate Governance continue to improve our SOPs. With company level. Apart from the myriad a number of simulation exercises risk high reward exploration wells
occupational risks in E&P operations, were conducted to empower our in Bannu West Block and initiating
the age-old risk lies at the heart female workforce. MPCL takes pride exploration activities in the dormant
of petroleum exploration, which is in providing outstanding learning Block 28 in Balochistan. We plan Lt Gen Ishfaq Nadeem Ahmad
high risk and high cost undertaking. opportunities to the student interns to commission the carbon dioxide HI (M), (Retd)
Then there are risks associated with every year which helps us to spot liquefaction plant to take advantage Managing Director/CEO
development of discovered assets, the talent and more importantly to of the onset of the peak seasonal
finalisation of sale deals and start of
commercial transactions. At the top of
it all is the risk of oil price fluctuations
which affects the revenue from sale
of oil and gas. As mentioned earlier,
the E&P industry generically also faces
a new threat from growing concerns
for climate change and ingress of the
clean and green energy. Realising the
multitude of inherent risks associated
with the E&P industry, MPCL has
instituted a major programme of ERM.

Gearing up the team to meet the


challenges of consistent improvements
in all-round performance, cost
reduction, technology assimilation
on a sustainable basis remained my
foremost occupation during the year.
We reviewed and fine-tuned our vision
and mission statements in line with

36
the changing needs of the E&P industry
and have introduced new techniques
of human resource management
39
Mari Petroleum Company Limited
Annual Report 2018

CALENDAR OF Major Events

01
Aug 2017
02
Aug 2017
03
Oct 2017
10
Feb 2018
11
Feb 2018
MPCL Wins Two Prestigious MPCL Annual Report 2016 wins MPCL Awarded 1st Position at 5th MPCL Annual Report 2016 MOU signed between
Awards at 30th RCCI International 1st Prize at Best Corporate and Employer of the Year Awards 2016 wins SAFA Award MPCL and KUFPEC for
Achievement Awards 2017 Sustainability Report Awards strategic cooperation
a. Company of the Year
b. Fastest Growing Company of
the Year Award

04
Oct 2017
05
Nov 2017
06
Nov 2017
12
Feb 2018
13
Mar 2018
MOU Signed between Production commencement Hydrocarbon Discovery at 1st Prize in Oil & Gas Sector Mari Petroleum & PGNiG
MPCL and MOL for strategic from exploratory well Exploratory Well Tipu-I in Mari D&P at 33rd Corporate Excellence sign MOU for strategic
cooperation Aqeeq-1 in Sujawal Block Lease Area Awards cooperation

07
Dec 2017
08
Dec 2017
09
Dec 2017
14
May 2018
15
June 2018
Azadi-1 completed as Golden Jubilee of Appraisal Well Bhitai-5 Completed as 2nd Prize in Oil, Gas & Energy Sector MPCL and Pakarab Fertilizer
Gas Producer in Mari D&P Uninterrupted Gas Supplies Gas Producer in Mari D&P Lease Area at the13th Best Practices Award on Limited sign Term Sheet for

38
Lease Area from Mari Field Daharki Occupational Safety & Health 2017 supply of 75 MMSCFD gas
from Mari Field
41
Mari Petroleum Company Limited
Annual Report 2018

RISKS AND Opportunit ies Report • A comprehensive training


needs analysis focused on
identifying competency gaps and
formulation of suitable trainings conducted in difficult terrain and Significant opportunities available to
to address the identified gaps. far-flung areas that could disrupt the Company include:
operations, waste opportunities
• Review of existing Risk and escalate cost. Core Business
Management Policy of the • Potential for further
Company. External enhancement of production from
a. Oil business is subject to Mari Field.
ASSESSMENT OF THE PRINCIPAL associated geopolitics and
• Room for incremental production
RISKS FACING THE COMPANY unpredictable oil price swings.
from Goru-B reservoir of Mari
The Board carries out periodic
b. Fast emerging new technologies Field.
assessment of the principal risks
and trends that may gradually
faced by the Company, including • Discovery of new reserves
replace the use of fossil fuels.
those that would threaten its through ongoing exploration.
business model, future operational c. International agreements on
• Geographical diversification
and financial performance, solvency climate change that have
by entering the international
and/or liquidity issues. The Board triggered an urgency in reducing
E&P market through farm-in

A
also reviews the risk mitigation traditional use of fossil fuels.
s per Listed Companies (Code in prospective blocks in other
of Corporate Governance) strategies proposed/adopted by the d. Delay in fresh bidding round for countries.
Regulations 2017, the overall Management, provides guidance and new exploration licenses/blocks
responsibility for governance of the accords approval where required. hampering Company’s plans to
Diversification
Company’s risks lies with the Board. expand its exploration portfolio
• Diversification into an associated
PRINCIPAL RISKS AND for aggressive exploration to
activity of power generation by
BOARD’S EFFORTS FOR UNCERTAINTIES increase its reserves base,
setting up gas-fired power plants
DETERMINING THE COMPANY’S improve reserves replenishment
based on low BTU value gas from
LEVEL OF RISK TOLERANCE Internal ratio and increase production
Goru-B reservoir of Mari Field;
The Board has approved a Risk a. Dependence on the Mari Field revenues.
and
Management Policy to determine alone that generates bulk of
e. Delay in requisite approvals from
production (95%) and revenues • setting up a carbon dioxide
the Company’s risk tolerance level. the Government in allocation
(89%). production plant to food grade
The Policy also provides guidelines of gas/condensates from new
gas for sale to beverage industry.
to manage risks faced by the b. Impending production decline discoveries depriving the
Company, and identifies roles and from Mari Field due to natural Company of sizeable revenues.
STRATEGIES ADOPTED BY THE
responsibilities for each level of depletion which could result in
f. Challenges of difficult terrain, COMPANY TO MITIGATE RISKS AND
risk management through standard loss of conventional as well as
extreme weather conditions, lack AVAIL OPPORTUNITIES
processes and techniques. incremental price revenue.
of basic infrastructure in remote A. HRL Phase-X Development
c. Appears to be a weakness and frontier regions, precarious Project
The Board has approved hiring the
on part of company when in security situation and high The Company has devised
services of I-Risk Group (a UK based
reality its an inherent risk of this security cost at places where HRL Phase-X progressive
Risk Management Consultancy)
business the Company operates or holds Development Project to extend
to improve risk management
working interests. the plateau period of HRL
competencies and capabilities across d. Inherent uncertainty and
associated risk in the E&P g. Delay in settlement of Company’s Reservoir. The Plan envisages
the organisation. The project will start
business. dues by its customers due to drilling of 19 development
in the first week of September 2018
circular debt issue (Power Sector) wells, 30 km spur flow lines,
and will be completed in a period
e. Probability of major accidents debottlenecking of existing
of 4 months. The deliverables of the and litigation on imposition of
caused by natural causes, 22 km transmission pipelines
consultancy assignment include: GIDC (Fertiliser Sector), can
human error or negligence which and up-gradation of existing
negatively impact the Company’s
can result in injuries, deaths, central manifolds. The Project
• Assessment of the Company’s liquidity situation.
disruption of operations and is expected to extend current
current risk maturity level and
associated losses.

40
OPPORTUNITIES plateau period of HRL Reservoir
preparation of an improvement
Risks and opportunities are two sides to 2023 from the present
roadmap for achieving the f. Operational risks resulting
of the coin in E&P industry. timeframe of 2019.
desired level. from multifarious operations
43
Mari Petroleum Company Limited
Risks and Opportunities Report Annual Report 2018

B. Incremental Production from strategy of enhancing exploration acreage by acquiring working interests project was technically and commercially viable. Accordingly, final investment decision has been taken
HRL Reservoir in prospective blocks held by other E&P companies on fast-track basis to and the FEED study is in progress to commission the plant in the coming fiscal year.
Incremental production from maintain a well-paced growth.
HRL reservoir of Mari Field is the G. Operating Strategy
mainstay of MPCL’s business The Company successfully acquired new and additional working interests The Company follows best industry practices vis-à-vis use of technology, due diligence in decision making
strategy to enhance revenues for in Bannu West (20%), Block-28 (95%), Kalchas (30%), Kohat (13.33%), Ghauri and strict compliance with HSE standards and practices. It also collaborates effectively with national
funding an aggressive exploratory (30%) and with mutual concurrence of partners, approvals for MPCL's security apparatus to ensure safety of personnel and assets in the security sensitive areas. As a result, the
and developmental programme. acquisition of 25% working interest in Bela West are in progress. Company succeeded in achieving the lowest ever TRCF of 0.11 during the year and was able to initiate
Accordingly, the Company exploration activities in Bannu West falling in KPK and Waziristan. It has also made preparation for
produced 28 BCF incremental E. Expansion of Exploration Acreage - International start of exploration in security sensitive areas of Block 28, Balochistan.
volume of gas during FY 2017-18. In view of the limited indigenous hydrocarbon potential, the Company is
Sales revenue (net of Govt. levies) evaluating the strategy of farming-in opportunities in overseas exploration H. Changes in Regulatory Policy
from the incremental production and producing assets to augment its reserves base and achieve sustainable The Company keeps a close watch on changes in regulations and promptly
amounted to Rs. 10.53 billion future growth. adjusts its business strategy and operations to take advantage of the offered
which otherwise would have incentives. Our decision of diversifying into power sector was motivated by
been only Rs. 2.63 billion at the MPCL signed MOU with MOL Group of Hungary, Kuwait Foreign Petroleum the new Power Policy that gave the first right to set up a power plant to
normal price. Exploration Company and Polish Oil and Gas Company for strategic the producers of the low heating value gas.
cooperation and joint evaluation of the potential business opportunities
C. Aggressive Exploration in national as well as international upstream exploration and production KEY RISKS AND OPPORTUNITIES AFFECTING AVAILABILITY,
Strategy assets. QUALITY AND AFFORDABILITY OF CAPITALS IN THE SHORT,
The Company followed the MEDIUM AND LONG TERM
strategy of enhancement of Several international blocks offered by Tullow and Polish Oil & Gas Company The Company has a strong equity position with adequate equity capital for both
Exploration Budget for FY 2018- are currently under evaluation. IPR Energy Resources USA has also shown medium and long term in the form of sufficient retained earnings after distribution
19 to US$ 371 million from US$ interest for joint bidding in international blocks which is under consideration. of dividend to shareholders. This presents the opportunity of having greater degree
249 million of the year under of operational freedom and flexibility as it is a permanent source of funds available to
the organisation without any explicit cost of interest or dividend. The Company, having

Guiding Principles
review for aggressive exploratory
efforts in Mari Field and other zero debt to equity ratio can readily raise sufficient debt capital when needed at the
Blocks with particular focus on most competitive terms.
highly prospective blocks in KPK
(Bannu west) and Balochistan FOR INTERNATIONAL EXPANSION
(Block-28). The strategy led to
the drilling of 6 exploratory, 3 • Geo-Political Situation
appraisal and 2 development
wells in the operated blocks • Economic Viability
achieving an exploration success • Reliable Partner(s)
rate of 70%. By adding 259 BCF
in new recoverable reserves the • Limited Initial Partnership (5-10%)
Company was able to enhance • International Companies having working
reserves replenishment ratio to
43%. The production potential of
interest in Pakistan, if possible.
the Company was also enhanced
by 80 MMCFD. In the long run, F. Diversification
the Company will benefit from its MPCL has taken a strategic decision of diversification of setting-up a
aggressive exploration strategy Power Project. It has completed the process of hiring of Owners Engineer
to enhance reserve replacement by issuing an LOI to M/s Fichtner in March 2018. A Kick-off meeting was
ratio for attaining sustainable formally held with the OE and a site visit was jointly conducted on May 31,
future growth in production and 2018. The Company hopes to complete the feasibility study by September
revenues. 2018.

D. Expansion of Exploration In view of technical and commercial viability of purifying and liquefying the
Acreage carbon dioxide from the produced gas for sale to food industry, a proposal

42
In the absence of fresh bidding to establish a CO2 Plant was initiated. After in-house evaluations, an
round for new exploration blocks, independent third party consultant was hired to conduct the technical and
the Company has pursued a commercial feasibility of the project. Consultant’s report concluded that the
45
Mari Petroleum Company Limited
Annual Report 2018

STRATEGIC BUSINESS PLAN AND

Resource Allocat ion


S
trategic Business Plan serves as a the departmental level to ensure
blueprint of the Company’s future ownership and commitment of
activities. The Plan aims at: those responsible for implementing
the plan.
a. Providing a framework for setting
strategic direction of the Company; Overall Strategic/ Corporate
b. providing a basis for more detailed Objectives
planning (setting high level To ensure balanced growth of the
corporate objectives and targets); Company, MPCL Business Plan
focuses on the following strategic including shareholders, JV partners,
c. aligning corporate resources customers, employees and more
areas while setting Company’s annual
and energies towards common importantly the local communities in
corporate objectives and targets:
objectives; the areas of Company’s operations.
d. assisting benchmarking and 1. Core Business/E&P: The Measurable targets are set for
corporate performance monitoring; focus in this area is on seismic safety of operations (TRCF) and CSR
activities, drilling of wells, spending.
e. explaining the business objectives
to all levels of management for production addition, expansion of
exploration acreage and reserves Short, Medium and Long Term
informing, motivating and involving
enhancement. Strategic Objectives
them; and
The objectives and targets in each focus
f. stimulating desired change and 2. Diversification: This area area are classified into short, medium
building on the past successes. focuses on diversification of the and long term:
Company’s operations by entering a. Short-Term (0-2 Years): The
In view of changing internal and value to its existing business and Management Control System indicators. The Company has
into related businesses such as Company aims to re-capitalize the
external business environment, the on securing sources of income (MCS) has been instituted for implemented specialized management
power generation and carbon business by the gains achieved
Plan is periodically reviewed and other than core upstream close monitoring and reporting of control systems for reviewing its past
dioxide separation and purification through enhanced production during
monitored to keep it relevant, business to ensure growth the progress and for mid-course performance vis-à-vis a set of ‘look-
projects. low price period and to re-focus on
strategically active and capable expansion on sustainable basis corrections in case of slippages behind’ key performance indicators
growth by revenue enhancement by
of channeling the corporate in varying oil price regimes. from the planned course. (KPIs). The formulation of following
3. Financial: The targets in this area acquiring producing assets, with an
resources towards achievement of The Company shall not only be year’s business plan draws input from
include increasing return to the upside exploration potential, around
the set corporate objectives. The looking to transform into an l Monthly review meetings of the the preceding year’s performance on
shareholders, increasing gross the world to augment its cash flows
Plan is operationalised through international E&P Company but senior management are held to the ‘look-behind’ KPIs listed in the
and net sales through production in the short and medium term.
successive annual Corporate also aim to become an energy make adjustments or alterations following:
enhancement, cost cutting/
Objectives and Targets (COTs). The b. Medium-Term (3-5 Years): conglomerate in the future. in course of actions to achieve
budgetary control measures, 1. Finding and Development Cost per
allocation of resources for various The Company plans to focus on the targets within the specified
reduction in outstanding BOE of new reserves added
activities is guided by the priority investments aimed at adding high Management Strategies to Meet time.
receivables, and achieving
given in the Plan. potential block in its portfolio the Objectives 2. Reserves Replacement Ratio (%)
financial self-sufficiency for Mari
to achieve positive reserves Actual plans and strategies l Besides monitoring corporate
Services Division.
replacement ratio and sustainable implemented by the Management performance under each COT, 3. Exploration success rate
Strategic Planning Process
production growth, besides revenue, to achieve the objectives and a set of Key Performance
The strategic planning process is 4. Internal Processes: The focus is 4. Drilling cost per meter
diversification by extending its reach targets for FY 2017-18 are detailed Indicators (KPIs) covering a larger
systematic, rational and is based on the on refining of internal processes,
into power sector. This would be in Risks and Opportunities Report. spectrum of performance indices 5. Production cost per BOE produced
guiding principle that “planning process use of modern technology and
done by financial capacity achieved For effective monitoring, following are calculated bi-annually to
is as important as the plan itself”. All innovative techniques to increase 6. Production growth (%)
through revenue diversification and measures are adopted by the monitor and compare the overall
possible efforts are made to keep the efficiency in the Company’s
cash flow maximization in the short Management: performance of the Company. 7. EBITDA per BOE production
process open, iterative and flexible operational activities.
term.  
so that it is dynamically evolving over
8. EBITDA per employee

44
c. Long-Term (6-8 Years): the l To ensure achievement of Key Performance Indicators
the time. While the overall direction is 5. Stakeholders: The emphasis
Company places strategic focus on corporate goals within the MPCL’s business planning system 9. Petro-technical professionals per
provided by the Managing Director, the is on meeting the expectations
diversifying investments for adding stipulated time period a is based on key performance MMBOE production
strategies and COTs are evolved at of the Company’s stakeholders
47
Mari Petroleum Company Limited
Strategic Business Plan and Resource Allocation Annual Report 2018

10. Reserve growth rate (%) structure of the Company is details can be found in Risk and surety of required services especially for enhancement of revenues (both increase in human capital in Finance,
expected to remain unchanged in Opportunities Report. in security sensitive areas. These conventional and incremental) and Procurement and Administration
11. Reserve to production rate
foreseeable future. capabilities have been pivotal in meeting financial and production departments to provide expedient
Since there has been no change in the c. Discontinuation of Operations carrying out seismic data acquisition related targets of the business support to the core functions.
The Company has made some
core objectives and targets, the KPIs The Company has no plans to projects in Mari and Sukkur in the past plan. Therefore, a budget of US$ 45
internal re-alignments. Mari Inadequacy in the Capital
identified above will continue to be discontinue any of its major and Bannu West at the present. million has been allocated for HRL
Seismic Processing Unit has Structure and plans to address
relevant in the future. operations. However, the Phase-X Development Programme
been brought under Exploration such inadequacies: Total equity on
Management has reluctantly Resource Allocation & which envisages drilling of 19
Department while control of June 30, 2018 was Rs. 40.19 billion,
Significant Changes in Objectives decided to relinquish Peshawar Capital Structure development wells, 30 km spur flow
Skytop Brewster Rig has been an increase of 57% over Rs. 25.54
and Strategies from the Previous East Block because the Ministry Resource allocation is an important lines, debottlenecking of existing 22
handed over to Operations billion at the end of the last year.
Year of Defense has not approved the management activity that allows km transmission pipelines and up-
Department for smooth operations. The equity comprised of issued,
There has been no change in the NOC to enter and work in the area. for effective execution of corporate gradation of existing central manifolds.
subscribed and paid up capital,
Company’s focus areas from those The JV Partner M/s KPOGCL has strategies. The primary tool for making Similarly, sufficient budgets have been
b. Business Expansion undistributed percentage return
reported in the previous year. However, been taken on board regarding the resource allocations is the budgeting earmarked for development activities
Core Operations: The Company reserve, Profit & Loss account and
actual measureable targets are revised relinquishment. Process will start process. At MPCL, strategic planning at existing as well as upcoming fields,
has been substantially enhancing other reserves. Enabled by strong
each year taking into consideration after completion of the internal and budgeting are interlinked and feasibility study of Mari Power Plant
its exploration budget. The operational cash flows, the Company
different internal and external factors. working. integrated. and installation of Carbon Capture
budget for FY 2018-19 has been paid all of its long term loans
The size of MPCL’s proposed power Plant.
enhanced to US$ 371 million For instance, since the Company (around Rs. 5 billion) during the year.
plant has been reduced from 280 MW Company’s Most Significant
(firm and contingent) from US$ is pursuing a reserves-led growth Resultantly, the Company’s capital
to 180 MW in view of the availability of Resources Apart from financial capital, other
249 million kept for 2017-18. strategy marked by an aggressive structure was 100% equity based on
gas from Goru-B reservoirs. The Company’s most significant resources, in particular human
As a result of an aggressive exploration and drilling programme June 30, 2018.
resources include the following: resource, are also allocated in line with
exploration strategy, yearly drilling and expansion of exploration acreage,
Relationship Between the corporate objectives and targets for The financial projections indicate
of wells has increased from 2-3 Human Capital: MPCL’s most sufficient resources have been
Company’s Results and short, medium and long term. Most adequacy of the capital structure for
wells in the past to 8-10 wells valuable resource is its workforce. allocated for exploration activities.
Management’s Objectives of the expansion in the Company’s the foreseeable future. The Company
in recent years. Seismic data The Company has an appropriate Exploration budget for FY 2018-19 has
Actual financial and operational human capital has been in Exploration, plans to meet all of its financing
acquisition is in progress in Bannu mix of highly knowledgeable and been enhanced to US$ 371 million
results during the year are directly Operations, Business Development requirements during the next year
West Block while seismic data talented young as well as experienced from US$ 249 million of last year.
linked with the Management’s and Mari Services Departments in through available reserves. Borrowing
acquisition projects in Sukkur, professionals providing simultaneously
objectives for the year. The actions Production from HRL Reservoir of line with growth of the Company’s from banks will only be used as a fall-
Block-28 and Ghauri Block are the right amount of energy and
defined in Business Plan 2017-18 Mari Field is pivotal to MPCL's plans core operations, with proportionate back option.
planned in the coming year. The business acumen for the growth and
have resulted in corporate efficiency,
Company has been pursuing development of the Company. In view
prudent investment choices and
stricter financial discipline leading to
expansion of exploration acreage of the Company’s growing operations, MPCL'S POSITION IN
within the Country and abroad.
improved growth in the Company’s
During the year the Company
its workforce has been gradually
expanding in recent years.
E&P Allied Services
• Seismic Data Acquisition
PETROLEUM VALUE CHAIN
core business and creation of strong and Processing
has acquired additional and • Drilling Rigs & Services
fundamentals for a robust recovery Hydrocarbon Reserves: The Company • Other Wellsite Services
new working interests in several
of profitability even in a globally has substantial level of recoverable
blocks within the country and it
challenging business environment. hydrocarbon reserves to cater to
plans to continue acquisition of
Major Plans and Decisions
working interests from other E&P
its current client pool and meet its
long term supply commitments. The
Upstream Midstream Downstream
companies within the country and
a. Corporate Restructuring recoverable reserves were 613.4
abroad.
The Company’s operational and MMBOE on June 30, 2018. Concerted Oil Transportation Storage Refining Distribution Marketing
financial performance has been Diversification: The Management efforts are being made to enhance
Exploration Development Production
outstanding during the year. is fully cognizant that despite the reserves replenishment ratio to at
The Company is supported by bringing in operational efficiencies least 100% in the coming years. Gas Processing Transportation Marketing
a robust statement of financial and cutting of costs, long-term
Financial Resources: The Company
Mari Petroleum Company Limited Oil, Gas, Petroleum Products Marketing and
position and strong operational sustainability and growth is not
had Rs. 40.19 billion in shareholders' Pipelines, Tankers Distribution Companies
cash flows. Hence, there are no possible without securing income
reserves as of June 30, 2018.
from non-core activities. Hence, Gas supply
plans for financial or organisational directly to those on
the management is pursuing E&P Allied Capabilities: In-house
restructuring. The Government had MPCL System
several opportunities to diversify seismic data acquisition, processing Customers/Consumers
initiated the process for divestment
and drilling capabilities at par with Fertilizer Plants

46
of its residual shareholding in business to complement core
international standards provide the Power Generation Plants
MPCL, but the process is now operations as well as secure Commercial Entities
other sources of revenues. The Company with greater flexibility and Households
on hold. Hence, the ownership
49
Mari Petroleum Company Limited
Annual Report 2018

BUSINESS OVERVIEW AND In line with the target of expansion

Forward Looking Statements


Market Share Information
of exploration acreage in four new/
existing blocks, the Company Product Total Output MPCL’s Output MPCL’s Share
successfully acquired new/additional
working interests in Bannu West, Gas (MMCSF) 723,329 132,320 18.3%
Block-28, Ghauri, Kalchas, Kohat Blocks
MACRO LEVEL Natural gas contributes around 45
percent of Pakistan’s primary energy
• Regulatory issues
and acquisition of working interest in
Oil & Condensate 16,286,766 399,023 2.4%

OVERVIEW
• Human errors and negligence
supply mix. There is growing shortage Bela West is in progress. Source: Pakistan Petroleum Information Service by LMKR on behalf of DGPC.
of natural gas due to increase in gas • Natural disasters and extreme Based on the data for Jan-Jun, 2018.

T
he recovery in global oil price demand and depletion of existing gas weather conditions Diversification: Work on setting-up
continued in 2017-18 as the glut fields. In addition to exploitation of of MPCL’s pilot Power Project is in
in global oil supply gradually indigenous resources, efforts have Analysis of the Company’s Current progress. An LOI of Owners Engineer for the year besides announcement the Company has successfully
disappeared as a result of production been made to mitigate the shortfall Performance vis-à-vis Targets has been issued to M/s Fichtner in of 10% bonus shares. As a result implemented Competency
adjustments from OPEC and non-OPEC through import of LNG mainly from Financial year 2017-18 has been the March 2018. A Kick-off meeting was of prudent strategies stemming Management System whereby gaps
nations under the ‘Declaration of Qatar. The LNG import has reached 7 most prolific year with highest ever formally held with the OE and a site from cost consciousness, MPCL has between competency levels will be
Cooperation’. Oil price which averaged million tons per annum. production rates and profits. The visit was jointly conducted on May 31, emerged as the most cost effective identified and rectified to ensure that
around $50 per barrel in 2016-17 Company posted a strong financial 2018. The Company hopes to complete E&P company in the Country with competent personnel are in place
touched $70 per barrel in 2017-18. Indigenous crude oil meets only and operational performance with the feasibility study by September operating expenses at only 9.98% of to operate and maintain facilities
The price is expected to remain stable 15 percent of the Country’s total all major performance parameters 2018. the gross sales. efficiently and effectively.
during next 2-3 years due to increase requirement, while 85 percent following a positive trajectory.
in oil demand resulting from a strong requirement is met through imports In view of technical and commercial Internal Processes: The Company Stakeholders: The Company
world economy (mostly developing of crude oil and refined petroleum Core Activities: The Company made viability, carbon dioxide will be continuously improved its internal managed to bring down Total
countries) and growth in demand for products. The indigenous and one new hydrocarbon discovery in its separated from the produced HRL business processes and was able Recordable Case Frequency (TRCF) to
petrochemicals (mostly in USA, China imported crude is refined by six operated blocks and also completed gas through a new processing plant to successfully implement SAP 0.11 against the target of 0.45. It was
and other developed countries). On major and two small refineries in the one appraisal and one development and then purified to good grade for Plant Maintenance System at MPCL the lowest-ever TRCF in the history
the supply side, most of the increase Country. well during the year. The new sale to beverages industry. After in- operated fields. Moreover, 872 of the MPCL. The Company spent Rs.
in supply is expected to come from discovery and appraisal well resulted house evaluations, an independent Management System Procedures 221.4 million on CSR Projects in Mari
non-OPEC countries led by the US. The downward trajectory of the in expected reserves addition of 143 third party consultant was hired to (MSPs) pertaining to all departments and other operated Fields/Blocks.
Despite oil price stability, investment in Country’s recoverable oil and gas BCF against a target of 181 BCF. conduct the technical and commercial were revised and updated. In order
the upstream sector has so far shown reserves amid declining production feasibility of the project. Consultant’s to enhance overall competency level
only modest signs of recovery from volumes from maturing fields, The Company produced a total Report concluded that the project was of 70-80% of technical workforce,
the lows of 2015-17. projects a weaker outlook for of 34.02 million barrels of oil technically and commercially viable.
indigenous oil and gas production in equivalent (MMBOE) compared Final Investment Decision has been
In Pakistan, upstream sector remained coming years. Most of the unexplored with 32.32 MMBOE of last year. made and FEED study is in progress to
quite active during the year although hydrocarbon potential in the Country The Company was able to further commission the plant in the next fiscal
the much-awaited bidding round remains in the frontier areas of KPK enhance incremental production year.
for new blocks remained elusive as and Balochistan which are now from HRL Reservoir as planned.
before. 29 oil and gas exploration opening out to cautious operations. Total incremental production of gas Financial: During the year, gross sales
and production companies are reached 27,797 MMCF compared exceeded Rs. 100 billion for the first
working in Pakistan, out of which Key Sources of Uncertainty with 17,999 MMCF of last year. The time in the history of MPCL. Gross
11 are local. There have been quite The uncertainty in E&P operations Company was also able to commence sales surged to Rs. 100.04 billion from
a few discoveries of both oil and emanates from multiple sources. Key production from Aqeeq-1 well in 96.78 billion in the last year. Similarly,
gas during the year but reserves sources of uncertainty for MPCL are Sujawal Block as per plan. net sales reached an unprecedented
replenishment remains quite low. as following: level of Rs. 40.68 billion from Rs. 28.18
Remaining recoverable gas reserves A record number of 10 wells were billion in the last year. The impact of
• Crude oil price volatility
stand at about 20 TCF and oil planned for FY 2017-18, out of which increase in net sales was reflected
reserves are at 344 million barrels. • Inherent risks in E&P business 05 wells were drilled during the in net profit, which jumped by 68%
Indigenous production of natural gas • Security situation in areas of year, while drilling of 04 wells was in to reach a whopping Rs. 15.37 billion
has remained stagnant at 4 billion Company operations particularly progress at the close of the year. One compared with Rs. 9.14 billion of the
cubic feet per day for a few years and in KPK and Balochistan well was carried forward to 2018-19 last year. Earnings per share also
oil production has been fluctuating for arranging drilling materials as the increased from Rs. 82.87 to Rs. 139.45
• Changes in Government policies

48
around 90,000 barrels per day. For oil plan changed from vertical to a dual and after payment of final dividend,
concerning energy, petroleum and lateral well.
and petroleum products, the Country total dividend to the shareholders
fertiliser sectors
has mainly remained dependent on will amount to 60% (Rs. 6.0 per share)
imports since independence.
51
Mari Petroleum Company Limited
Business Overview and Forward Looking Statements Annual Report 2018

FORWARD LOOKING
STATEMENTS
Analysis of prior period forward E&P sector as a whole. It is exploring and on the other hand will allow it to
looking disclosures avenues in the energy sector that can produce more and thereby earn more
In last year’s Annual Report, it add value to the bottom line during the revenues.
was stated that the Company will low oil price regimes. The Company is
pursue an aggressive exploration at advanced stages of diversifying into HRL Phase-X Development Project will
programme and will acquire new/ low BTU gas-based power generation, help to extend the production plateau
additional exploration acreage, both manufacturing of carbon dioxide from period of HRL Reservoir of Mari Field
locally and internationally, to expand the produced gas into marketable by 4 years up to 2023. As a result,
exploration portfolio for implementing food grade liquid carbon dioxide. It the Company will be able to maintain
its aggressive exploration and drilling has also started looking into potential minimum production threshold for
programme for arresting depletion opportunities of diversifying into mid- getting the incentive price.
trends and sustainable growth in and-downstream petroleum sectors of
production and revenues. To achieve refineries, pipelines and retail outlets In the long run, setting up a gas fired
these objectives, a huge exploration etc. combined cycle power generation unit
budget of US$ 249 million was based on low BTU gas from Mari Lower
earmarked for the year for exploration The feasibility study of the power Goru-B reservoir and its successful
activities including acquisition of new/ project is progressing and the operations will provide the much
additional working interests. Actual Company aims to get the requisite needed synergy to MPCL’s upstream
performance of the Company and regulatory approvals during the business. The Company will not only
status of projects has been explained coming year. Timely completion of the generate additional revenues from the
in the section titled “Analysis of the power project would provide a much incremental production from Goru-B
Company’s Current Performance vis-à- needed diversified income stream to reservoir, it will also earn return on
vis the Targets”. the Company. its investment in power plant at an
expected rate of 15-20%.
Forward Looking Statement Analysis of the Prospects
MPCL has positioned itself for of the Company Source of Information and
sustainable growth in the coming The prospects of the Company are Assumptions Used for Projections/
years. The Company has acquired very promising. The Company’s Forecasts in Forward Looking
new exploration acreages as well exploration efforts are now focused Statements
as additional working interests in on enhancing its reserves base The information and assumptions
different blocks. Other high reward through reserve-led growth strategy. used for projections and forecasts are
exploration acreages both locally The exploration budget has been sourced from PPIS, PPEPCA, Economic
and internationally are also being enhanced to US$ 371 million for 2018- Survey of Pakistan etc. and a multitude
evaluated to expand the existing 19. The drilling activity has jumped up of international oil & gas industry
exploration portfolio, to pursue and rate of drilling of wells per year specific sources such as IEA. The data
aggressive exploration and drilling has leapt up to 8-9 wells per year from external sources is combined
for achieving a higher reserves compared with 2-3 wells per year in with in-house exploration, production
replenishment ratio and consequently the past. In the long run, the Company and financial data. After extensive
sustaining production, revenues and is set to benefit from its reinvigorated examination and deliberations by the
returns in the long-term. exploration and drilling activities. More area-experts, the Company’s business
drilling will result in more discoveries plan is developed to set the objectives
The Company is also constantly which, on one hand will enhance the and targets for coming year(s),
Mari Seismic Crew at Work at Sukkur Block
looking for avenues to hedge itself Company’s reserve replenishment providing a foundation for developing
from the oil price risk that faces the ratio to ensure its long term viability, forward looking statements.

50
53
Mari Petroleum Company Limited
Annual Report 2018

Mari Field Development PHASE-X


SEGMENTAL REVIEW OF

Business Performance
T
he Reservoir Engineering Department of
MPCL has greatly improved the in-house

B
ased on the different types of activities, the Company has three strategic management of the Company's oil and
divisions, which are considered its reportable segments. The following gas fields. It has fine-tuned the simulation
summary describes the operations of each reportable segment: model of the Habib Rahi Limestone Reservoir
of the Mari Gas Field by updating the historical
Reportable Segments Operations model with pressure and production data. The
refined simulation model provided confidence
Exploration and Production includes all upstream business activities to increase the production of gas from 525 to
Mari Seismic Unit includes 2D/3D seismic data acquisition services 630/650 MMSCFD. The rate of production was
Mari Drilling Unit includes onshore drilling services expected to start declining in 2019 affecting
our ability to maintain our committed gas sale
Net Sales of Exploration and Production segment increased by Rs. 12,501
volumes beyond this time. The Department
million, during the year as compared to the last year which, coupled with
undertook an exhaustive in-house reservoir
increase in finance income by Rs. 533 million, has primarily resulted in an
simulation study during the year to investigate
increase in profit before taxation. Mari Seismic Unit earned a profit of Rs. 54
the feasibility of extending the plateau of 630
million, through efficient use of resources, despite overall slump in the industry.
MMSCFD by drilling of additional wells in the
HRL reservoir. Multiple reservoir simulation
Exploration
and Mari Mari Drilling realizations were run for well placements in
Production Seismic Unit Unit the reservoir to determine optimum number of
(Rupees in million) additional wells and their locations. The study
indicated that drilling of 19 development wells
Profit / (Loss) before taxation
in the HRL reservoir along with debottlenecking
2017-18 20,608.4 53.8 (29.7)
of the surface gathering network will enable
2016-17 11,939.9 (354.9) 11.6
MPCL to produce 650 MMSCFD up to 2023,
thus extending the plateau by four years.
BUSINESS RATIONALE OF MAJOR CAPITAL
EXPENDITURES/ PROJECTS DURING THE YEAR The plan was approved by the Board and the
AND FOR THOSE PLANNED FOR NEXT YEAR work was commenced immediately thereafter

A
and by 31 August 2018 three new wells had
ll major capital expenditure/ capital expenditure and projects
been drilled and connected into the system.
projects during the year were focused on enhancing its reserves
The data collected from these wells (logs
in line with the Company’s base, through reserve-led growth
and initial testing results) have increased our
strategic objective of reserves strategy. Diversification will require
confidence that the projected flow rates and
enhancement, increase in production entering into related businesses
plateau period will be maintained with the
and expansion of exploration acreage such as power generation and
drilling of the planned 19 wells.
and growth in allied business. carbon capture. The Company
plans to set up a gas fired
The enhanced production and extended
Major capital expenditure and combined cycle power generation
plateau period will ensure that the fertiliser
projects planned for next years are to unit, based on low BTU gas from
plants will continue to receive the HRL gas
meet both the objectives of growth Mari Lower Goru-B reservoir, which
for longer period than previously envisaged
led by focusing on core business will provide the much needed
ensuring the food security of Pakistan.

52
as well through diversification. synergy to MPCL’s upstream
Focus on core business requires business.
55
Mari Petroleum Company Limited
Annual Report 2018

HSE AND Sustainable Development Policy for safety records


of the Company
MPCL ensures top priority to HSE
Social and environmental
responsibility policy
MPCL has demonstrated its
14001 enabling us to comply with
environmental and labor legislations.

during execution of all activities. commitment by acting responsibly CSR activities at MPCL are governed

H
SE management plays an Commitment to HSE standards during towards introducing sustainable by the Company’s Welfare Policy
important role in dealing with TRCF COMPARISION execution of operational activities has
always been demonstrated by our
community development and social
welfare schemes in our areas of
and are undertaken in line with
Social Welfare Guidelines issued by
people, assets, environment

1.21
and company reputation. Critical employees and contractors. operation. In line with our policy we Directorate General of Petroleum

1.03
review of guidelines and procedures ensured support to communities in Concessions.

0.92

0.81
In FY 2017-18, we undertook special a manner consistent with our values

0.79
is essential to understand the
effects of work related hazards efforts to improve our HSE culture by as we made a growing contribution We ensured well-being and safety of

0.50
conducting analysis of contributing to strengthen the agribusiness by all the stakeholders in our value chain

0.45
on sustainable development.
Occupational health and safety is factors to serious injuries and providing uninterrupted supply of gas through continuous engagement with

0.22

0.13

0.11
built on three pillars of economy, incidents; based on that analysis to urea manufacturers thus fueling relevant communities, departments
environment and society. Sound HSE mitigation measures and revision the economy of the country. and regulators to uphold the best
policies and environmental friendly of HSE procedures and policies was practices laid down in ISO 26000
practices enabled MPCL to maintain carried out. Findings were discussed We have used Risk Management Guidelines. This international
safety of employees and sustainability in the HSE workshops conducted System in all areas of operations standard helps organisations to
TRCF (World-wide) TRCF (Region Asia / Australasia)
of its operations. TRCF MPCL Targets TRCF MPCL
at all locations among all the tiers to identify areas of concerns and effectively assess and address
of employees and consequently developed mitigation plans for those social responsibilities that
E&P industry is hazard prone and HSE culture improved exponentially. ensuring compliance to ISO OSHAS are relevant and significant to their
continues to encounter new HSE monitor and assess occupational 14001, 18001 & 27001 for the The number of incidents reduced 18001 (Occupational Health & mission and vision; operations and
challenges to safe operations. health, safety and environment year 2017-18 was successfully drastically and we recorded the Safety Assessment Series) and EMS processes; customers, employees,
Health, Safety and Environment management. KPIs were established carried out without any Major lowest ever Total Recordable Cases in (Environmental Management System) communities, and other stakeholders;
(HSE) management thus assumes for better loss-control after due Non Compliance/Conformance the history of MPCL. and environmental impact.
a profound importance in any E&P deliberations by the management for for all certified locations.
company. It is essential to pay due satisfying the statutory compliance
attention and allocate adequate and IMS requirements. MPCL is an • Rig Mari 3 and Mari Seismic Unit
resources for HSE objectives. IMS certified integrated E&P Company (MSU) have also been certified
with its own in-house exploration, for IMS Certification in spite of
HSE STRATEGY drilling, well completion, production, facing a lot of security threats in
MPCL followed an effective strategy maintenance, pipeline network and the areas of operations. MSD has
during the year and the focus associated services. succeeded in completing seismic
remained on avoidance of work surveys in all security sensitive
related fatalities; reduction of road TOTAL RECORDABLE CASE areas without any Lost Time
traffic incidents; improvement of FREQUENCY (TRCF) Incidents (LTIs).
medical infrastructure and health The number of injurious
care; reduction of oil spills from incidents significantly reduced in • Successful implementation of
transportation and corroding 2017-18; Company recorded best- HSE promotional campaigns
pipelines; reduction of energy ever combined (employee and such as malaria and dengue
consumption and GHG emissions; contractor workforce) TRCF of 0.11 prevention, no smoking, hand
reduction of hazardous waste in for FY 2017-18 against the target and finger injuries campaign,
production processes and treatment (TRCF) of 4.5, which is lower than heat stress campaign, hazard
of the accumulated waste for previous year. hunt reporting and housekeeping
safe disposal and increase in campaign and competitions.
HSE awareness among the entire ACHIEVEMENTS FOR THE
workforce. YEAR 2017-18 • Upgradation of HSEQ procedures
Through a devoted and committed in line with the current industrial
HSE PERFORMANCE MONITORING leadership, MPCL achieved the practices
Continuous assessment and following milestones during the year:
monitoring are considered important • 2nd Prize in Oil, Gas and Energy

54
steps to ensure that our facilities • Company-wide External Sector for HSE performance by
are reliable and available. Carefully Certification Audit of Integrated the Employer’s Federation of
developed KPIs were introduced to Management System ISO 9001, Pakistan (EFP)
Fire Fighting Drill at Ghauri Field
57
Mari Petroleum Company Limited
Annual Report 2018

CORPORATE

Social Responsibility

Inauguration of Free Medical Camp, Daharki

US$ 600,000 (Rs. 69.42 million) were 3. Financial assistance to Special 3. Mintaka Pass Expedition 2018 of
paid as Production Bonus to District Education School, Ghotki of Rs. 200,000
Karkan Primary School, Zarghun Ghar, Balochistan
Administrations of Jhelum and Rs. 450,000
Rawalpindi during the year. ADVANCE LEVEL IN ISO 26000
OUR CSR PHILOSOPHY Health
(SOCIAL RESPONSIBILITY

W
e maintain participative In line with the Revised Guidelines, 30,000 in each of its operated An amount of Rs. 69.4 million was
1. Free Medical Camps in different GUIDELINES) ASSESSMENT
relationship with the social welfare schemes against blocks on social uplift of the local spent in JV Blocks on account of
operational areas of Rs. 1.7 million MPCL has been placed at “Advanced”
society and continuously specified minimum financial communities. Statutory Obligations, Rs. 112 million
invest in the interventions related obligations are identified and was spent in Mari Field Daharki and Rs. Level of performance against global
Sports guidelines of ISO 26000:2010 (Social
to education, health, water supply implemented by a “Social Welfare 2. Spendings over and above the 40 million was spent in JV Blocks on
schemes, philanthropic donations and Committee” comprising of relevant Statutory Obligations in JV blocks various CSR Projects over and above 1. MPCL Youth Tennis Sponsorship Responsibility Guidelines), in the
communication infrastructure. MNA, MPA, DCO, Nazims of the other than Mari Field. the mandatory obligations. Social Programme of Rs. 8.6 million assessment conducted during 27-30
District, Tehsil and union councils and welfare projects were undertaken November 2017. The highest rating,
2. Financial assistance to Pakistan i.e. the “Role Model” Level, can
In addition to our communities, we representatives of concerned E&P 3. CSR activities at Mari Field. mainly in the priority areas of health,
Junior Hockey Team of Rs. 3.6 only be achieved if “Role Model” is
ensure the well-being and safety of company. The schemes are executed education, water supply and drainage
million attained in all domains/standards of
all the stakeholders in our value chain and monitored by concerned DCO 4. Production Bonus is paid on schemes.
through continuous engagement with through relevant agencies under commencement of commercial 3. Sponsorship for All Pakistan Open ISO 26000 (CSR, HR, Procurement,
relevant stakeholders to uphold the intimation to the concerned MNA and production from a field and is Golf Championship 2017 of Rs. HSE & Field Operations). MPCL
Major Projects Over and Above has achieved “Role Model” in
best practices in social responsibility as the Union Council. deposited in the account of local 1.21 million
Statutory Obligations Accountability, Ethical Behavior,
laid down in the ISO 26000 Guidelines. administration for social welfare
4. Sponsorship for Margalla Football
Major CSR Categories projects. Respect for Stakeholder’s Interests,
Education Club, Islamabad of Rs. 500,000
OUR CSR POLICY CSR programme is divided into four Respect for the Rule of Law, Respect
CSR activities at MPCL are governed by major categories: CSR INTERVENTIONS DURING 1. Financial assistance to for International Norms of Behavior
Miscellaneous
the Company’s Welfare Policy and are FY 2017-18 development in literacy and for and Respect for Human Rights.
undertaken in line with Social Welfare 1. Statutory Obligations: As The Company spent Rs. 221.4 million children education programme of 1. 10th All Pakistan Chambers MPCL has become the only Oil & Gas
Guidelines issued by Directorate per Petroleum Concession on numerous CSR Projects in its Rs. 500,000 Presidents Conference, at Gwadar Company in Pakistan to be formally

56
General of Petroleum Concessions, as Agreements, MPCL is under operational areas in all the four of Rs. 1.5 million assessed for ISO 26000, and the
statutory obligation to spend US$ provinces of the Country. In addition, 2. Financial assistance to Foundation 2. Tree Plantation Campaign at only Company to have achieved the
revised from time to time.
University of Rs. 1 million different fields of Rs. 1.5 million Advanced Level rating.
59
Mari Petroleum Company Limited
Annual Report 2018

Human Resource The ability tool was introduced to


facilitate the recruitment and selection
process. So far, the tool has been

DEVELOPMENT applied on 39 new inductees in the


Management cadre. The tests reflect
the ability, aptitude and potential
of the candidate to perform the

M
PCL in line with its vision the year. In-house seminars expose jobs they are being considered for.
and mission statements maximum employees to learning and During the Promotion Board 2017,
considers competitive broadening the professional base. 44 potential employees (who were
manpower with cutting edge expertise likely to be promoted to key positions)
essential for its corporate goals. It TEAM BUILDING ACTIVITY were exposed to psychometric tests
also believes that job satisfaction, MPCL conducted a team-building to facilitate the Promotion Board in
motivation and high morale are keys to exercise in May 2018 to develop comprehensive decision making.
success. It takes pride in engaging the collaborative mindset, strengthen
best available professionals and also bonds among departments and HRD has now planned to apply
employs new techniques of human employees and build mutual trust. The psychometric tests for Succession
resource management for continuous two-day programme was started with Planning, conversion of Non-
improvements. In addition to effective an ice breaking session conducted by Management staff to Management and
in-house and on-job training, MPCL a professional trainer. The participants absorption of Trainees.
sends selected employees to profiled
institutions/universities at home
and abroad to stay abreast of the
professional advances and also to
strengthen the corporate loyalty.

TRAINING
MPCL shows a strong commitment
amounting to a passion for continuous
professional learning and knowledge
sharing. A training-need-analysis
is conducted round the year for Team Building Exercise at Whispering Pines, Pir Sohawa
identifying needs and opportunities
for augmenting the professional were taken through a number of FOREIGN DEGREE PROGRAMME IN
expertise to meet the ongoing engaging and interactive learning RENOWNED UNIVERSITIES
business challenges. Numerous exercises. They liked the activity and In order to provide an opportunity to
opportunities are being provided for expressed commitments to applying its human capital, MPCL has recently
foreign and local training programmes them in their functions. launched a fully sponsored foreign
and courses. Twenty five employees degree programme for the desirous
attended technical and 24 non- PSYCHOMETRIC TESTING employees who aspire to study
technical programmes abroad during The Human Resource Department in Ivy League or other top ranking
the year. Similarly 36 attended introduced Psychometric Testing in Universities of the world which
technical and 73 non-technical within 2017. Two HR officers were sent to stand out for their widespread and
the country. receive training on psychometric prestigious global reputation with a
tools i.e. Personality Assessment purpose to encourage the employees
IN-HOUSE PROGRAMMES/ (Occupational Personality to expose themselves to quality
SEMINARS Questionnaire 32r) and Ability education and international learning
Professional talks and seminars are tests (Verbal, Numerical and Verbal experiences. The programme includes
commonly recognized for valuable Reasoning). The OPQ32r is designed Masters and Doctoral level degrees.
exposure to expert knowledge to assess the individual preferences This is dual benefit programme for the
and innovative technologies. MPCL between personalities while the employees as well as the Company,

58
follows a rich programme of in-house Ability tests are designed to measure besides being a welfare measure and
talks and seminars and 21 such maximum performance. is expected to deliver the
sessions were conducted during perceived objectives in a long way.
61
Mari Petroleum Company Limited
Human Resource Development Annual Report 2018

INDUSTRY ACADEMIA projects in the field to the students locations of Ghauri Field, Mari Field
COOPERATION and faculty of related disciplines of Daharki and Sujawal Field.
Collaboration between industry and QAU Islamabad and NED Karachi. A
academic institutions has proved very team comprising GM HR, HR Specialist, E-LEARNING PILOT PROGRAMME
useful in spawning practical application Talent Acquisition and Psychometric The E-Learning programme is intended
of innovative ideas. Specialist, and Incharge Sajawal Gas to provide opportunity to the employees
Production field visited the HODs of to improve their knowledge and
The Silicon Valley, the largest electrical, mechanical, petroleum and enhance their skills to perform their
innovation and technology center chemical department of NED University jobs more efficiently. A pilot programme
in the world, took birth through to discuss modes of association and was launched for 12 technical trainees
collaboration with Stanford University. collaboration. The Team also visited on December 20, 2017 to assess the
This model is now gaining currency in UET Lahore and LUMS in October 2017 efficacy of E-Learning. The trainees
the developing countries with positive for the same purpose. GM (HR) and were assigned 10-12 learning courses
outcomes. MPCL has been sponsoring Talent Acquisition and Psychometric and were required to complete all the
the chair of the head of the School Specialist visited PIEAS in December modules in 2 months, which they did
of Earth Sciences in the QAU. It has 2017. During the year, MPCL organised successfully. The process is explained
also been providing opportunities of field tours for about 200 students from with more clarity through the flowchart
International Women’ Day Celebrations at MPCL Head Office
professional lectures and visits to E&P NUST, NED, BUITEMS, NFC to its field given below:
INTERNATIONAL WOMEN’S DAY
International Women’s Day (March 8)
E-Learning Pilot Programme is globally celebrated to recognise the
social, economic, cultural and political
emancipation and achievements of
Selection the women. The Day also marks a call
Assign the Post Course
of course by Completion of to action for accelerating the end to
course to the Activities/
Trainee duly the course gender discrimination.
Trainee Follow up
endorsed by HOD Keeping in view the importance
of this day and giving a flavor of
empowerment to MPCL female
employees, an in-house awareness
session on women empowerment
was conducted at MPCL Head Office
on the topic of “Rise Above (Women
Keeping in view its efficacy, the MD Empowerment)” by Ms. Shireen Naqvi officer from each department was followed by the next senior officer
has desired to arrange another session (Carnelian) in 2017. In continuation given the opportunity to perform assuming the office of Manager and
with more creative ideas and games of the same, the senior most female the duties of General Manager/HOD so on March 08, 2018.
and another series of this activity is
planned to be held during September –
November 2018. CMS ONLINE TOOL

EQ (EMOTIONAL QUOTIENT)
International Human
Resources Development
Assess Plan Learn
Emotional Intelligence is designed Corporation (IHRDC) has
to provide useful skills to handle ● Provides a ● Allows employees ● Once competency
been a worldwide leader in
Comprehensive to review their development plans
increasing levels of emotional training and competency assessment process competency profile are approved,
Creativity through Painting Workshop at MPCL Head Office stresses in the work environment. development for the oil and Including self- and build competency employees can start
MPCL attaches great importance to gas industry for over 40 assessment, supervisor development plans the learning process
CREATIVITY THROUGH PAINTING mandatory for the management staff the Emotional Intelligence and has and qualities assessor ● Supervisors can train ● When ready,
years. MPCL has acquired assessments
MPCL introduces variable initiatives to participate in the programme. introduced the Emotional Quotient approve and rejects employees can initiate
two of IHRDC’s products/ ● Determines competency the plans and provide the reassessment
to stimulate creativity, innovation, A very positive feedback was (EQ) which leads to identifying, services i.e Competency skill gaps for each feedback and comments process to close
production enhancement and received at the end of every session. understanding and managing emotions Management System (CMS) employee through to the employees skill gaps
stress release. It organised a weekly Employees felt rejuvenated by positively for relieving job-related assessment process ● Supervisors can keep
and e-Learning Module. CMS
● Generates reports that track of the

60
programme of painting at the Head painting their thoughts/emotions stresses, improving communication, leads to building a database
Office from July to September 2017 and participating in stress relieving provide an overview of employee learning
diffusing tensions and promoting of job roles and required the workforce’s strengths progress throughout
and March to May 2018. It was activities with other team members. harmony. competencies and skill and areas of valueability
63
Mari Petroleum Company Limited
Human Resource Development Annual Report 2018

levels. Furthermore, the Competency Management System enables automating MPCL MANPOWER performance management,
and personalising learning plans for each learner. The software includes the MPCL permanent manpower, duly succession planning,
following functions: approved by the Board, has been remuneration, benefits and
expanding in line with the operational compensation, and leave
l Allows employers to evaluate employees’ performance.
expansion and requirement. The total management etc. after
l Enables employees to showcase their skills and certifications. number of employees as at June 30, thorough deliberations, industry
l Identifies gaps in the competencies of the employees and suggests learning 2018 was 1,187 which includes 478 benchmarking and striking a
plans to fill those gaps. management, 675 non-management healthy balance between the
staff and 34 management trainees. interests of the Company and
l Makes training more prolific.
However, the average number of the employees. These policies
employees during the period under have been outlined in respective
review stood at 1,150. Management System Procedures
(MSPs), which are periodically
Mari Internship A total of 127 interns attended the
DIVERSITY AND EQUAL reviewed for improvements
Mari Internship Programme during
Ceremony-2017 2017. The students were selected
OPPORTUNITY POLICY/PRACTICE and approval by the Board of
The Board has been emphasising Directors.
The Company attaches great from the top HEC recognized
Best Intern of the Year 2017 the policy and practice of diversity
importance to annual internship universities of Pakistan to provide
programs for multiple objectives. them a platform wherein they could Ms. Sohab Mushtaq in employment opportunities and For continuous professional
a healthy gender balance opening development of employees
Foremost objective is to provide compliment their professional LEARNING IS AN Senior Manager Accounts
greater opportunities to women in with the potential to fill key
opportunities of practical exposure knowledge with practical application. AMAZING PROCESS Declared Chartered offices as well as in the fields. During business leadership positions,
to field application of the theoretical A ‘Best Intern Award’ was introduced
AND ACTUALLY FINDING Accountant (CA) Woman the year, the percentage of female a comprehensive Succession
knowledge in E&P functions. for the first time during the year for
making the internship programme SOMEBODY WHO IS of the Year 2018 workforce increased by 4%. There Plan is followed which ensures
is an effective policy in vogue that that experienced and capable
It also provides MPCL with an more inspiring and motivational. EAGER TO MAKE YOU Ms. Sohab Mushtaq, Senior
aggressively deals with harassment employees are prepared to
opportunity to spot and earmark LEARN IS LIKE HITTING Manager Accounts at MPCL has incidents to provide a safe and assume higher roles as these
bright interns for regular employment The Best Intern of the Year 2017 been declared CA Woman of
THE JACKPOT AND WELL, conducive work environment. become available due to
in future. The graduating interns was awarded to Miss Ana Fatima
I DID. I WAS AWARDED the Year 2018. The Award was retirement or separation of
become medium of projecting the Pasha, a graduate from the Lahore
presented to her on CA Women’s HUMAN RESOURCE key personnel. The plan is also
reputation of the Company among University of Management Sciences in BEST INTERN OUT OF MANAGEMENT POLICIES instrumental in safeguarding
the peer industry. Economics and Political Sciences. OVER A HUNDRED Day Celebration on April 14, 2018.
INCLUDING PREPARATION OF A the Company against key
The Awards are part of ICAP and
OTHER INTERNS AFTER SUCCESSION PLAN personnel risks, which arises
the CA Women Committee’s MPCL has developed effective HR from unplanned and unexpected
THE COMPLETION OF
endeavours to recognise female policies covering employment, changes at senior management
SIX WEEKS AND THERE training, professional development,
chartered accountants for levels.
IS NO TRICK OR OVER
outstanding performance in their
EFFICIENCY YOU NEED TO
professional careers. The winners
SHOW TO REACH A GOAL were selected by an independent
LIKE THAT. jury, based on predefined
HONESTY, CONSISTENCY criteria, from a list of candidates
AND HARD WORK ARE nominated by the members.
THOSE THREE WORDS Ms. Sohab Mushtaq has been
THAT LEAVE YOUR PALMS associated with MPCL since
FULL EVERY SINGLE TIME. November 2004. She is an FCA
SO DON'T LET GO OF from ICAP, an ACA from Institute
THEM AND KEEP AIMING of Chartered Accountants in
Internship Ceremony, MPCL Head Office FOR THE STARS AND IN England and Wales and a Sloan
NO TIME YOU'LL HAVE Masters in Leadership & Strategy

62
YOUR OWN GALAXY . from London Business School.
65
Mari Petroleum Company Limited
Human Resource Development Annual Report 2018

London Business School


Students visit MPCL

A group of 20 students from London


Business School (LBS) visited MPCL To quote Brandon, one of the trek participants:
on April 2, 2018. The group’s visit to
MPCL was part of a weeklong trip to
Pakistan led by LBS alum and Senior
Manager Accounts MPCL, Ms. Sohab
THEIR GENEROSITY IN OPENING THEIR BUSINESS
Mushtaq. This was the first ever
LBS-Pakistan Trek. Students were AND THEIR PERSONAL CALENDARS TO WELCOME
taken to a whirlwind tour of Pakistan US IS PART OF WHAT MAKES PAKISTAN INCREDIBLE.
covering Lahore, Islamabad and
THANK YOU MARI
Shogran. The initiative was aimed at
changing the narrative of Pakistan in
the eyes of International Community.

At MPCL, the group was welcomed for a sumptuous dinner at Serena acknowledged the warmth and
by MPCL Management and given Hotel, where the students shared hospitality of Pakistani people from
a presentation about MPCL’s their views about and experiences every walk of life.
history and operations. After the in Pakistan during few days of
presentation, the group was hosted exploration. During their visit, the LBS students
for a lunch with MPCL Senior also met the then Honorable Prime
Management to allow them the The students also reflected on how Minister, Mr. Shahid Khaqan Abbassi

64
opportunity to learn more about the visit helped them in gaining a to help facilitate an understanding of
MPCL and its culture. Later in the better understanding of the Country’s the geo-political narrative of Pakistan.
week, MPCL hosted the group rich and diverse culture. They also
67
Mari Petroleum Company Limited
Annual Report 2018

approach to respond to unexpected maintains soft copies of supporting


INFORMATION which necessitates the selection
and implementation of leading
in underground oil and gas assets. for instant recall. Implementation
of state of the art integrated E&P incidents that threaten the financial documents and records in its

Technology
information sharing systems. Efficient Mari Seismic Data Processing Center data management system has Company’s IT infrastructure SAP system, which is accessible only
information systems provide greater (MSPC) is playing a vital role by led MCPL to the introduction and encompassing hardware, software, to authorised users. Regular backups
integration across functional teams providing high quality and state of adoption of industry’s best practices networks, processes and people. of SAP System are also secured.
for effective planning, coordination the art 2D and 3D data processing regarding standardised data Priorities and recovery time
and decision making in its core facility that helps the Company in management related workflows in objectives for critical systems are Hard copies of active business
business of E&P activities. timely interpretation and selection the Company. The system is helping developed in the light of business records are maintained in locations

A
technological paradigm of exploration prospects. MSPC is an exploration, production and reservoir impact analysis. DRP is periodically where they can be quickly and easily
shift incorporating key Our exploration and reservoir integrated geoscience services center professionals in effective planning, tested and improved to help enhance accessed i.e. storage space provided
advancements in IT sector departments use industry and is equipped with industry leading coordination and timely decision the efficacy of recovery procedures, in each department. Records which
is indispensable to E&P industry’s leading Geological & Geophysical processing software and latest high- making during E&P related lifecycle. processes and ensure improvement are not frequently required are stored
continued success. Mari Petroleum interpretation and reservoir performance hardware. Its scalable of the Company’s infrastructure in secured store rooms in the Head
SAP Plant Maintenance System (PMS) readiness to minimise system down- Office Building as well as at separate
has been successfully implemented time in disaster situations. premises.
at all MPCL operated fields. The key
benefit of SAP PMS includes the POLICY FOR SAFETY OF RECORDS
standardisation of maintenance At MPCL, management of Company
processes across the organisation, records is decentralised and decisions
better planning and scheduling, regarding ‘retention period’ and
integrated PM processes with other ‘destruction’ of records are made at
functions and equipment level departmental level keeping in view
maintenance cost breakup including legal and operational requirements.
equipment history facilitating sound All efforts are made to ensure proper
decisions in critical situations. handling of business records to
protect them from loss, misuse or
IT GOVERNANCE POLICY misappropriation. All confidential files,
MPCL’s IT Governance Policy provides documents and records are kept in
necessary guidelines to ensure locked desks, file cabinets or offices
effective input and decision-making except when in use; or are kept in
pertaining to IT policies, standards, office areas or secured facilities
guidelines, processes and procedures. where access is granted only to the
As per the Policy, the Company’s IT authorised individuals. Reasonable
related initiatives and functions are caution is exercised to avoid such
overseen by a Steering Committee files, documents and records being
headed by the Managing Director visible or accessible to unauthorised
with all Heads of Departments as individuals.
its members. The Committee meets
on quarterly basis to evaluate and MPCL adopts industry leading
ensure that the IT Strategy is aligned software systems to ensure secure
with the Company’s business and fast transmission of financial
objectives, and effective controls are data for recording and reporting
in place to safeguard its information of financial transactions. It has
assets. The Committee also ensures implemented Microsoft SharePoint
that the requirements of Information System that extends technological
takes pride in adopting technology modeling software suites developed infrastructure enables it to employ Security Management System edge for safe and fast data storage
innovations as it champions corporate by renowned companies like latest geophysical technology across (ISMS-27001:2013) are adequately and retrieval. It provides an effective
sustainability and operational Schlumberger and Halliburton. the full spectrum of seismic imaging met alongwith the identification business productivity platform
excellence. Integrated workflows provide and reservoir characterisation. and overview of implementation of equipped with well-integrated set
geophysicists and geologists with continual improvements in the ISMS of technologies to bring information
The company focuses strongly critical collaborative capabilities that Preservation and retrieval of E&P data systems. management, access, collaboration,
people-driven processes and critical

66
on effective interaction among all yield better geological insights. These is a crucial requirement of the E&P
departments especially between systems help to improve exploration companies. They need to preserve DISASTER RECOVERY PLAN (DRP) document management in a single
technical and non-technical setups success rate leading to the increase and handle very large volumes of data MPCL’s DRP provides a structured environment. The Company securely
69
Mari Petroleum Company Limited
Annual Report 2018

MAJOR Social Events


I Pakistan
t is important for an organisation work undoubtedly are the most picnics, corporate retreats, sports
to provide employees with ample effective ways of bringing employees competitions etc. have more personal
opportunities to build quality from various departments together touch, are deeper, longer lasting and
relationships with their co-workers.
Although, such opportunities can
to know one another in an informal
environment, to interact and to have
easily carried into work life.
Resolution Day
be provided on-the-job and in more
formal ways, however, arrangement
of informal get-togethers away from
fun and entertainment. Relationships
built in informal settings
such as dinners, family galas,
Living by the above philosophy, the
Company arranged following major
events during the year:
Celebrations
79
th Pakistan Resolution Day was celebrated on 23rd
March, 2018 with patriotic zeal and fervour at MPCL

Annual Function
Head Office and field locations. Continuing with the
past tradition, the Head Office building and adjoining areas were
decorated with National and MPCL flags and illuminated with
of the Management beautiful lights to commemorate Pakistan Day. The whole area was
lit up in national colors of green and white, becoming a source of
Employees inspiration and heightening the patriotic feelings.

A
nnual Function is an occasion for recognizing
the extraordinary efforts of MPCL employees
for achieving the Personnel, Departmental and
Corporate level objectives and targets set for the year.
Annual Function also allows the employees that come
in from diverse cultures and backgrounds to know one
another in an informal way, which may otherwise be
impossible in their respective work routines.

Keeping with its past tradition, the Company


celebrated its Annual Function 2017 on January 13,
2018 at Serena Hotel Islamabad with traditional
enthusiasm. Mr. Shahid Khaqan Abbasi, the then
Honourable Prime Minister of Islamic Republic
of Pakistan was the Chief Guest. Apart from
Management Employees and their families, ex-MDs
of MPCL and a large number of distinguished guests
from the Government of Pakistan and E&P sector
were also in attendance.

The event started with recitation from the Holy


Quran followed by opening speech by the Managing
Director MPCL. Later on, the Chief Guest conferred
Outstanding Performance Awards and the Best
Field Trophy for the year 2017. Speaking on the
occasion, the Chief Guest applauded MPCL’s financial
and operational performance and its contributions
towards socio-economic development of the Country.

After a sumptuous dinner, music maestro Rahat Fateh

68
Ali Khan enthralled the audience with his live musical
performance.
71
Mari Petroleum Company Limited
Major Social Events Annual Report 2018

Mari Family Gala


A
Family Gala was organised for Management employees and their
families at Ayub Park, Rawalpindi on December 09, 2017. The
event consisted of different activities including football and cricket
matches, musical chair, relay race, tug of war etc. followed by high-tea and prize distribution. Kids playing area was also
set-up with multiple activities for kids. The event was appreciated by all the participants.

Realising the importance of


sports in corporate life, different
sports competitions were
arranged for the employees for
the first time in the history of the
Company. Individual players and
Departmental Teams participated
in Table Tennis, Cricket, Futsal
and Badminton competitions
held over several weeks during
April-May 2018. Management
and non-management
employees from all cadres
enthusiastically participated
in different competitions.
Winners and Runner-ups were
awarded trophies and medals as
mementos of their participation.

Sports Events All the employees gave a thumbs-

S
ports activities are very work. Such activities also give the up to the initiative. Sports
effective in enhancing the employees a true measure of their activities will now be a permanent
spirit of comradery, teamwork physical fitness. Regular participation feature of corporate life at
and cooperation among employees in sports activities improves MPCL. Such competitions will be

70
which ultimately leads to improved employees’ health and quality of life arranged every year with more
performance and productivity at in an otherwise sedentary lifestyle. sports added to the list.
73
Mari Petroleum Company Limited
Annual Report 2018

AWARDS AND 1st Position for

Recognit ions
Annual Report 2016
in the Fuel and
Energy Sector at Best
Corporate Report

D
uring the year, the Company won a number of
awards from various independent bodies not only
Awards
for its financial and operational performance and
reporting but also for its management, HSE, and CSR
practices. Major awards won by the Company included:
1st Prize for
Best HRM
Practices 2017

1st Prize in Oil & Gas Sector at 33rd


Corporate Excellence Awards

First Position at
5th Employer of the 2nd Prize for Occupational
Company of the Year and Year Awards 2016 Safety & Health Practices
MPCL Annual Report 2016 wins Fastest Growing Company
SAFA Award in February 2018 of the Year Awards

72
75
Mari Petroleum Company Limited
Annual Report 2018

IMPLEMENTATION OF l TORs of the Board’s Audit


Committee and HR&R Committee

Listed Companies
were revised to incorporate new
requirements stated in the Code.

l Although not required under


(CODE OF CORPORATE GOVERNANCE) REGULATIONS 2017 the Code, the Company drafted
the TORs of Board’s Technical
Committee to clarify its role and
functions.

l A Directors’ Training
Programme was arranged
at MPCL Head Office on
August 28, 29 & 31, 2018. The
programme was conducted by
the Country’s premier institute
Pakistan Institute of Corporate
Governance. In addition to
MPCL Directors, CFO, Company
Secretary and two other
executives including one female
officer, several Directors and
senior executives of FF Group
Directors Training Programme at MPCL Head Office
companies also attended the
training.

I
• Self-Evaluation Templates for • Assessment of the l MPCL Risk Management Policy
n November 2017, the Securities The Company adopted a proactive
l The Company also conducted Board’s Committees Company’s current was first formulated in 2004.
and Exchange Commission approach to implement the Code in
an orientation session for the risk maturity level The policy is being revamped
of Pakistan issued the Listed true letter and spirit, by undertaking • Self-Evaluation Templates for
Directors on the Companies Act, and preparation of an in line with new Codal and
Companies (Code of Corporate the following measures: Individual Directors
2017 and the Listed Companies improvement roadmap for business requirements. The
Governance) Regulations 2017 (the
(Code of Corporate Governance) achieving the desired target Policy will be presented to the
Code), effective from January 01, 2018. l The Code and its summary, l The policy on “Acquisition and
Regulations, 2017 on August 30, maturity level. Board, once finalised.
The Regulations aim to revamp the highlighting the significant Disposal of Fixed Assets” was
2018.
Corporate Governance framework changes, were circulated to all already in-place. However, the said • Preparation of a complete All the documents which
applicable to the listed companies. the members of the Board for Policy was updated in line with training needs analysis based
l Using in-house resources, the required Board’s approval were
their information. the requirements of the Code and on early view of competency
Company prepared/drafted the duly presented to the Board
Through the new Regulations, a renamed as “Policy for Acquisition, gaps and provision of
following: and approved. Work on other
number of significant changes have l The checklist for determining the Disposal & Lease of Assets, training to ensure gaps are requirements of the Code is in
been introduced in the Corporate compliance with the Code was • Letter from the Chairman Capital Expenditure, Planning and addressed. progress.
Governance framework. The changes updated. of the Board to newly Control”.
mainly pertain to the number of appointed directors setting • Review of existing Risk
COMPLIANCE EXCEEDING
simultaneous directorships, minimum l A Gap Analysis was carried out to out their role, obligations, l To improve risk management Management Policy of the
LEGAL REQUIREMENTS
number of independent directors on identify the areas where action powers and responsibilities competencies and capabilities Company
All directors on MPCL Board
the board, female director, mechanism was needed and timelines were in accordance with the across the organisation, the
along with two HODs and one
for evaluation of individual directors determined. Companies Act 2017 Company has hired the services Updates on major risks faced
female executive have acquired
and the Committees of the board, and the Company’s of I-Risk Group (a UK based Risk by the Company and risk
certification under directors’
composition of the committees, l In line with the Code’s Articles of Association, Management Consultancy). The mitigation strategies adopted by
mandatory training programme.
directors’ remuneration, directors requirements, Engr. S. H. Mehdi their remuneration and project will kick-start in the first the Management are a regular
MPCL is now well ahead of the
training, qualification of CFO, Head Jamal, an independent director, entitlements. week of September 2018 and feature of the Managing Director’s
timelines as far as requirements of
of Internal Audit and the Company was appointed as President of will be completed in a period of briefing to the Board in each

74
• Directors’ Remuneration the Code pertaining to mandatory
Secretary, external audit and reporting the Board’s Audit Committee and 4 months. The deliverables of the Board meeting in compliance with
Policy training of Directors, HODs and
and disclosures etc. HR&R Committee. consultancy assignment include: Clause 14 of the Code.
female executives is concerned.
77
Mari Petroleum Company Limited
Annual Report 2018

CORPORATE
Governance
of the Company and identifying areas of significant business risk and ensures b) Directors' remuneration
that policies and mechanisms are in place to adequately manage those risks. c) Annual review of the
performance of the Board,
The Board has delegated certain responsibilities to its committees for review Committees and individual
and recommendations to the Board. All Committees operate in accordance with Directors
their TORs approved by the Board. The permanent Committees of the Board
are the Audit Committee, Human Resource and Remuneration Committee, and d) Strategy and direction, financial
Technical Committee. Any agenda or matter that requires Board’s approval controls, legal and regulatory
is first presented to relevant Committee of the Board, which after thorough compliance, risk management,
deliberations presents its recommendations to the Board for final decision. related party transactions,
company’s significant policies,
The Board has delegated the day to day management of the affairs of the changes to the company’s
Company to the management through the MD/CEO subject to the agreed capital structure, declaration
authority limits as detailed in Clause 100 of MPCL Articles of Association and of dividend and bonus shares*,
Managing Director’s General Power of Attorney. diversification projects,
acquisition and relinquishment
However, in line with the provisions of Section 183 of the Companies Act 2017, of working interests and major
Clause 10 of the Listed Companies (Code of Corporate Governance) Regulations capital expenditures
2017, and Clause 73 of MPCL Articles of Association, the Board has reserved e) Major transactions which exceed
following matters to itself to maintain control over certain matters of strategic, MD’s authority or which are
sensitive or extraordinary nature or which exceed the thresholds set in the outside the ordinary course of
authority delegated to the management. business
f) Delegation of authority to the
Attendance at Board Meetings Management.
Director Meetings Attended [* subject to approval by the shareholders]

Lt. Gen. Syed Tariq Nadeem Gilani (Retd) 02 1


Formal Orientation Courses
Lt. Gen Khalid Nawaz Khan (Retd.) 02
for Directors
Lt Gen Ishfaq Nadeem Ahmad (Retd) 05
Upon joining the Board, each director
ROLE OF THE CHAIRMAN
Chairman is responsible for
MD/CEO
The Managing Director is
Mr. Qaiser Javed 05
is provided with an orientation
Dr. Nadeem Inayat 05 pack comprising of Memorandum
CHAIRMAN AND providing effective leadership responsible for providing effective
Maj. Gen. Javaid Iqbal Nasar (Retd.) 03 2 and Articles of Association,
to the Board particularly leadership to the management
THE MD/CEO during Board and shareholders and employees and for overseeing
Maj. Gen. Mumtaz Ahmad Bajwa (Retd.)
Brig Raashid Wali Janjua (Retd.)
01
05
Significant Policies, Participation
and Shareholders Agreement,
meetings. He sets the agenda the day-to-day operations and
Chairman of the Board of the Board meetings and management of the Company’s Mr. Sajid Mehmood Qazi 02 3 Mari GPA, MD’s Power of Attorney,
Mr. Sabino Sikandar Jalal 02 Petroleum Policy 2012, Code of
and MD/CEO of the ensures that reasonable time is businesses and affairs by
Qazi Mohammad Saleem Siddiqui 05 Corporate Governance 2017 and
available for discussion of the ensuring that the executive team
Company have well same. He creates the conditions implements the policies and Mr. Shahid Yousaf 04 latest Annual Report. The Company
Secretary gives a briefing to the
of conducive environment for strategies approved by the Board. Mr. Zahid Mir 05
defined separate overall effectiveness of the Board, He keeps the Board updated on Mr. Ahmed Hayat Lak 05
but complimentary facilitates and encourages the significant and sensitive issues Mr. Manzoor Ahmed 04 4
contribution of executive, non- that might affect the Company. Mr. Shahid Ghaffar 01
roles in line with executive, and independent He ensures that operational plans Engr. S. H. Mehdi Jamal 05
directors in carrying out the and control systems are in place;
the Companies Act Board’s business in line with and he regularly monitors actual 1 Joined the Board in January 2018 in place of Lt Gen Khalid Nawaz Khan (Retd)

2017 and the Listed applicable laws, rules and performance against plans and 2 Joined the Board in February 2018 in place of Maj. Gen. Mumtaz Ahmad Bajwa (Retd.)
regulations. At the start of the takes remedial actions, where 3 Joined the Board in March 2018 in place of Mr. Sabino Sikandar Jalal
Companies (Code of term of newly appointed directors, necessary. 4 Joined the Board in September 2017 in place of Mr. Shahid Ghaffar
the Chairman informs them
Corporate Governance) about their roles, responsibilities, OPERATIONS OF THE BOARD Matters Reserved for the Board
Regulations 2017.

76
duties and powers to help them The Board is responsible for setting a) Appointment and removal of (i) Board Members and its Committees
effectively manage the affairs of strategic objectives, overseeing the including that of the Chairman (ii) of CFO, HIA and Company Secretary (iii)
the Company. effective management and control MPCL employees of Grade 26 and above, and (iv) of external auditors *
79
Mari Petroleum Company Limited
Corporate Governance Annual Report 2018

new director, covering the salient interest of minority shareholders. The conducted by it are on an arm’s auditors by Company’s shareholders g) Review of the scope and extent of
features of corporate structure, roles Board is committed to meeting the length-basis. and considers any questions of internal audit, audit plan, reporting
and responsibilities of the Board, requirements pertaining to number of resignation or removal of external framework and procedures and
Committees and Individual Directors, independent and female directors as MD/CEO Performance Review auditors, audit fees and provision by ensuring that the internal audit
overall structure, history and they become applicable. MD/CEO’s report on the Company’s external auditors of any service to the function has adequate resources
operations of the Company. Directors operations, major achievements, and Company in addition to the audit of and is appropriately placed within
are also sent on local and foreign Female Directors on MPCL Board progress of outstanding issues is its financial statements. the Company.
trainings and courses to acquaint The Board is committed to meeting presented to the Board of Directors
h) Consideration of major findings of
them with latest developments and the requirements pertaining to as a regular agenda item in each Terms of reference of the Audit
internal investigations of activities
trends in corporate governance, number of female directors as they meeting (at least once in each Committee are as follows:
characterised by fraud, corruption
finance, management and leadership become applicable on reconstitution quarter) for review, discussion and a) Determination of appropriate
and abuse of power and
practices. of the Board in June 2019. decisions, all of which are duly measures to safeguard the
management’s response thereto.
recorded in the minutes. During Company’s assets.
Policy for Retention of Fee by an Security Clearance of the year 2017-18, five such reports i) Ascertaining that the internal
b) Review of Annual and Interim
Executive Director Foreign Directors were presented to the Board. The control system including financial
Financial Statements of the
An executive director on MPCL Board MPCL has never had a foreign Board is extremely satisfied with and operational controls,
Company, prior to their approval external auditors, their removal,
may join the board of any other public director on its Board. In case a foreign the performance of the incumbent accounting system for timely
by the Board of Directors, audit fees, the provision of
or private company as non-executive director is elected on MPCL Board Managing Director. Financial year and appropriate recording of
focusing on: any service permissible to be
director with the approval of MPCL in future, security clearance will be 2017-18 was the best ever in the purchases and sales, receipts and
rendered to the company by the
Board. In such case, the executive required from the Ministry of Interior history of the Company in terms • major judgmental areas; payments, assets and liabilities
external auditors in addition to
director shall be entitled to retain in through the SECP. A detailed SOP is of production and profitability. • significant adjustments and reporting structure are
audit of its financial statements.
full the fee and/or other emoluments in place for security clearance and Further details of the Company’s resulting from the audit; adequate and effective.
The Board of Directors shall
received from such other company provision of security to the foreigners progress and achievements under j) Review of the Company’s give due consideration to the
• going-concern assumption;
against his/her services as a non- coming into Pakistan to work with the incumbent MD/CEO are provided statement on internal control recommendations of the audit
executive director. the Company. Security Section of in Managing Director’s Outlook and • any changes in accounting systems prior to endorsement by committee and where it acts
MPCL Administration Department other relevant sections of the Annual policies and practices; the Board of Directors and internal otherwise, it shall record the
Other Directorships of the undertakes coordination with Ministry Report. • compliance with applicable audit reports. reasons thereof.
Executive Director of Interior for all security related accounting standards; k) Instituting special projects, p) Consideration of any other issue
MD MPCL is the only executive matters. Supporting documentation COMMITTEES OF THE
• compliance with these value for money studies or or matter as may be assigned by
director on the Company’s Board. is provided by the Corporate Affairs BOARD OF DIRECTORS
regulations and other statutory other investigations on any the Board of Directors.
He does not hold non-executive Department. The Board of Directors oversees the
and regulatory requirements; matter specified by the Board of
directorship in any other company. operations and affairs of the Company q) Approval of resolutions for
and Directors, in consultation with the
[However, he has served as Chairman Conflict of Interest in an efficient and effective manner. transfer of shares and issuance
CEO and to consider remittance
PPEPCA (a not-for-profit organisation) The Directors and employees of the For the sake of smooth functioning, • all related party transactions. of duplicate share certificates of
of any matter to the external
from September 2017 to September Company must recognise that in the the Board has constituted three the Company, as per provisions
auditors or to any other external
2018.] course of performing their duties committees. These committees are c) Review of preliminary of the Companies Act, 2017
body.
there may be a situation where there entrusted with the task of ensuring announcements of results prior (resolutions to be signed by any
Board’s Policy on Diversity is a conflict in the performance of speedy management decisions to external communication and l) Determination of compliance with two members).
MPCL has a diverse and balanced such a duty and a personal associated relating to their respective domains. publication. relevant statutory requirements.
Board which not only represents the interest they may have. Directors and d) Facilitating the external audit and m) Monitoring compliance with Attendance in the Audit
shareholders proportionately but employees are required to be aware Audit Committee: discussion with external auditors the best practices of corporate Committee Meetings
also provides a mix of professional of the conflict of interest provisions Salient Features of major observations arising governance and identification of Five meetings of the Audit Committee
expertise in leadership, finance, contained in the Companies Act 2017, The primary role of the Audit from interim and final audits significant violations thereof. were held during the financial year
economics, engineering, legal, Listed Companies (Code of Corporate Committee is to provide oversight and any matter that the auditors 2017-18. The attendance of directors
n) Review of arrangement for staff
corporate law, oil & gas exploration Governance) Regulations 2017, MPCL of the financial reporting process, may wish to highlight (in the in the meetings was as under:
and management to report to
and production disciplines and Articles of Association, and MPCL the audit process, the system of absence of management, where audit committee in confidence, Meetings
business management skills and Code of Conduct. They are also internal controls and compliance with necessary). Director Attended
concerns, if any, about actual
experiences covering adequately required to disclose their interests applicable laws, rules and regulations.
e) Review of management letter or potential improprieties in Engr. S.H. Mehdi Jamal 05
all areas of MPCL’s business beforehand and are not allowed to
issued by external auditors and financial and other matters and to Mr. Qaiser Javed 05
undertakings. Currently the Board be involved in the decision making Terms of Reference
management’s response thereto. recommend instituting remedial Mr. Shahid Yousaf 05
comprises of one executive director, regarding any transaction or matter in The Audit Committee is, among
and mitigating measures. Mr. Ahmed Hayat Lak 05

78
one independent director and twelve which they have vested interest. It is other things, responsible for f) Ensuring coordination between
o) Recommend to the board of Mr. Manzoor Ahmed 04
non-executive directors. Two of the overriding intention of the Company recommending to the Board of the internal and external auditors
directors the appointment of Mr. Shahid Ghaffar 01
directors represent shareholding that all business transactions Directors the appointment of external of the Company.
81
Mari Petroleum Company Limited
Corporate Governance Annual Report 2018

any other connection with the Technical Committee:


company. Salient Features
The primary role of the
h) Review managements proposals
Committee is to review the
for the promotion of senior staff
technical and operational matters
in accordance with Article 100-c
of the Company and present its
of the Articles of Association
recommendations to the Board
and make recommendations for
for consideration and approval.
consideration of the Board of
Directors.
Terms of Reference
i) Review management’s proposals The Technical Committee shall be
for changes in personnel responsible to evaluate technical
compensation policy and aspects of all projects/matters
salary structure of employees pertaining to the Company’s core
and make recommendations businesses i.e. Exploration &
for consideration of the Production and allied services and
Board. President of the Audit make their recommendations for
Committee, if not already a consideration of the Board. The
member, will be the co-opted projects/matters may, inter alia,
member of the Human Resource include the following:
HR and Remuneration Committee for this function.
a statement to that effect shall a) Annual Exploration, Appraisal
Committee and Development work
be made in the Directors’ Report j) Review management’s
Salient Features programme and its Budget.
disclosing name, qualifications proposals for changes in the
The primary role of the Committee
and major terms of appointment. Company’s organogram and b) Farm-in and Farm-out
is to review major HR related
make recommendation for opportunities including
matters of the Company and c) Recommending the Human
consideration of the Board. acquisition of working g) Committee’s annual self-evaluation as per Listed Companies (Code of
present its recommendation to Resource Management policies
to the Board. interest in a new block, Corporate Governance) Regulations 2017.
the Board for consideration and k) Evaluate the candidates and
approval. d) Recommending to the Board make recommendation for the acquisition of additional h) Any other matter that may be referred by the Board to the Committee.
of Directors the selection, appointment of senior staff in working interest in an
Terms of Reference evaluation, compensation Group 26 and above. For this existing block, partial or Attendance in the Technical Committee meetings
Terms of reference of the HR&R (including retirement benefits), particular function, the Managing complete divestment of Five meetings of the Technical Committee were held during the financial year
Committee are as following: and succession planning of the Director will be co-opted working interest in an 2017-18. The attendance of directors in the meeting was as under:
a) Recommend to the board for CEO. member of the Committee. The existing block.
consideration and approval Committee may also co-opt any c) Relinquishment/surrender
e) Recommending to the Board Director Meetings Attended
a policy framework for other director of this purpose. of working interest in an
of Directors the selection,
determining remuneration l) Take up any matter assigned existing block. Brig Raashid Wali Janjua (Retd) 05
evaluation, development,
of directors (both executive by the Board and make its Maj. Gen. Javaid Iqbal Nasar (Retd.) 03
compensation (including d) Acquisition or disposal
and non-executive directors) recommendations to the Board Maj. Gen. Mumtaz Ahmad Bajwa (Retd.) 02
retirement benefits) of the Chief of plant, machinery and
and members of senior thereon. Mr. Sajid Mehmood Qazi 02
Operating Officer, Chief Financial equipment pertaining to the
management. The definition Mr. Sabino Sikandar Jalal 03
Officer, Company Secretary and Company’s core operations
of senior management will be Attendance in the Qazi Mohammad Saleem Siddiqui 05
Head of Internal Audit. and allied services, which
determined by the board which HR&R Committee Meetings Mr. Zahid Mir 05
f) Consideration and approval exceed MD’s authorised limit.
shall normally include the first Two meetings of HR&R Committee
layer of management below on recommendations of were held during the financial year e) Capital expenditures
REPORTS OF THE AUDIT COMMITTEE
the chief executive officer CEO on such matters for key 2017-18. The attendance of the pertaining to the Company’s
In accordance with its TORs, the Audit Committee reviewed the Company’s
level. management positions who directors in the meetings was as core operations and allied
Annual and Interim Financial Statements, including non-financial information,
b) Undertaking annually a formal report directly to the CEO or COO. under: services not provided for in
prior to publication. Audit Committee periodically reviewed the adequacy and
process of evaluation of g) Where Human Resource and the approved annual budget
Meetings appropriateness of internal control, matters relating to accounting policies,
performance of the board as Remuneration consultants are and where these exceed
Director Attended financial risks and compliance with accounting standards, statutory and legal
a whole and its committees appointed, their credentials shall MD’s authorised limit.
Engr. S.H. Mehdi Jamal 02 requirements and regulations. The Audit Committee discussed with external

80
either directly or by engaging be known by the committee and f) Company’s diversification auditors the issues arising from interim and annual audits along with the
Dr. Nadeem Inayat 02
external independent a statement shall be made by projects. Management Letter issued by External Auditors and management responses
Mr. Zahid Mir 02
consultant and if so appointed, them as to whether they have
83
Mari Petroleum Company Limited
Corporate Governance Annual Report 2018

Internal Audit Function is an that enables people to carry out Listing Regulations of PSX, and • Material Information pertaining
independent assurance and consulting their responsibilities. the Memorandum and Articles of to the Company’s operations is
activity and is designed to add value Association of the Company. circulated to PSX, SECP and the
e) Monitoring: Internal Control
and improve MPCL’s operations. It Shareholders as and when need
Systems need to be monitored • Annual and Quarterly Accounts
helps the Company to accomplish its arises.
by Internal Audit Department. of the Company are placed on
objectives by bringing a systematic,
This process assesses the quality the Company’s website while
disciplined approach to evaluating and
of Internal Control Framework in Annual Audited Accounts are also Briefing to the Shareholders
improving the effectiveness of risk
place. circulated to the Shareholders in During each AGM, a detailed
management, control, and governance
physical form. presentation on the Company’s
processes.
In addition, Internal Audit also performance during the year
• Besides their right to appoint
undertakes special tasks as and when and future plans is made by the
Objectives of ‘Internal Control directors to oversee affairs of the
directed by the Audit Committee of the Chairman. The presentation is
Framework’ are: Company, the Shareholders are
Board. Internal Audit plays a central followed by question answers
invited to all the shareholders
a) Effectiveness and efficiency of role in highlighting weaknesses in the session wherein the views of the
meetings (AGMs, EOGMs) and
operations; existing system and processes and minority shareholders are solicited,
are encouraged to present their
identifying implementation of effective their concerns are addressed and
b) reliability of internal/external viewpoint on important matters.
controls needed to strengthen the suggestions are noted for suitable
reporting; • There is an Investor Relations action.
overall control system.
c) compliance with laws, rules and Section on the Company’s
thereof. Important findings, risks Audit Committee on Appointment regulations; and Access of Head of Internal Audit to website which contains important Understanding of Major
identified and follow-up actions were of External Auditors Audit Committee investor specific information as Shareholders’ Views
d) safeguarding of the Company’s
examined thoroughly in order to allow Every year, the Audit Committee Head of the Internal Audit has direct well as an Online Complaint Form Major shareholders of the Company
assets.
appropriate measures to be taken. makes its recommendations to the access to the President and other for investors. are Fauji Foundation, OGDCL and
Board regarding the appointment Members of the Audit Committee. Government of Pakistan who
To achieve Internal Control Framework • The Board has approved an
Composition of external auditors and their fee. collectively hold 80% shares in the
objectives, following Internal Control Investor Relations & Grievance
The recommendations are based STAKEHOLDERS’ ENGAGEMENT Company. Out of 12 non-executive
Director Designation components are assessed and Policy which contains the
on performance of the Auditor, Major stakeholders of the Company directors currently on MPCL Board, 10
Engr. S.H. Mehdi Jamal President
1 evaluated by the Internal Audit mechanism for handling
satisfactory rating under QCR include Shareholders (Institutional and directors are nominees of/represent
Mr. Qaiser Javed 2 Member Department: shareholders complaints and
programme of ICAP, and their Minority), Customers, Suppliers, Joint the major shareholders. Hence,
Mr. Shahid Yousaf Member queries.
a) Control Environment: It sets the these non-executive directors are
eligibility to be re-appointed (including Venture Partners, Regulators, Banks
Mr. Ahmed Hayat Lak Member audit control tone of the Company • Minority investors can also lodge well aware of the views of the major
length of their term with the and other Lenders, Media, Employees,
Mr. Manzoor Ahmed 2 Member and influences the control their complaints and submit their shareholders about the Company and
Company). and Communities in MPCL Concession
1. Engr. S.H. Mehdi Jamal is an independent consciousness of personnel. It queries directly to the Shares adequately share those views with
areas. Relationships with different
non-executive director is the foundation of all other Department using conventional other directors and management of
Presence of President Audit stakeholders are extremely important
2. Mr. Qaiser Javed and Mr. Manzoor Ahmed components of Internal Control mail, fax, email or phone. the Company during Board meetings.
both qualify as financially literate. Committee in AGM for the Company as these relationships
providing discipline and structure.
The President Audit Committee is can impact MPCL’s operations,
Audit Committee's Views on present in each AGM to answer b) Risk Assessment: Management revenues, corporate image and profile.
Financial Statements the questions pertaining to the of Company is responsible MPCL maintains cordial relationships
The financial statements of the Committee’s activities during the for ensuring adequate risk with all of its stakeholders.
Company for FY 2017-18 were year and other important matters identification and analysis of
presented to the Audit Committee in which fall within the scope of the relevant risks to achieve Internal Engagement with Major
its meeting held on August 27, 2018. Committee’s mandate. Control Framework objectives. Stakeholders:
The Audit Committee reported to Engagement with Shareholders
c) Control Activities: These are
the Board that the statements are INTERNAL CONTROL FRAMEWORK • Relationships with the
the policies and procedures that
fair, balanced and understandable. AND ROLE OF INTERNAL AUDIT shareholders are managed in
help ensure that Management
The statements provide the In Compliance with the requirements line with the provisions of the
directives are carried out
shareholders and other readers with of Listed Companies (Code of Shareholders and Participation
effectively.
detailed qualitative and quantitative Corporate Governance) Regulations Agreement, applicable corporate
information which they can use 2017, the Board of Directors has set d) Information and
laws/rules/regulations/
to assess the Company’s current up Internal Audit function, which is Communication: Pertinent
notifications, notably the
position and performance, business headed by Head Internal Audit who information must be identified,

82
Companies Act 2017, Listed
model and strategies as well as the reports to the Audit Committee of the captured and communicated in a
Companies (Code of Corporate
Company’s future prospects. Board. structured form and time-frame
Governance) Regulations 2017,
85
Mari Petroleum Company Limited
Corporate Governance Annual Report 2018

Engagement with Regulators An independent Internal Audit of shareholders, EPS, P/E Ratio and by the Company till the final decision
• Relationship with SECP and PSX Department periodically reviews breakup value etc. of the Court in the matter. Accordingly,
are managed as per applicable the conduct of business of each dividend warrants were dispatched to
corporate laws/rules/regulations/ department and points out the areas The information is compiled and the Shareholders on October 05, 2017.
notifications, notably the for improvement, if any. provided by Business Recorder under Tax was deducted at the applicable
Companies Act 2017, Listed an arrangement with the Company. rates and deposited in the Government
Companies (Code of Corporate CONFLICT OF INTEREST Treasury.
Governance) Regulations 2017, The matter of Conflict of Interest All the material information which
Listing Regulations of PSX, and relating to Board members is might affect the share price of the Agenda Item-3: Appointment of
the Memorandum and Articles of dealt with in accordance with the Company is communicated to the auditors for the year ending June 30,
Association of the Company. provisions of the Companies Act 2017 PSX and SECP in a timely manner. 2019 and to fix their remuneration.
and the Articles of Association of the
• Annual and Quarterly Accounts
of the Company are filed with the
Company. Any person intending to LAST ANNUAL GENERAL Decision and Implementation:
Registrar of the Companies and
become a Director of the Company MEETING (AGM) M/s Deloitte Yousuf Adil, Chartered
has to submit a declaration that he/ 33rd AGM of the Company was held Accountants, were appointed as
SECP and are also circulated to
she is aware of the powers and on September 26, 2017 at 10:00 auditors to hold office until the
PSX.
duties of a Director as envisaged in a.m., at the Registered Office of the conclusion of the next Annual General
• Material Information pertaining the Companies Act 2017 and has Company situated at 21-Mauve Area, Meeting of the Company for the year
to the Company’s operations is read the Articles of Association of the 3rd Road, Sector G-10/4, Islamabad. ending June 30, 2019 at the fee agreed
circulated to the PSX and SECP Company. by the Board of Directors.
as and when need arises. Agenda, Decisions and
• The Company also participates Further, MPCL has a Code of Ethics Implementation STEPS TO ENCOURAGE MINORITY
which, among others, covers this Agenda Item-1: To receive, consider SHAREHOLDERS’ PARTICIPATION d) The shareholders are facilitated employees and other parties dealing
in trainings and awareness
area. It is overriding intention of the and adopt audited accounts of the IN AGMs to appoint a proxy if they are with the Company, who have concerns
seminars arranged by PSX and
Company that all business transitions Company for the year ended June 30, Apart from being an event for decision- unable to attend the AGM in about suspected serious misconduct
SECP from time to time.
conducted by it are on arm’s length 2017 together with the Directors' and making on important matters, Annual person. or any breach or suspected breach of
basis. Adequate internal controls Auditors’ Reports thereon. General Meeting also provides a forum law or regulation that may adversely
BUSINESS ETHICS e) During AGM, a detailed briefing
have been implemented to ensure for two-way engagement with the impact the Company, to come
MPCL conducts its business in a on the Company’s performance
that transactions with related parties Decision and Implementation: shareholders, particularly the minority forward and express such concerns
socially responsible and ethical and future plans is given to the
are appropriately identified in the A detailed presentation on the shareholders. Therefore, the Company without fear of punishment or unfair
manner and in compliance with shareholders. The shareholders
information system and disclosed Company’s operations during the takes the following measures to ensure treatment.
applicable laws. The Company has are encouraged to raise queries
prepared a Code of Ethics and in the financial statements. Related FY 2016-17 and future plans of the meaningful participation of minority and give suggestions relating to
Party Transactions are reviewed and Company was made by the Chairman. shareholders in AGM: COMPLIANCE WITH THE BEST
Business Practices which, inter the Company’s operations.
approved by the Board. Interested After Q&A session, the audited PRACTICES OF CODE OF
alia, covers the matters such as
Directors are required to disclose accounts, Directors’ and Auditors’ a) Notice of AGM is sent to every CORPORATE GOVERNANCE
conflict of interest, business integrity,
ANTI-CORRUPTION MEASURES The Company makes every effort
gifts, entertainment and bribery, their interest and they are not Reports were duly approved and member of the Company at least
MPCL conducts its business in a to achieve full compliance with
insider trading and accountability allowed to participate in the voting adopted by the members. Thereafter, 21 days before the meeting.
socially responsible and ethical the best practices of the Code of
etc. Members of the Board and on any transaction in which they are audited accounts, Directors’ and The notice is also published in
manner and in compliance with Corporate Governance (CCG). The
employees, while joining and during interested. Auditors’ Reports were filed with the newspapers (both English & Urdu)
applicable laws. The Company has Statement of Compliance with the
their tenure with the Company, are Registrar and circulated to SECP and having nationwide circulation.
prepared a Code of Ethics and Code of Corporate Governance (the
required to read, acknowledge, and Similarly, MPCL executives are PSX. Moreover, the notice is also
Business Practices which, inter alia Statement) prepared by the Board of
abide by the Code. required to disclose buying and selling circulated from the forum of
covers the matters such as conflict Directors of the Company is reviewed
of the Company shares. Agenda Item-2: To approve payment Pakistan Stock Exchange.
of interest, business integrity, and verified by the external auditors
The Board has approved a of Final Dividend @ Rs.2.20 (22%) per
b) Annual Report of the Company gifts, entertainment and bribery, of the Company. The Statement for
Whistleblower Policy to encourage SHARE PRICE SENSITIVITY share for the year ended June 30,
is sent to each member of the insider trading and accountability the year 2017-18 details the manner
employees, who have concerns about ANALYSIS 2017.
Company before AGM in electronic etc. Members of the Board and in which the Company has applied
suspected serious misconduct or any Investor Relations Section on
(CD, email) or hard form (on employees, while joining and during the principles contained in the CCG.
breach or suspected breach of law or the Company’s website contains Decision and Implementation:
request). their tenure with the Company, are The Statement also confirms that all
regulation that may adversely impact important information such as Payment of dividend as
c) Video-link facility is provided to required to read, acknowledge, and material principles enshrined in the
the Company, to come forward and Share Price (along with turnover, recommended by the Board was
the shareholders (on demand), abide by the Code. CCG have been complied with.
express such concerns without fear market capitalisation and graphical approved by the Shareholders. It was

84
of punishment or unfair treatment. representation of Share Price also approved that the dividend on enabling them to participate in
the AGM from a city other than The Board has approved a A detailed write-up titled
movement over the period), financial 5% Bonus Shares which are subjudice
Islamabad. Whistleblower Policy to encourage Implementation of Listed Companies
highlights and indicators, pattern before Sindh High Court be withheld
87
Mari Petroleum Company Limited
Corporate Governance Annual Report 2018

(Code of Corporate Governance) conducted by Whistleblowing ANNUAL EVALUATION OF THE subjective comments in the
Regulations 2017 is also included Committee. PERFORMANCE OF THE BOARD, Comments section of the templates.
in the Annual Report which details BOARD’S COMMITTEES AND
the proactive approach adopted by During the year, one complaint was INDIVIDUAL DIRECTORS ALONG Board Evaluation Template and
the Company to implement the new lodged under the Whistleblowing WITH DESCRIPTION OF CRITERIA Individual Director’s Template are
Code. Policy. However, after investigation it USED forwarded to all Board Members,
transpired that the complaint did not In line with the requirements of while Committees Evaluation
WHISTLE BLOWING POLICY constitute a whistleblowing incident. clause 10 (v) of Listed Companies Template is forwarded to Members
The Board has approved a The complaint was disposed-off as (Code of Corporate Governance) of the respective Committees. The
Whistleblower Policy to encourage per applicable policies. Regulations 2017, a formal and Directors are requested to rate each
employees, who have concerns effective mechanism is in place for factor on a scale of 1 to 5. The scores
about suspected serious misconduct INVESTORS' GRIEVANCE POLICY annual evaluation of the Board’s own are consolidated through a specially
or any breach or suspected breach of The Board has approved an Investor performance, Members of the Board designed programme and mean value,
law or regulation that may adversely Relations & Grievance Policy which and of Board’s Committees. standard deviation and bar charts for
impact the Company, to come contains the mechanism for handling each factor are calculated.
forward and express such concerns shareholders complaints and queries. Mechanism for Board’s Self Evaluation
without fear of punishment or unfair As envisaged in the Policy, the was approved by MPCL Board in its As per the methodology, if the mean
treatment. The Policy applies to all Company has a designated email ID Meeting held on September 30, 2014. value against any performance factor
regular/contractual Management as well as an online Complaint Form The approved Board Performance is less than 3, it needs improvement.
and Non-Management employees of at its website for the Shareholders Evaluation Template contains 36 If the mean value is above 3, the
the Company, vendors, contractors, to lodge a complaint or query with performance factors covering areas performance factor is acceptable.
customers and consultants etc. The the Management. Shareholders can such as Composition of the Board Further, the standard deviation and performance of the Board and INVESTORS’ RELATIONS SECTION
Policy also includes other personnel also lodge a complaint or query using and its Committees, functions and indicates the degree of dispersion in overall governance of the affairs of AND COMPLETE ACCESSIBILITY
associated in any other manner with telephone, fax or conventional mail. performance of the Board and its the opinion of Board Members against the Company was satisfactory. The OF ANNUAL REPORT ON MPCL
the Company. Pursuant to the Policy, The Policy ensures that grievances Committees, governance structure any specific factor. If the value of value of standard deviation was less WEBSITE
the Management has formed a notified by the shareholders are and practices, and Company standard deviation is less than 1, then than 1 against all performance factors In order to promote investor
‘Whistleblowing Committee’, headed handled and resolved efficiently at Performance Monitoring System. there is unanimity in Board's opinion. showing unanimity in the opinions of relations and facilitate access to the
by General Manager Corporate appropriate level within shortest If the value is more than 1, the the Directors against these factors. Company for grievance/other query
Affairs for handling and managing possible time span (within 5 working Mechanism for Board’s Committees’ opinion of Board is dispersed against registration, an ‘Investors’ Relations’
all whistleblowing concerns and days). The Company maintains record Evaluation was approved by MPCL that performance factor. All the results of the evaluations section is also maintained on MPCL
complaints. Disciplinary action (which of all such grievances along with Board in its meeting held on April 16, along with suggestions/comments of website. Further, annual report is also
may include dismissal) against the actions taken for resolution and 2018. Committees’ Self Evaluation Results of Evaluation the Directors were presented to the completely accessible on the website.
wrongdoer is taken depending prepares summary of unresolved/ Template consists of 15 performance for FY 2017-18 Board in its 173rd meeting held on Website of MPCL is www.mpcl.com.
on the results of the investigation unsettled issues on monthly basis. factors pertaining to the composition Board Evaluation for the year 2017-18 August 30, 2018. pk.
of the committee, mandate and revealed that the mean value against
functioning of the Committee, role all performance factors was above Board’s Performance Evaluation by BOARD MEETINGS HELD
of Committee’s Chairman, general 3, which showed that in the opinion External Consultant OUTSIDE PAKISTAN
atmosphere and contribution of of the Directors, the composition Board’s performance evaluation No Board meeting was held outside
Committee Members. and performance of the Board and is a relatively new concept in Pakistan during the year.
overall governance of the affairs of Pakistan. MPCL was among the
Mechanism for Individual Directors the Company was satisfactory. The first companies to devise and REPORTS OF THE SHARIAH
Evaluation was approved by MPCL value of standard deviation was less implement a mechanism for Board’s ADVISORY BOARD
Board in its Meeting held on May than 1 against all performance factors performance in 2014-15 and since The Company is not required to have
31, 2018. Individual Director’s Self showing unanimity in the opinions of then, Board’s evaluation has become a Sharia Advisory Board. However,
Evaluation Template consists of 24 the Directors against these factors. a significant end-of-the-year activity. the Company is included in PSX KMI
performance factors which provide After weighing the pros and cons of All Share Index and KMI 30 Index
Directors with an opportunity to Committees’ and Individual Directors different evaluation methods, the which track the performance of
reflect upon their own competencies, Evaluation is a new requirement and Company has adopted Self Evaluation sharia compliant companies listed on
their role, behavior, contributions was conducted for the first time in Methodology for the Board. However, Pakistan Stock Exchange.
and performance as Members of the FY 2017-18. The Evaluation revealed the Company may engage the
Board. that the mean value against all services of an external consultant in

86
performance factors was above 3, future for improving the evaluation
In addition to the identified factors, which showed that in the opinion mechanism and/or conducting the
Directors can also provide their of the Directors, the composition evaluation.
89
Mari Petroleum Company Limited
Annual Report 2018

MPCL’S Operated Blocks & MPCL’S Non-Operated Blocks


DEVELOPMENT AND PRODUCTION (D&P) LEASES AND D&P LEASES

MARI ZIARAT SUKKUR ADAM-X KALCHAS


(D&P LEASE) BLOCK BLOCK Operator: PPL
(D&P LEASE)
BLOCK
Operator: OGDCL

MPCL 10O% MPCL 60% MPCL 58.82% MPCL 35% OGDCL 50%
PPL EUROPE 40% PEL* 41.18% PPL 65% MPCL 50%
* Acquisition of PEL’s
entire 41.18% working
interest by MPCL is
in progress

SUJAWAL KARAK GHAURI ADAM WEST HALA BLOCK SHAH BANDAR


(D&P LEASE)
BLOCK BLOCK Operator: PPL
(D&P LEASE)
Operator: PPL BLOCK
Operator: PPL

MPCL 100% MPCL 60% MPCL 65% MPCL 35% PPL 65% PPL 63.0%
MOL 40% PPL 35% PPL 65% MPCL 35% MPCL 32.0%
GHPL 2.5%
SEHPL 2.5%

ZARGHUN BANNU WEST HARNAI FAZL KOHLU BLOCK 28


SOUTH BLOCK BLOCK Operator: PPL
(D&P LEASE)
BLOCK Operator: OGDCL
(D&P LEASE) Operator: OGDCL

MPCL 35.0% MPCL 55% MPCL 60% MPCL 35% OGDCL 40% MPCL 95%
SPUD 40.0% OGDCL 35% PPL EUROPE 40% PPL 65% MPCL 30% OGDCL 5%
PKP 7.5% SEL 10% TULLOW 30% *Transfer of operatorship
GHPL 17.5% of the Block from OGDCL
to MPCL is in progress

KOONJ SUJAWAL PESHAWAR KOHAT


(D&P LEASE)
BLOCK EAST BLOCK BLOCK
Operator: OGDCL

MPCL 58.82% MPCL 100% MPCL 98.19% OGDCL 50.00%


PEL 41.18% KPOCGL 1.81% MPCL* 33.33%
SEL 16.67%
* Acquisition of Tullow’s

88
13.33% working interest
by MPCL has been
approved by the DGPC
91
Mari Petroleum Company Limited
Annual Report 2018

Performance INDICATORS
2017-18 2016-17 2015-16 2014-15 2013-14 2012-13
PROFITABILITY RATIOS
(Percentage)
PROFITABILITY RATIOS 80
70
Operating profit % 20.16 12.10 7.15 8.87 6.62 6.09 RATIO ANALYSIS 60
50
Net profit to sales % 15.37 9.44 6.37 6.40 5.60 3.83 40
30
EBITDA margin to net sales % 60.10 49.77 39.83 49.75 40.97 41.13 Profitability Ratios withheld by fertiliser companies 20
Operating leverage Times 22.27 36.03 (1.89) 2.32 2.45 2.68 Net sales increased in 2017-18 due due to stay orders from various
10

Return on equity % 38.25 35.78 35.67 49.15 23.44 17.86 to increase in production as well as High Courts. Total assets turnover
Net Profit to Sales Return on Equity
Return on capital employed % 50.55 38.19 36.78 37.37 26.43 24.11 increase in incremental production decreased owing to increase EBITDA Margin to Sales Return on Capital Employed

LIQUIDITY RATIOS from Mari field and higher wellhead in total assets during the year
Current ratio Times 1.19 1.16 0.93 1.06 1.08 1.34 prices, which coupled with increase 2017-18.
in finance income and decrease
Quick / acid test ratio Times 1.18 1.14 0.87 1.02 1.06 1.28
in other expenses (net profit from
LIQUIDITY RATIOS
Cash to current liabilities Times 0.16 0.12 0.02 0.12 0.14 0.43 Investment / Market Ratios (Times) 1.5
Mari Seismic Unit of Rs. 54 million Earnings per share stood at Rs.
Cash flow from operations to sales Times 0.20 0.07 0.13 0.07 0.09 0.08 1.2
during the year as against loss of 139.45 per share for the year 0.9
ACTIVITY / TURNOVER RATIOS Rs. 355 million in the comparative ended June 30, 2018 registering 0.6
Debtor turnover Times 1.34 2.38 3.21 2.78 3.27 4.60 year) resulted in enhanced an increase of 68.28% compared 0.3
Total assets turnover Times 0.69 1.03 1.60 1.34 1.18 1.85 operating profit margin and profit to last year on account of
Fixed assets turnover Times 3.59 3.71 3.94 4.13 4.17 5.22 margin. Return on capital employed increase in profitability. Market Current Ratio Cash to Current Liabilities
No. of days in receivables Days 273 153 114 131 111 79 was increased to 50.55% from value per share at year end stood Quick / Acid Test Ratio Cash Flow from Operations to Sales

38.19% due to increase in profit at Rs. 1,506.18 per share, lower


INVESTMENT / MARKET RATIOS
margin. by around 4% as compared to
Earnings per share (EPS) - basic and diluted Rupees 139.45 82.87 54.89 51.25 35.77 26.35
Distributable earnings per share Rupees 6.44 5.91 5.55 4.82 5.25 5.51
last year. Breakup value of the ACTIVITY / TURNOVER RATIOS
Liquidity Ratios Company improved to Rs. 364.55 (Times) 6
Price earnings - on the basis of
Current ratio of 1.19 times for per share, around 57% higher as 5
earnings per share Times 10.80 19.01 16.55 9.14 10.44 5.18
2017-18 showed an improvement compared to the last year, due to 4

Price earnings - on the basis of 3


of 0.03 times compared to 2016-17 higher profit retention. Dividend 2
distributable earnings per share Times 233.88 266.61 163.64 97.22 71.13 24.79 mainly due to increase in short payout ratio for 2017-18 was 1
Dividend yield % 0.38 0.32 0.50 0.79 1.01 2.72 term investments & cash and bank recorded at 88.51% against last
Dividend payout % 88.51 86.29 81.08 77.18 72.00 67.33 balances. Cash to current liabilities year's 86.29%, translating into a Debtor Turnover Fixed Assets Turnover
Dividend cover - on the basis of ratio improved to 0.16 times total cash dividend per share of Total Assets Turnover

earnings per share Times 24.46 16.25 12.20 13.78 9.46 7.10 compared to 0.12 times of last year Rs. 5.70.
Dividend cover - on the basis of on account of increase in cash and
distributable earnings per share Times 1.13 1.16 1.23 1.30 1.39 1.49 cash equivalents. Capital Structure Ratios NUMBER OF DAYS
Dividends Rupees in million 628.43 562.28 496.13 410.24 347.66 340.49 There is no long term financing of IN RECEIVABLES

273
(Days)
Cash dividend per share Rupees 5.70 5.10 4.50 3.72 3.78 3.71 Activity / Turnover Ratios the Company at the year-end due
Stock dividend per share % -       -       -       20% -       -    No. of days in receivables increased to the repayment of the long term

153
Market value per share during the year as average trade loans. This has resulted in debt to

131

114
111
debts increased because of GIDC equity ratio of 00 : 100 in 2017-18.

79
Year end Rupees 1,506.18 1,575.64 908.22 468.60 373.43 136.57
highest during the year Rupees 1,809.41 1,750.00 982.48 764.32 391.40 163.99
lowest during the year Rupees 1,398.38 905.10 363.18 351.14 136.97 90.06
Breakup value per share Rupees 364.55 231.63 153.89 104.27 183.10 147.56
CAPITAL STRUCTURE RATIOS
Debt to equity % 00 : 100 14.04 : 85.96 5.57 : 94.43 44.69 : 55.31 1.94 : 98.06 10.22 : 89.78

1,575.64
139.45
Financial leverage Times 0.003 0.20 0.07 0.95 0.10 0.18 Earnings Per Share (EPS) - Basic & Diluted Distributable Earnings Per Share Market Value Per Share at year end

1,506.18
(Rupees) (Rupees) (Rupees)

6.44
Interest cover Times 764.79 57.42 144.08 6.39 29.03 23.83

5.91
5.51

5.55
5.25

4.82
Weighted average cost of debt % 6.09 6.00 6.99 10.38 10.28 10.83

82.87

908.22
Note: Breakup value with revaluation reserves does not apply as MPCL has no revaluation reserves.

54.89
51.25

136.57

468.60
90 35.77

373.43
26.35
93
Mari Petroleum Company Limited
Annual Report 2018

Variat ion in Results Return On Equity (DUPONT ANALYSIS)


OF INTERIM REPORTS WITH THE FINAL ACCOUNTS (RUPEES IN THOUSAND)
Return on
First Quarter Second Quarter Third Quarter Fourth Quarter Total for the Equity
ended September 30, ended December 31, ended March 31, ended June 30, year ended 38.25%
2017 2017 2018 2018 June 30, 2018

(Rupees in thousand)

Statement of Profit or Loss items


Gross sales 24,537,870 23,051,981 24,778,078 27,674,910 100,042,839
Ownership
– Return on
Sales - net 9,335,478 8,681,506 10,574,687 12,084,697 40,676,368 Ratio Assets
Profit before taxation 5,091,093 3,962,774 5,946,571 5,291,106 20,291,544 27.88% 10.66%
Net profit 3,613,095 3,202,323 3,968,815 4,590,107 15,374,340

Analysis:
Higher gross sales in fourth quarter as compared to other quarters is mainly due to higher gas and condensate production. Net
sales were higher in the third and fourth quarters mainly due to incremental production. Profit before taxation was higher for the
third quarter in comparison to the remaining quarters is largely attributable to lower exploration and prospecting expenditures.

Net profit posted for the third and fourth quarters in comparison with the remaining quarters is greater due to increased profit Total Owners' Assets Net Profit
Assets Equity Turnover Margin
before tax. In the other quarters, decline in the profit before tax led to reduced profitability. 144,165,700 40,191,738 0.69 15.37%
Times
Mari Petroleum Company Limited
Interim Financial Statements
(Un-audited)
For the Nine Months Ended
March 31, 2018

Owners' Total Total


– – Net
Head Office
21 Mauve Area, 3rd Road, G-10/4
Islamabad - 44000. Pakistan Equity Liabilities Assets Sales Profit
40,191,738 103,973,962 144,165,700 100,042,839 15,374,340
UAN: +92-51-111 410 410 Fax: +92-51-2352859
www.mpcl.com.pk

Daharaki Field Office Quetta Liaison Office Karachi Liaison Office


Daharaki, District Ghotki 26, Survey-31 D-87, Block, Kehkashan
Pakistan Defence Officers Housing Scheme Clifton, Karachi-75600, Pakistan

Mari Petroleum Company Limited


UAN: +92-723-111 410 410 Airport Road, Quetta, Pakistan UAN: +92-21-111 410 410
Fax: +92-723-660402 Tel: +92-81-2821052, 2839790 Fax: +92-21-35870273
Fax: +92-81-2834465

Interim Financial Information


ISO 9001 : 2008 ISO 14001 : 2004 OHSAS 18001 : 2007 ISO/IEC 27001 : 2005
(Un-audited)
For the Six Months Ended
December 31, 2017

CMYK Title Instant

QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4


GAS GAS GAS GAS
64,712 61,681 64,588
(MMSCF)
66,174
(MMSCF)
(MMSCF) (MMSCF)

CRUDE OIL CRUDE OIL CRUDE OIL CRUDE OIL Current Non Current
Non-Current
117,128 103,804 97,750 107,899 Liabilities Liabilities Current Assets Assets Total Cost Sales
(Barrels) (Barrels) (Barrels) (Barrels)
7,952,336 96,021,626 29,760,170 114,405,530 84,668,499 100,042,839
CONDENSATE CONDENSATE CONDENSATE CONDENSATE
22,659
(Barrels)
21,186
(Barrels)
23,904
(Barrels)
49,490
(Barrels)

EARNINGS PER SHARE EARNINGS PER SHARE EARNINGS PER SHARE EARNINGS PER SHARE
32.77
(Rupees)
29.05
(Rupees)
36.00
(Rupees)
41.63
(Rupees)
Analysis
Total assets increased by 54% due to higher trade debts, short term investments and cash
and bank balances at year end, which consequently increased the return on assets to 10.66%
NET from 9.76% and ownership ratio to 27.88% from 27.29%. Net sales increased by 44.57% due
GROSS NET PROFIT BEFORE
SALES SALES TAXATION PROFIT to increase in production as well as increase in incremental production from Mari field and
higher wellhead prices, which coupled with increase in finance income and decrease in other
expenses (net profit from Mari Seismic Unit of Rs. 54 million during the year as against loss
First Quarter 24.53% First Quarter 22.95% First Quarter 25.09% First Quarter 23.50%

92
Second Quarter 23.04% Second Quarter 21.34% Second Quarter 19.53% Second Quarter 20.83% of Rs. 355 million in the comparative year) resulted in increase in net margin from 9.44% to
Third Quarter 24.77% Third Quarter 26.00% Third Quarter 29.30% Third Quarter 25.81%
Fourth Quarter 27.66% Fourth Quarter 29.71% Fourth Quarter 26.08% Fourth Quarter 29.86% 15.37%. This resulted in 38.25% return on equity compared to 35.78% earned in FY 2016-17.
95
Mari Petroleum Company Limited
Annual Report 2018

SUMMARY OF THE RELATED PARTIES AND


Statement of Cash Flows Related Party Transact ions
2017-18 2016-17 2015-16 2014-15 2013-14 2012-13
(Rupees in million)

Cash flows from operating activities 20,225.239 7,120.289 12,638.329 6,609.010 6,096.578 5,374.004
Cash flows from investing activities (5,543.564) (4,081.586) (5,287.579) (5,393.894) (5,918.203) (2,421.167)
Cash flows from financing activities (5,903.205) 3,262.935 (11,625.231) (1,621.744) (1,379.671) 604.906
Increase / (Decrease) in cash and
cash equivalents 8,778.470 6,301.638 (4,274.481) (406.628) (1,201.296) 3,557.743
Cash and cash equivalents at
beginning of year 6,927.792 626.154 4,900.635 5,307.263 6,508.559 2,950.816
Cash and cash equivalents at
end of year 15,706.262 6,927.792 626.154 4,900.635 5,307.263 6,508.559

Direct Met hod Cash Flow CASH FLOW ANALYSIS


(Rupees in million)

FOR THE YEAR ENDED JUNE 30, 2018


2018 2017 25000
(Rupees in thousand)
20000
Cash flows from operating activities
Cash receipts from customers 59,354,356 69,266,727 15000
Cash paid to the Government for Government levies (26,365,488) (50,624,648)
Cash paid to suppliers and employees (10,415,830) (10,386,297) 10000
Income tax paid (2,347,799) (1,135,493)
5000
Cash provided by operating activities 20,225,239 7,120,289 NAMES OF RELATED PARTIES WITH WHOM THE COMPANY HAD ENTERED INTO TRANSACTIONS
OR HAD AGREEMENTS AND / OR ARRANGEMENTS IN PLACE DURING THE FINANCIAL YEAR
Cash flows from investing activities
Name of Related Party Basis of relationship Percentage of Shareholding
Purchase of property, plant and equipment (2,182,761) (1,091,333) -5000
Development and production assets (1,650,534) (1,073,402) Fauji Foundation Entity with significant influence over the Company 40%
Exploration and evaluation assets (2,424,676) (2,124,810) -10000 OGDCL Entity with significant influence over the Company 20%
Proceeds from disposal of property, Gratuity funds (Management and
-15000 Non-Management) Post employment benefit plan -
plant and equipment 32,688 422
Interest received 681,719 207,537 Provident fund Post employment benefit plan -
Operating Activities Financing Activities Chief Executive and Directors Key management personnel -
Cash used in investing activities (5,543,564) (4,081,586) Investing Activities

ANY CONTRACT OR ARRANGEMENT WITH THE RELATED PARTY OTHER THAN IN THE ORDINARY
Cash flows from financing activities COURSE OF BUSINESS
Long term financing received - 4,000,000
Related party transactions neither deviate from the company’s normal business operations nor are they made on terms that
Long term financing repaid (5,008,719) (24,010)
CASH & CASH deviate from market equivalent.
15,706.26

Finance cost paid (270,939) (155,139)


EQUIVALENTS
Dividends paid (623,547) (557,916) AT YEAR END
APPROVED POLICY FOR RELATED PARTY TRANSACTIONS INCLUDING POLICY FOR DISCLOSURE OF
(Rupees in million)
6,927.79

INTEREST BY DIRECTORS IN THIS REGARD


6,508.56

Cash (used in) / from financing activities (5,903,205) 3,262,935


4,900.64
5307.26

Increase in cash and cash equivalents 8,778,470 6,301,638 There is an approved policy for related party transactions and all the related party transactions are reviewed and approved by
626.15

94
Cash and cash equivalents at beginning of year 6,927,792 626,154 the Board. Interested Directors are required to disclose their interest and they are not allowed to participate in the voting on
any transaction in which they are interested.
Cash and cash equivalents at end of year 15,706,262 6,927,792
97
Mari Petroleum Company Limited
Annual Report 2018

Management ’s Responsibility
TOWARDS THE PREPARATION AND PRESENTATION OF
THE FINANCIAL STATEMENTS

M
anagement is responsible for the preparation and fair presentation In preparing the financial statements,
of the financial statements in accordance with the accounting and management is responsible for
reporting standards as applicable in Pakistan and the requirements of assessing the Company’s ability to
Companies Act, 2017 (XIX of 2017) and for such internal control as management continue as a going concern.
determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.

COMPLIANCE OF
Internat ional Financial Report ing Standards
(IFRS) ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

F
inancial statements have been prepared in accordance with the accounting and reporting standards as applicable in
Pakistan. The accounting and reporting standards applicable in Pakistan comprise of International Financial Reporting
Standards (IFRS standards) issued by the International Accounting Standards Board (IASB) as notified under the
Companies Act, 2017 and provisions of and directives issued under the Companies Act, 2017. Where provisions of and
directives issued under the Companies Act, 2017 differ from the IFRS standards, the provisions of and directives issued
under the Companies Act, 2017 have been followed.

96
99
Mari Petroleum Company Limited
Annual Report 2018

Cash Flows Significant Changes IN FINANCIAL POSITION


AND FINANCING ARRANGEMENTS PERFORMANCE AND CASH FLOWS FROM THE PREVIOUS PERIOD

EQUITY AND LIABILITIES CURRENT ASSETS Finance Cost


Shareholders’ Equity Current assets mainly comprise of Finance cost has decreased by Rs.
Shareholders’ equity comprising of trade debts, short term investments 158 million mainly due to decrease
share capital and reserves witnessed and cash & bank balances. On an in interest on long term financing
an increase of 57% from the last year, aggregate basis, current assets by Rs. 171 million which is offset by
due to increase in unappropriated increased from Rs. 65.30 billion in increase in Unwinding of discount on
profit for the year. 2016-17 to Rs. 114.41 billion in 2017- provision for decommissioning cost
18, primarily on account of increase by Rs. 80 million.
Non Current Liabilities in trade debts due to GIDC withheld
Noncurrent liabilities decreased due by the fertiliser companies, short Profit for the Year
to repayment of long term financing term investments and cash & bank Profit after tax is Rs. 15.37 billion for
during the year. balances. the year 2017-18 as compared to
Rs. 9.14 billion in the previous year.
Current Liabilities STATEMENT OF PROFIT OR LOSS Increase in net sales and finance
Overall, current liabilities increased Gross Sales income and decrease in other
by 70%. This is due to increase in Gross sales increased by 3.38% expenses were the major reasons
trade and other payables mainly mainly due to increase in sales for increase in profitability. This
Analysis of Liquidity relationships and therefore has the providing leverage to adequately due to increase in GIDC payable. volume. was offset with increase in royalty,
The Company remained sufficiently capacity to arrange short term loan/ manage recovery of losses, if any, However, current maturity of long operating expenses, other charges
liquid during the year owing to overdraft facility whenever required. with surplus funds available for term financing has decrease due to Exploration and Prospecting and provision for taxation.
timely billing and recovery of investments to generate incremental repayment of loans. Expenditure
invoices from the customers, which Financing Arrangements liquidity / revenues for the Company. Exploration and prospecting CASH FLOWS
resulted in increase in cash and cash Reliance on external financing is ASSETS expenditure decreased from Rs. 3.88 Cash and cash equivalents were
equivalents at the year end. secondary to internally generated Defaults in payment Non Current Assets billion in 2016-17 to Rs. 3.69 billion Rs. 15,706 million as against Rs.
cash which represents the of any debts Non-current assets have increased in 2017-18. This decrease is mainly 6,928 million in the previous year.
Analysis of Cash Flows Company’s primary source of During the year, the Company has from Rs. 28.29 billion in 2016-17 to due to decrease in cost of dry and During the year, an amount of Rs.
Cash and cash equivalents were working capital thereby minimizing not defaulted on any payment of Rs. 29.76 billion in 2017-18, mainly abandoned wells written off during 20,225 million was generated from
Rs. 15,706 million as against Rs. financing costs through effective its debts and has rather repaid full due to increase in property, plant the year. operating activities of the Company
6,928 million in the previous year. liquidity management. External amount of outstanding loans. and equipment & development and which was used mainly to undertake
During the year, an amount of Rs. financing is arranged when required, production assets and strengthening Other Income / (Expenses) exploration activities, capital
the Company’s asset base. However, There is decrease in other expenses expenditures and repayment of long

Contribution
20,225 million was generated from after extensive cash flow forecasting
operating activities of the Company, for working capital, investment or exploration and evaluation assets by Rs. 613 million due to profit of Mari term loans.
which was used mainly to undertake capital expenditure requirements. have decreased due to transfer of Seismic Unit as against loss in the last
exploration activities, capital
expenditures and repayment of long Repayment of Debts and to National assets to development and production
assets.
year.

Exchequer
term loans. Recovery of Losses, if any
The Company enjoys strong debt
Strategies to overcome raising capacity besides the ability
liquidity problem to generate sufficient revenues from MPCL contributed around
Even a short term liquidity problem operating activities for operating Rs. 70,409 million to the
can quickly result in serious problem cash requirements and repayment Government exchequer during
for any company. MPCL does not of debt on maturity dates. Liquid the year (Rs. 74,298 million
foresee any liquidity problem in the assets including cash and bank during 2016-17) mainly on
year ahead. In the quest to evade balances, short term investments account of gas development
any liquidity problem, the Company and trade debts, in addition to surcharge, gas infrastructure
bills its customers in a timely fashion projected revenue / cash forecasts
development cess, sales
and follows up any unpaid invoices indicate availability of sufficient

98
tax, excise duty, royalty and
as soon as they become past due. funding for timely repayment
income taxes.
The Company enjoys sound banking of debt / payables, besides
101
Mari Petroleum Company Limited
Annual Report 2018

Horizontal Analysis - STATEMENT OF FINANCIAL POSITION


(Rupees in thousand)
2018 18 vs 17 2017 17 vs 16 2016 16 vs 15 2015 15 vs 14 2014 14 vs 13 2013 13 vs 12
%age %age %age %age %age %age

EQUITY AND LIABILITIES


Share capital and reserves
Issued, subscribed and paid up capital 1,102,500 - 1,102,500 - 1,102,500 - 1,102,500 20.00 918,750 - 918,750 -
Undistributed percentage return reserve 613,109 23.50 496,436 16.30 426,867 7.98 395,331 (4.51) 414,014 (28.49) 578,994 37.84
Other reserves 12,190,001 8.94 11,190,001 4.68 10,690,001 7.30 9,962,850 73.57 5,739,995 12.40 5,106,644 23.04
Profit and loss account 26,286,128 106.19 12,748,733 168.59 4,746,555 13,256.66 35,537 (99.64) 9,749,472 40.23 6,952,345 16.13
40,191,738 57.38 25,537,670 50.52 16,965,923 47.58 11,496,218 (31.66) 16,822,231 24.09 13,556,733 18.13
Non current liabilities
Long term financing -        4,172,727 317.27 1,000,000 (89.24) 9,290,001 2,693.94 332,505 (78.45) 1,543,207 63.01
Deferred liabilities 7,952,336 6.26 7,483,812 13.79 6,576,575 20.25 5,468,973 16.00 4,714,598 23.48 3,818,180 (13.53)
7,952,336 (31.78) 11,656,539 53.85 7,576,575 (48.66) 14,758,974 192.42 5,047,103 (5.86) 5,361,387 (0.02)
Current liabilities
Trade and other payables 93,774,013 69.99 55,165,162 59.22 34,647,573 (4.38) 36,235,805 0.45 36,074,046 162.05 13,766,209 (13.15)
Unclaimed dividend 19,371 12.14 17,274 70.36 10,140 (1.87) 10,333 9.81 9,410 32.70 7,091 6.79
Unpaid dividend 11,514 31.84 8,733 (24.11) 11,508 (97.19) 410,241 338.53 93,550 (0.50) 94,016 1.40
Current maturity of long term financing 119,045 (87.54) 955,037 529.25 151,774 (90.70) 1,632,505 18.37 1,379,173 43.42 961,603 117.45
Interest accrued on long term financing 10,180 (96.00) 254,552 29.77 196,154 (82.32) 1,109,742 2,858.21 37,514 (10.76) 42,039 (25.29)
Provision for income tax 2,087,503 100.00 -        - -         - -         -        -         (100.00) 403,360 100.00
96,021,626 70.25 56,400,758 61.07 35,017,149 (11.12) 39,398,626 4.80 37,593,693 146.12 15,274,318 (7.14)
144,165,700 54.03 93,594,967 57.14 59,559,647 (9.28) 65,653,818 10.41 59,463,027 73.91 34,192,438 2.72
ASSETS
Non current assets
Property, plant and equipment 13,266,282 4.55 12,688,670 15.11 11,023,452 12.78 9,774,533 12.71 8,671,909 48.02 5,858,512 31.00
Development and production assets 11,886,872 60.42 7,409,878 146.83 3,002,063 37.22 2,187,715 (39.59) 3,621,571 74.72 2,072,821 (39.47)
Exploration and evaluation assets 2,689,549 (54.96) 5,972,108 (40.78) 10,084,055 7.28 9,399,602 105.04 4,584,270 9.50 4,186,644 0.87
Long term loans and advances 35,411 9.86 32,233 19.08 27,069 32.11 20,489 168.78 7,623 3.01 7,400 7.34
Long term deposits and prepayments 62,890 141.87 26,002 72.15 15,104 41.97 10,639 (41.97) 18,335 31.12 13,983 43.46
Deferred income tax asset 1,819,166 (15.87) 2,162,308 (19.34) 2,680,622 12.03 2,392,765 23.95 1,930,387 22.12 1,580,793 222.26
29,760,170 5.19 28,291,199 5.44 26,832,365 12.81 23,785,743 26.29 18,834,095 37.27 13,720,153 9.29
Current assets
Stores and spares 671,051 (33.89) 1,015,000 (53.17) 2,167,328 26.16 1,717,945 105.73 835,055 1.76 820,648 1.70
Trade debts 95,294,994 75.09 54,426,085 102.42 26,887,469 (16.90) 32,355,308 3.82 31,165,789 162.37 11,878,669 (23.89)
Loans and advances 2,532,344 54.41 1,640,065 14.09 1,437,456 (18.11) 1,755,283 2.66 1,709,860 99.78 855,871 (18.45)
Short term investments 8,437,354 134.07 3,604,596 100.00 -         - -        - -        - -         -
Short term prepayments 66,714 1.55 65,697 (18.08) 80,193 (34.45) 122,341 119.03 55,857 (16.47) 66,871 131.84
Interest accrued 103,183 119.39 47,031 1,087.35 3,961 106.09 1,922 (67.00) 5,824 (79.74) 28,750 67.00
Other receivables 30,982 (22.11) 39,779 86.47 21,333 550.00 3,282 (99.64) 913,739 192.01 312,917 293.82
Income tax paid in advance -        (100.00) 1,142,319 (24.02) 1,503,388 48.65 1,011,359 59.13 635,545 100.00 -         (100.00)
Cash and bank balances 7,268,908 118.73 3,323,196 430.73 626,154 (87.22) 4,900,635 (7.66) 5,307,263 (18.46) 6,508,559 120.57
114,405,530 75.19 65,303,768 99.54 32,727,282 (21.83) 41,868,075 3.05 40,628,932 98.46 20,472,285 (1.26)
144,165,700 54.03 93,594,967 57.14 59,559,647 (9.28) 65,653,818 10.41 59,463,027 73.91 34,192,438 2.72

TOTAL LIABILITIES SHARE CAPITAL TOTAL ASSETS ANALYSIS

144.2
104.0

(Rupees in billion)
AND RESERVES (Rupees in billion) In 2017-18, total assets increased by 54.03% primarily due to increase
40.2

(Rupees in billion) in current assets. Increase in current assets is mainly due to increase
in trade debts, short term investments & cash and bank balances.

93.6
68.1

25.5

On equity and liabilities side, share capital and reserves increased by


54.2

65.7
59.5
42.6

59.6
42.6

57.38% mainly due to increase in profit and loss account. Non current
17.0
16.8
13.6

100
11.5

liabilities decreased by 31.78% primarily due to repayment of long

34.2
20.6

term financing while current liabilities increased by 70.25% principally


due to increase in trade and other payables.
103
Mari Petroleum Company Limited
Annual Report 2018

Vert ical Analysis - STATEMENT OF FINANCIAL POSITION


(Rupees in thousand)
2018 % 2017 % 2016 % 2015 % 2014 % 2013 %
age age age age age age

EQUITY AND LIABILITIES


Share capital and reserves
Issued, subscribed and paid up capital 1,102,500 0.76 1,102,500 1.18 1,102,500 1.85 1,102,500 1.68 918,750 1.55 918,750 2.69
Undistributed percentage return reserve 613,109 0.43 496,436 0.53 426,867 0.72 395,331 0.60 414,014 0.70 578,994 1.69
Other reserves 12,190,001 8.46 11,190,001 11.96 10,690,001 17.95 9,962,850 15.17 5,739,995 9.65 5,106,644 14.94
Profit and loss account 26,286,128 18.23 12,748,733 13.62 4,746,555 7.97 35,537 0.05 9,749,472 16.40 6,952,345 20.33
40,191,738 27.88 25,537,670 27.29 16,965,923 28.49 11,496,218 17.51 16,822,231 28.29 13,556,733 39.65
Non Current Liabilities
Long term financing -        - 4,172,727 4.46 1,000,000 1.68 9,290,001 14.15 332,505 0.56 1,543,207 4.51
Deferred liabilities 7,952,336 5.52 7,483,812 8.00 6,576,575 11.04 5,468,973 8.33 4,714,598 7.93 3,818,180 11.17
7,952,336 5.52 11,656,539 12.45 7,576,575 12.72 14,758,974 22.48 5,047,103 8.49 5,361,387 15.68
Current liabilities
Trade and other payables 93,774,013 65.05 55,165,162 58.94 34,647,573 58.17 36,235,805 55.19 36,074,046 60.67 13,766,209 40.26
Unclaimed dividend 19,371 0.01 17,274 0.02 10,140 0.02 10,333 0.02 9,410 0.02 7,091 0.02
Unpaid dividend 11,514 0.01 8,733 0.01 11,508 0.02 410,241 0.62 93,550 0.16 94,016 0.27
Current maturity of long term financing 119,045 0.08 955,037 1.02 151,774 0.25 1,632,505 2.49 1,379,173 2.32 961,603 2.81
Interest accrued on long term financing 10,180 0.01 254,552 0.27 196,154 0.33 1,109,742 1.69 37,514 0.06 42,039 0.12
Provision for income tax 2,087,503 1.45 -         - -        - -        - -         - 403,360 1.18
96,021,626 66.61 56,400,758 60.26 35,017,149 58.79 39,398,626 60.01 37,593,693 63.22 15,274,318 44.67
144,165,700 100.00 93,594,967 100.00 59,559,647 100.00 65,653,818 100.00 59,463,027 100.00 34,192,438 100.00
ASSETS
Non current assets
Property, plant and equipment 13,266,282 9.20 12,688,670 13.56 11,023,452 18.51 9,774,533 14.89 8,671,909 14.58 5,858,512 17.13
Development and production assets 11,886,872 8.25 7,409,878 7.92 3,002,063 5.04 2,187,715 3.33 3,621,571 6.09 2,072,821 6.06
Exploration and evaluation assets 2,689,549 1.87 5,972,108 6.38 10,084,055 16.93 9,399,602 14.32 4,584,270 7.71 4,186,644 12.24
Long term loans and advances 35,411 0.02 32,233 0.03 27,069 0.05 20,489 0.03 7,623 0.01 7,400 0.02
Long term deposits and prepayments 62,890 0.04 26,002 0.03 15,104 0.03 10,639 0.02 18,335 0.03 13,983 0.04
Deferred income tax asset 1,819,166 1.26 2,162,308 2.31 2,680,622 4.50 2,392,765 3.64 1,930,387 3.25 1,580,793 4.62
29,760,170 20.64 28,291,199 30.23 26,832,365 45.05 23,785,743 36.23 18,834,095 31.67 13,720,153 40.13
Current assets
Stores and spares 671,051 0.47 1,015,000 1.08 2,167,328 3.64 1,717,945 2.62 835,055 1.40 820,648 2.40
Trade debts 95,294,994 66.10 54,426,085 58.15 26,887,469 45.14 32,355,308 49.28 31,165,789 52.41 11,878,669 34.74
Loans and advances 2,532,344 1.76 1,640,065 1.75 1,437,456 2.41 1,755,283 2.67 1,709,860 2.88 855,871 2.50
Short term investments 8,437,354 5.85 3,604,596 3.85 -        - -         - -         - -         -
Short term prepayments 66,714 0.05 65,697 0.07 80,193 0.13 122,341 0.19 55,857 0.09 66,871 0.20
Interest accrued 103,183 0.07 47,031 0.05 3,961 0.01 1,922 0.00 5,824 0.01 28,750 0.08
Other receivables 30,982 0.02 39,779 0.04 21,333 0.04 3,282 0.00 913,739 1.54 312,917 0.92
Income tax paid in advance -        - 1,142,319 1.22 1,503,388 2.52 1,011,359 1.54 635,545 1.07 -         -
Cash and bank balances 7,268,908 5.04 3,323,196 3.55 626,154 1.05 4,900,635 7.46 5,307,263 8.93 6,508,559 19.04
114,405,530 79.36 65,303,768 69.77 32,727,282 54.95 41,868,075 63.77 40,628,932 68.33 20,472,285 59.87
144,165,700 100.00 93,594,967 100.00 59,559,647 100.00 65,653,818 100.00 59,463,027 100.00 34,192,438 100.00

COMPOSITION COMPOSITION ANALYSIS


40.1

31.7

36.2

45.1

30.2

79.4 20.6

39.6

28.3

17.5

28.5

27.3

27.9
OF ASSETS OF EQUITY In the statement of financial position, total assets comprise of
current assets 79.36% and non-current assets 20.64%. Current assets
& LIABILITIES

22.5
(Percentage)

66.6 5.5
63.2 8.5

60.3 12.5
58.8 12.7
69.8

increased from last year mainly due to increase in trade debts, short
68.3

63.8

(Percentage)

15.7
59.9

60.0
54.9

term investments and cash and bank balances. Further increase in

44.7
non current assets is mainly due to increase in property, plant and

102
equipment and development and production assets. On the other side,
non current liabilities decrease to 5.52% as compared to 12.45% of
Current Assets Current Liabilities last year due to repayment of long term financing.
Non Current Assets Non Current Liabilities
Share Capital and Reserves
105
Mari Petroleum Company Limited
Annual Report 2018

Horizontal Analysis - STATEMENT OF PROFIT OR LOSS


(Rupees in thousand)
2018 18 vs 17 2017 17 vs 16 2016 16 vs 15 2015 15 vs 14 2014 14 vs 13 2013 13 vs 12
%age %age %age %age %age %age

Gross sales to customers 100,042,839 3.38 96,775,974 1.87 94,997,719 7.66 88,239,537 25.24 70,454,050 11.35 63,269,794 33.41

Gas development surcharge 11,029,741 (43.67) 19,580,832 (24.28) 25,859,852 43.52 18,017,729 (9.73) 19,959,539 (6.06) 21,246,005 (7.39)
General sales tax 11,668,172 (15.11) 13,745,689 1.75 13,509,334 9.20 12,370,744 24.29 9,952,761 17.51 8,469,429 33.20
Excise duty 1,906,530 6.25 1,794,397 5.91 1,694,205 3.94 1,630,044 5.31 1,547,845 3.47 1,495,971 1.43
Gas infrastructure development cess 34,762,028 3.83 33,479,569 4.84 31,933,382 (11.42) 36,050,495 51.90 23,733,661 31.58 18,037,931 127.25
Wind fall levy -         - -         (100.00) 288,182 (63.73) 794,504 53.91 516,224 1.56 508,291 51.50
Surplus / (deficit) under the Gas Price Agreement -         - -         - -         - -         (100.00) (133,949) (107.72) 1,734,400 111.02
59,366,471 (13.46) 68,600,487 (6.39) 73,284,955 6.42 68,863,516 23.91 55,576,081 7.93 51,492,027 29.15
Sales - net 40,676,368 44.37 28,175,487 29.76 21,712,764 12.06 19,376,021 30.23 14,877,969 26.32 11,777,767 55.87
Royalty 5,180,869 44.57 3,583,522 30.31 2,750,095 9.17 2,519,026 31.06 1,922,086 25.51 1,531,378 58.10
35,495,499 44.34 24,591,965 29.69 18,962,669 12.49 16,856,995 30.11 12,955,883 26.44 10,246,389 55.55

Operating expenses 9,985,411 34.03 7,450,011 29.26 5,763,609 7.21 5,376,244 22.88 4,375,198 (3.12) 4,516,086 30.69
Exploration and prospecting expenditure 3,689,854 (4.92) 3,880,797 (39.95) 6,462,126 102.30 3,194,383 2.51 3,116,299 24.85 2,496,075 52.26
Other charges 1,447,747 99.33 726,290 44.70 501,943 0.65 498,725 54.61 322,563 (2.49) 330,809 169.27
15,123,012 25.43 12,057,098 (5.27) 12,727,678 40.34 9,069,352 16.06 7,814,060 6.42 7,342,970 40.73
20,372,487 62.53 12,534,867 101.04 6,234,991 (19.94) 7,787,643 51.46 5,141,823 77.10 2,903,419 112.02
Other income / (expenses) (206,831) (74.79) (820,328) (246.54) 559,789 1,495.66 35,082 (107.36) (476,755) (150.08) 951,976 167.14
Operating profit 20,165,656 72.14 11,714,539 72.40 6,794,780 (13.14) 7,822,725 67.69 4,665,068 21.00 3,855,395 123.40

Finance income 765,616 228.58 233,006 (31.62) 340,730 (34.13) 517,239 (12.87) 593,674 128.79 259,484 (41.94)
Finance cost 639,728 (19.84) 798,086 39.03 574,058 (67.90) 1,788,092 102.94 881,105 40.66 626,388 (18.68)
Profit before taxation 20,291,544 82.00 11,149,459 69.92 6,561,452 0.15 6,551,872 49.67 4,377,637 25.49 3,488,491 148.73
Provision for taxation 4,917,204 144.24 2,013,265 294.76 509,997 (43.43) 901,559 107.57 434,334 (59.31) 1,067,415 271.50
Profit for the year 15,374,340 68.28 9,136,194 50.98 6,051,455 7.10 5,650,313 43.29 3,943,303 62.87 2,421,076 117.10

GROSS SALES OPERATING PROFIT NET PROFIT

15.4
20.2
100.0
96.8

(Rupees in billion) (Rupees in billion) (Rupees in billion)


95.0
88.2

ANALYSIS
70.5
63.3

9.1
11.7

Increase in net sales and finance income and decrease in other


expenses were the major reasons for increase in profitability in

6.1
7.8

5.7
6.8

104
2017-18 as compared to 2016-17. This was offset with increase

3.9
4.7
3.9

2.4
in royalty, operating expenses, other charges and provision for
taxation.
107
Mari Petroleum Company Limited
Annual Report 2018

Vert ical Analysis - STATEMENT OF PROFIT OR LOSS


(Rupees in thousand)
2018 % 2017 % 2016 % 2015 % 2014 % 2013 %
age age age age age age

Gross sales to customers 100,042,839 100.00 96,775,974 100.00 94,997,719 100.00 88,239,537 100.00 70,454,050 100.00 63,269,794 100.00

Gas development surcharge 11,029,741 11.03 19,580,832 20.23 25,859,852 27.22 18,017,729 20.42 19,959,539 28.33 21,246,005 33.58
General sales tax 11,668,172 11.66 13,745,689 14.20 13,509,334 14.22 12,370,744 14.02 9,952,761 14.13 8,469,429 13.39
Excise duty 1,906,530 1.91 1,794,397 1.85 1,694,205 1.78 1,630,044 1.85 1,547,845 2.20 1,495,971 2.36
Gas infrastructure development cess 34,762,028 34.75 33,479,569 34.59 31,933,382 33.61 36,050,495 40.86 23,733,661 33.69 18,037,931 28.51
Wind fall levy -         - -         - 288,182 0.30 794,504 0.90 516,224 0.73 508,291 0.80
Surplus / (deficit) under the Gas Price Agreement -         - -         - -         - -         - (133,949) (0.19) 1,734,400 2.74
59,366,471 59.34 68,600,487 70.89 73,284,955 77.14 68,863,516 78.04 55,576,081 78.88 51,492,027 81.38
Sales - net 40,676,368 40.66 28,175,487 29.11 21,712,764 22.86 19,376,021 21.96 14,877,969 21.12 11,777,767 18.62
Royalty 5,180,869 5.18 3,583,522 3.70 2,750,095 2.89 2,519,026 2.85 1,922,086 2.73 1,531,378 2.42
35,495,499 35.48 24,591,965 25.41 18,962,669 19.96 16,856,995 19.10 12,955,883 18.39 10,246,389 16.19

Operating expenses 9,985,411 9.98 7,450,011 7.70 5,763,609 6.07 5,376,244 6.09 4,375,198 6.21 4,516,086 7.14
Exploration and prospecting expenditure 3,689,854 3.69 3,880,797 4.01 6,462,126 6.80 3,194,383 3.62 3,116,299 4.42 2,496,075 3.95
Other charges 1,447,747 1.45 726,290 0.75 501,943 0.53 498,725 0.57 322,563 0.46 330,809 0.52
15,123,012 15.12 12,057,098 12.46 12,727,678 13.40 9,069,352 10.28 7,814,060 11.09 7,342,970 11.61
20,372,487 20.36 12,534,867 12.95 6,234,991 6.56 7,787,643 8.83 5,141,823 7.30 2,903,419 4.59
Other income / (expenses) (206,831) (0.21) (820,328) (0.85) 559,789 0.59 35,082 0.04 (476,755) (0.68) 951,976 1.50
Operating profit 20,165,656 20.16 11,714,539 12.10 6,794,780 7.15 7,822,725 8.87 4,665,068 6.62 3,855,395 6.09

Finance income 765,616 0.77 233,006 0.24 340,730 0.36 517,239 0.59 593,674 0.84 259,484 0.41
Finance cost 639,728 0.64 798,086 0.82 574,058 0.60 1,788,092 2.03 881,105 1.25 626,388 0.99
Profit before taxation 20,291,544 20.28 11,149,459 11.52 6,561,452 6.91 6,551,872 7.43 4,377,637 6.21 3,488,491 5.51
Provision for taxation 4,917,204 4.92 2,013,265 2.08 509,997 0.54 901,559 1.02 434,334 0.62 1,067,415 1.69
Profit for the year 15,374,340 15.37 9,136,194 9.44 6,051,455 6.37 5,650,313 6.40 3,943,303 5.60 2,421,076 3.83

COMPOSITION

96.2 3.8

5.6

6.4

6.4

9.4

15.4
OF STATEMENT

94.4
OF PROFIT OR

93.6

93.6

90.6

84.6
LOSS
(Percentage)

106
ANALYSIS
During 2017-18, profit was 15.37% which was over 60%
Profit higher as compared to 9.44% of last year.
Expenditue net of other
income & finance income
109
Mari Petroleum Company Limited
Annual Report 2018

Ten Years AT A GLANCE Free Cash Flow (Rupees in thousand)


Drilling of Dharian-1 at Ghauri Block Description 30 June, 2018 30 June, 2017

Cash Provided by Operating Activities 20,225,239 7,120,289

Less: Capital Expenditures


Purchase of Property, Plant & Equipment 2,182,761 1,091,333
Development and production assets 1,650,534 1,073,402
Exploration and evaluation assets 2,424,676 2,124,810
6,257,971 4,289,545
Less: Dividends Paid 623,547 557,916
Free Cash Flow 13,343,721 2,272,828

(Rupees in million)
2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09

FINANCIAL 2018 2017


Revenue 100,601.62 96,188.65 95,898.24 88,791.86 70,570.97 65,128.56 48,228.33 32,177.82 28,979.37 26,864.38
(Rupees in thousand) (Rupees in thousand)
Government levies:
Income tax, other charges, royalty,
excise duty, general sales tax, gas
Free cash flow 13,343,721 Free cash flow 4,289,545
development surcharge and gas Dividends paid 623,547 Dividends paid 557,916
infrastructure development cess 70,409.10 74,298.34 77,328.34 73,242.31 58,599.39 55,511.89 41,617.72 26,647.09 23,061.72 22,117.41 Capital expenditures 6,257,971 Capital expenditures 2,272,828
Sales - net 40,676.37 28,175.49 21,712.76 19,376.02 14,877.97 11,777.77 7,555.92 7,128.27 6,423.01 5,789.20
Operating profit 20,165.66 11,714.54 6,794.78 7,822.73 4,665.07 3,198.70 1,725.80 2,778.43 2,460.75 2,545.84
Profit before taxation 20,291.54 11,149.46 6,561.45 6,551.87 4,377.64 3,488.49 1,402.50 2,708.90 2,341.47 2,394.73
Profit for the year 15,374.34 9,136.19 6,051.46 5,650.31 3,943.30 2,421.08 1,115.17 1,725.30 1,185.95 2,151.92
Issued, subscribed and paid up capital 1,102.50 1,102.50 1,102.50 1,102.50 918.75 918.75 918.75 735.00 735.00 367.50
Reserves 39,089.24 24,435.17 15,863.42 10,393.72 15,903.48 12,637.98 10,557.40 9,935.42 8,455.83 7,865.22
Property, plant and equipment - at cost 22,345.12 20,315.85 17,217.73 14,857.61 12,798.64 9,426.47 7,560.05 7,417.33 6,699.57 6,626.01
Net current assets / (liabilities) 18,383.90 8,903.01 (2,289.87) 2,469.45 3,035.24 5,197.97 4,284.04 3,265.80 3,231.97 898.45
Long term liabilities including
deferred liabilities 7,952.34 11,656.54 7,576.58 14,758.97 5,047.10 5,361.39 5,362.28 4,966.34 4,471.03 3,108.47

NATURAL GAS
Development and production
leases (sq. kilometres) 1,162.2 1,140.5 1,311.1 1,093.5 1,093.5 1,093.5 1,093.5 1,093.5 1,093.5 1,093.5
Ultimate recovery of proved
reserves (BSCF) 10,655.8 10,653.2 8,440.9 8,427.9 8,402.9 8,398.4 8,398.4 8,321.7 8,299.3 8,219.0
Cumulative production (BSCF) * 5,602.4 5,345.2 5,101.4 4,869.4 4,644.6 4,427.3 4,216.1 4,009.7 3,821.9 3,642.2
COMPOSITION OF LOCAL VERSUS IMPORTED MATERIAL AND

Sensit ivity Analysis


Number of producing wells 135 127 124 119 118 114 107 99 98 89
Production (BSCF) * 257.16 243.84 232.0 224.7 217.3 211.2 206.5 187.8 179.7 169.7
Daily average (BSCF) * 0.705 0.668 0.634 0.616 0.595 0.579 0.564 0.515 0.492 0.465

OIL A substantial portion (~60%) of our annual procurement spend comprises of foreign equipment, materials and services
Production (barrels) * 543,820 554,081 472,413 414,433 175,312 192,259 124,279 130,093 62,212 41,510 while major spend remains in US dollars. Hence, exchange rate volatility is an important facet of our international sourcing
that impacts the supplier selection decisions and can even make a supplier less competitive post award decision. Fur-
LPG thermore, in case of local procurement, our suppliers import a significant portion of materials that proportionately impact

108
Production (metric ton) * - 20 25 362 263 477 2,062 5,031 1,231 -      prices due to exchange rate fluctuation.

* MPCL's share
111
Mari Petroleum Company Limited
Annual Report 2018

Pat tern of Shareholding


STATEMENT OF Value Added
AS AT JUNE 30, 2018
No. of Total
Year 2017-18 Year 2016-17 Shareholders Shareholding shares held
(Rs. in million) % age (Rs. in million) % age
705 1 TO 100 27,242
Gross sales to customers 100,042.84 110.50% 96,775.97 110.15% 433 101 TO 500 118,201
366 501 TO 1,000 283,398
Operating and exploration expenses (9,020.69) (9.96%) (7,216.57) (8.21%) 500 1,001 TO 5,000 1,120,375
91,022.15 100.54% 89,559.40 101.94% 100 5,001 TO 10,000 715,037
45 10,001 TO 15,000 585,021
Other incomes and other expenses (487.42) (0.54%) (1,699.56) (1.94%) 14 15,001 TO 20,000 248,600
Total value added 90,534.73 100.00% 87,859.84 100.00% 11 20,001 TO 25,000 240,292
9 25,001 TO 30,000 274,242
11 30,001 TO 35,000 361,566
DISTRIBUTED AS FOLLOWS:
13 35,001 TO 40,000 492,959
Employees as remuneration and benefits 4,618.15 5.10% 3,942.34 4.49% 7 40,001 TO 45,000 302,902
Government as levies 11 45,001 TO 50,000 512,365
Direct 4,824.38 5.33% 1,624.55 1.85% 2 50,001 TO 55,000 103,810
3 55,001 TO 60,000 168,580
Indirect 65,584.72 72.44% 72,673.80 82.72% 5 65,001 TO 70,000 339,023
70,409.10 77.77% 74,298.34 84.57% 2 70,001 TO 75,000 145,070
Shareholder as dividends 709.93 0.78% 651.36 0.74% 5 75,001 TO 80,000 388,516
1 80,001 TO 85,000 83,950
Social welfare 198.43 0.22% 275.91 0.31% 3 85,001 TO 90,000 260,800
Providers of long term finance as financial charges 26.56 0.03% 209.23 0.24% 3 90,001 TO 95,000 282,690
Retained within the business 14,572.56 16.10% 8,482.67 9.65% 1 95,001 TO 100,000 100,000
2 100,001 TO 105,000 204,619
90,534.73 100.00% 87,859.84 100.00% 2 105,001 TO 110,000 214,960
1 110,001 TO 115,000 112,260
3 115,001 TO 120,000 357,295

DISTRIBUTION DISTRIBUTION

1
1
120,001
125,001
TO
TO
125,000
130,000
120,650
125,773
2017-18 2016-17 1 130,001 TO 135,000 133,300
1 140,001 TO 145,000 143,900
1 150,001 TO 155,000 154,850
Employees as remuneration and benefits 5.10% Employees as remuneration and benefits 4.49% 1 180,001 TO 185,000 182,440
Social Welfare 0.22% Social Welfare 0.31% 1 185,001 TO 190,000 185,950
Goverment as levies 77.77% Goverment as levies 84.57% 1 195,001 TO 200,000 198,960
Shareholder as dividends 0.78% Shareholder as dividends 0.74% 3 200,001 TO 205,000 605,290
Provides of long term finance as financial charges 0.03% Provides of long term finance as financial charges 0.24% 1 210,001 TO 215,000 210,330
Retained with in the business 16.10% Retained with in the business 9.65%
2 215,001 TO 220,000 432,550
1 240,001 TO 245,000 240,370
1 255,001 TO 260,000 259,680
1 285,001 TO 290,000 286,800
1 305,001 TO 310,000 309,680
1 320,001 TO 325,000 320,700
1 365,001 TO 370,000 369,662
1 380,001 TO 385,000 383,279

Charity Account
1 400,001 TO 405,000 401,540
1 510,001 TO 515,000 510,911
STATEMENT OF 1 605,001 TO 610,000 608,364
(Rupees in thousand) 1 1,020,001 TO 1,025,000 1,023,110
1 1,265,001 TO 1,270,000 1,267,724
Description 2017-18
1 1,710,001 TO 1,715,450 1,715,431
1 1,765,001 TO 1,770,000 1,765,151
Health care 105,003 1 1,965,001 TO 1,970,000 1,966,821
Education 1,450 1 2,410,001 TO 2,415,000 2,414,266
Social Welfare 91,975 1 20,270,001 TO 20,275,000 20,270,014
1 21,865,001 TO 21,870,000 21,866,250
198,428 1 43,730,001 TO 43,735,000 43,732,481

110
2,291 110,250,000
113
Mari Petroleum Company Limited
Pattern of Shareholding as at June 30, 2018 Annual Report 2018

Categories of Shareholders
Shares Pending Total Shares Pending Total
Categories of Shareholders Numbers held Shares *** Shares %age Categories of Shareholders Numbers held Shares *** Shares %age
Associated Companies, undertakings and related parties - CDC - Trustee Meezan Islamic Fund 1 1,966,821 8,999 1,975,820 1.79
- Fauji Foundation 1 43,732,500 367,500 44,100,000 40.00 - CDC - Trustee NAFA Islamic Active Allocation Equity Fund 1 77,350 - 77,350 0.07
- Oil & Gas Development Company Limited 1 21,866,250 183,750 22,050,000 20.00 - CDC - Trustee NAFA Islamic Aseet Allocation Fund 1 286,800 - 286,800 0.26
- CDC -Trustee NAFA Islamic Energy Fund 1 120,650 - 120,650 0.11
Mutual Funds - CDC - Trustee NAFA Islamic Principal Protected Fund - II 1 1,200 - 1,200 0.00
- CDC - Trustee HBL Energy Fund 1 85,040 - 85,040 0.08 - CDC -Trustee NAFA Islamic Stock Fund 1 185,950 - 185,950 0.17
- CDC - Trustee ABL Stock Fund 1 259,680 - 259,680 0.24 - CDC -Trustee NAFA Multi Asset Fund 1 27,200 - 27,200 0.02
- CDC - Trustee AKD Index Tracker Fund 1 4,941 43 4,984 0.00 - CDC -Trustee NAFA Stock Fund 1 401,540 - 401,540 0.36
- CDC - Trustee Al Ameen Islamic Dedicated Equity Fund 1 510,911 - 510,911 0.46 - CDC - Trustee PICIC Growth Fund 1 182,440 - 182,440 0.17
- CDC - Trustee Al Meezan Mutual Fund 1 320,700 1,400 322,100 0.29 - CDC - Trustee PICIC Investment Fund 1 94,880 - 94,880 0.09
- CDC - Trustee Al-Ameen Islamic Asset Allocation Fund 1 112,260 - 112,260 0.10 - CDC - Trustee UBL Asset Allocation Fund 1 3,980 - 3,980 0.00
- CDC - Trustee Al-Ameen Shariah Stock Fund 1 309,680 - 309,680 0.28 - CDC - Trustee UBL Dedicated Equity Fund 1 2,500 - 2,500 0.00
- CDC -Trustee Alfalah Capital Preservation Fund II 1 7,300 - 7,300 0.01 - CDC - Trustee UBL Retirement Savings Fund - Equity Sub Fund 1 48,170 - 48,170 0.04
- CDC -Trustee Alfalah GHP Alpha Fund 1 52,210 - 52,210 0.05 - CDC - Trustee UBL Stock Advantage Fund 1 240,370 - 240,370 0.22
- CDC - Trustee Alfalah GHP Islamic Dedicated Equity Fund 1 45,497 - 45,497 0.04 - CDC - Trustee Unit Trust Of Pakistan 1 79,680 - 79,680 0.07
- CDC - Trustee Alfalah GHP Islamic Stock Fund 1 125,773 - 125,773 0.11 - CDC - Trustee Meezan Dedicated Equity Fund 1 42,320 - 42,320 0.04
- CDC - Trustee Alfalah GHP Islamic Value Fund 1 6,520 - 6,520 0.01 - CDC - Trustee Al-Ameen Islamic Ret. Sav. Fund- Equity Sub Fund 1 58,150 - 58,150 0.05
- CDC - Trustee Alfalah GHP Stock Fund 1 67,940 - 67,940 0.06 - CDC - Trustee Alhamrah Islamic Asset Allocation Fund 1 4,420 - 4,420 0.00
- CDC - Trustee Alfalah GHP Value Fund 1 47,220 54 47,274 0.04 - CDC - Trustee First Habib Islamic Stock Fund 1 3,620 - 3,620 0.00
- CDC - Trustee Alhamra Islamic Stock Fund 1 69,250 - 69,250 0.06 - CDC - Trustee HBL Islamic Stock Fund 1 75,030 - 75,030 0.07
- CDC - Trustee APIF-Equity Sub Fund 1 11,200 - 11,200 0.01 - CDC - Trustee NAFA Asset Allocation Fund 1 55,050 - 55,050 0.05
- CDC - Trustee APIF - Equity Sub Fund 1 16,020 - 16,020 0.01 - MCFSL - Trustee Askari Islamic Asset Allocation Fund 1 2,860 - 2,860 0.00
- CDC - Trustee Askari Equity Fund 1 2,100 - 2,100 0.00 - MCFSL - Trustee JS Growth Fund 1 108,400 - 108,400 0.10
- CDC - Trustee Atlas Islamic Stock Fund 1 74,910 - 74,910 0.07 - MCBFSL - Trustee ABL Islamic Stock Fund 1 106,560 - 106,560 0.10
- CDC - Trustee Atlas Stock Market Fund 1 154,850 - 154,850 0.14 - MCBFSL - Trustee Allied Capital Protected Fund 1 3,340 - 3,340 0.00
- CDC - Trustee Faysal Asset Allocation Fund 1 3,000 - 3,000 0.00 - MCBFSL - Trustee JS Value Fund 1 66,020 - 66,020 0.06
- CDC - Trustee Faysal Islamic Asset Allocation Fund 1 10,000 - 10,000 0.01 - MCBFSL - Trustee Pak Oman Advantage Asset Allocation Fund 1 2,000 - 2,000 0.00
- CDC- Trustee Faysal Stock Fund 1 3,000 - 3,000 0.00 - MCBFSL - Trustee Pak Oman Islamic Asset Allocation Fund 1 5,500 - 5,500 0.00
- CDC - Trustee First Capital Mutual Fund 1 3,000 - 3,000 0.00 - MCBFSL - Trustee ABL Islamic Dedicated Stock Fund 1 93,360 - 93,360 0.08
- CDC - Trustee First Habib Stock Fund 1 4,000 - 4,000 0.00 - MCBFSL - Trustee ABL Islamic Asset Allocation Fund 1 3,000 - 3,000 0.00
- CDC - Trustee HBL Stock Fund 1 198,960 - 198,960 0.18 - CDC - Trustee PIML Islamic Equity Fund 1 - 35 35 0.00
- CDC - Trustee HBL Equity Fund 1 9,890 - 9,890 0.01 - CDC - Trustee PIML Strategic Multi Asset Fund 1 - 25 25 0.00
- CDC - Trustee HBL IPF Equity Sub Fund 1 6,000 140 6,140 0.01 - CDC - Trustee First Capital Mutual Fund 1 - 77 77 0.00
- CDC - Trustee HBL Islamic Asset Allocation Fund 1 25,240 - 25,240 0.02 - CDC - Trustee First Crosby Dragon Fund 1 - 20 20 0.00
- CDC - Trustee HBL Islamic Equity Fund 1 43,110 - 43,110 0.04 - CDC - Trustee Atlas Islamic Stock Fund 1 - 100 100 0.00
- CDC - Trustee HBL Multi Asset Fund 1 7,280 - 7,280 0.01 - CDC - Trustee Atlas Stock Market Fund 1 - 150 150 0.00
- CDC - Trustee HBL PF Equity Sub Fund 1 7,760 - 7,760 0.01 - CDC - Trustee JS KSE-30 Index Fund 1 - 7 7 0.00
- CDC - Trustee JS Islamic Dedicated Equity Fund (JSIDEF) 1 35,300 - 35,300 0.03 Directors, Chief Executive Officer
- CDC - Trustee JS Islamic Fund 1 88,080 - 88,080 0.08 and their spouses and minor children
- CDC - Trustee JS Islamic Pension Savings Fund - Equity Account 1 10,540 - 10,540 0.01 - S.H. Mehdi Jamal - Director representing General Public 1 500 - 500 0.00
- CDC - Trustee JS Large Cap. Fund 1 43,732 - 43,732 0.04
Public Sector Companies and Corporations
- CDC - Trustee JS Pension Savings Fund - Equity Account 1 14,080 - 14,080 0.01
- Oil & Gas Development Company Limited * - - - -
- CDC - Trustee KSE Meezan Index Fund 1 39,401 329 39,730 0.04
- CDC - Trustee Lakson Equity Fund 1 77,406 1,010 78,416 0.07 NIT and ICP
- CDC - Trustee Lakson Islamic Tactical Fund 1 3,065 - 3,065 0.00 - M/s Investment Corporation of Pakistan 1 3,332 - 3,332 0.00
- CDC - Trustee Lakson Tactical Fund 1 15,340 - 15,340 0.01 - IDBL (ICP UNIT). (CDC) 1 2,598 - 2,598 0.00
- CDC - Trustee MCB Pakistan Asset Allocation Fund 1 45,340 - 45,340 0.04 - CDC - Trustee Natonal Investment (Unit) Trust (CDC) 1 2,414,266 38,238 2,452,504 2.22
- CDC - Trustee MCB Pakistan Stock Market Fund 1 215,950 - 215,950 0.20 - CDC - Trustee NIT - Equity Market Opportunity Fund (CDC) 1 369,662 4,887 374,549 0.34

112
- CDC - Trustee Meezan Asset Allocation Fund 1 36,980 - 36,980 0.03 Banks, Development Financial Institutions and
- CDC - Trustee Meezan Balanced Fund 1 83,950 300 84,250 0.08 Non-Banking Financial Institutions
- CDC - Trustee Meezan Energy Fund 1 79,050 - 79,050 0.07 - National Development Finance Corp. 1 4,462 - 4,462 0.00
115
Mari Petroleum Company Limited
Pattern of Shareholding as at June 30, 2018 Annual Report 2018

Categories of Shareholders
Shares Pending Total Shares Pending Total
Categories of Shareholders Numbers held Shares *** Shares %age Categories of Shareholders Numbers held Shares *** Shares %age

- Bank Alfalah Limited 1 200,820 - 200,820 0.18 - Trustee Shell Pakistan Staff Pension Fund 1 140 140 0.00
- Meezan Bank Limited 1 216,600 - 216,600 0.20 - Trustee The Kot Addu Power Co. Ltd. Employees Pension Fund 1 3,990 3,990 0.00
- National Bank of Pakistan 1 1,715,431 - 1,715,431 1.56 - Pakistan Herald Publications (Pvt) Ltd. Staff Pension Fund 1 1,000 1,000 0.00
Insurance & Takaful Companies - Trustee Pak Herald Publications (Pvt) Ltd. Staff Pension Fund 1 2,800 2,800 0.00
- Adamjee Life Assurance Co. Ltd - DGF 1 11,040 - 11,040 0.01 - Trustee Nestle Pakistan Ltd Managerial Staff Pension Fund 1 32,361 32,361 0.03
- Adamjee Life Assurance Company Limited 1 16,420 - 16,420 0.01 - CDC - Trustee AGIPF Equity Sub-Fund 1 1,330 1,330 0.00
- Adamjee Life Assurance Company Limited-ISF 1 17,700 - 17,700 0.02 - CDC - Trustee AGPF Equity Sub-Fund 1 1,100 1,100 0.00
- Adamjee Life Assurance Company Ltd-IMF 1 94,450 94,450 0.09 - CDC - Trustee Pakistan Pension Fund - Equity Sub Fund 1 1,620 1,620 0.00
- Alfalah Insurance Company Limited 1 5,500 5,500 0.00 - CDC- Trustee Alhamra Islamic Pension Fund - Equity Sub Fund 1 9,880 9,880 0.01
- Askari General Insurance Co. Ltd 1 400 400 0.00 Shareholders holdings 5% or more voting interest **
- Atlas Insurance Limited 1 4,500 4,500 0.00 - Local Individuals 1,949 4,157,445 4,157,445 3.77
- Century Insurance Company Ltd 1 4,830 4,830 0.00 - Foreign Individuals 2 36,686 36,686 0.03
- IGI Life Insurance Limited 1 4,207 4,207 0.00 Others
- Jubilee General Insurance Company Limited 1 47,040 47,040 0.04 - Government of Pakistan 1 20,270,014 20,270,014 18.39
- Jubilee General Window Takaful Fund-PTF 1 1,000 1,000 0.00 - Federal Board of Revenue 1 45,289 45,289 0.04
- Jubilee Life Insurance Company Limited 1 1,023,110 1,023,110 0.93 - Joint Stock Companies 56 603,387 603,387 0.55
- State Life Insurance Corp. Of Pakistan 1 1,267,724 1,267,724 1.15 - Executives 4 15,965 15,965 0.01
- Takaful Pakistan Limited 1 2,740 2,740 0.00 - Foreign Companies 26 685,717 685,717 0.62
- Pak Qatar Family Takaful Limited 1 38,980 38,980 0.04 - Others 106 2,157,513 2,157,513 1.96
- Dawood Family Takaful Limited 1 25,230 25,230 0.02 2,291 109,641,636 608,364 110,250,000 100.00
Modarabas * Public Sector Companies and Corporations
- Crescent Standard Modaraba 1 200 200 0.00 (Separately included above)
- B.R.R. Guardian Modaraba 1 9,030 9,030 0.01 - Oil & Gas Development Company Limited 21,866,250 183,750 22,050,000 20.00
- First Al Noor Modaraba 1 160 160 0.00 ** Shareholders holdings 5% or more voting interest
Pension Funds (Separately included above)
- Trustees-ICI Pakistan Mngt Staff Pen. F 1 7,240 7,240 0.01 - Fauji Foundation 43,732,500 367,500 44,100,000 40.00
- Trustee National Bank of Pakistan Employees Pension Fund 1 383,279 383,279 0.35 - Oil & Gas Development Company Limited 21,866,250 183,750 22,050,000 20.00
- Pfizer Pakistan DC Pension Fund 1 3,650 3,650 0.00 - Government of Pakistan 20,270,014 - 20,270,014 18.39
- Unilever Pakistan DC Pension Fund (Sub Fund A) 1 6,450 6,450 0.01 Shares held by Sponsor Shareholders
- Unilever Pakistan DC Pension Fund (Sub Fund B) 1 5,250 5,250 0.00 - Fauji Foundation 43,732,500 367,500 44,100,000 40.00
- Unilever Pension Plan 1 600 600 0.00 - Oil & Gas Development Company Limited 21,866,250 183,750 22,050,000 20.00
- Wyeth Pakistan DC Pension Fund 1 490 490 0.00 - Government of Pakistan 20,270,014 - 20,270,014 18.39
- CDC - Trustee ABL Islamic Pension Fund - Equity Sub Fund 1 4,100 4,100 0.00
Shares held by Directors and Executives
- CDC - Trustee ABL Pension Fund - Equity Sub Fund 1 4,300 4,300 0.00
- Directors 500 - 500 0.00
- CDC - Trustee Meezan Tahaffuz Pension Fund - Equity Sub Fund 1 204,100 1,300 205,400 0.19 - Executives 15,965 - 15,965 0.01
- CDC - Trustee NAFA Islamic Pension Fund Equity Account 1 31,100 31,100 0.03
- CDC - Trustee NAFA Pension Fund Equity Sub- Fund Account 1 24,600 24,600 0.02 During the financial year the trading in shares of the Company by the Directors, CEO, CFO, Company Secretary and their spouses and minor
children is as follows:
- Trustee of Pak. Herald Publications (Pvt.) Ltd - SPF 1 2,700 2,700 0.00
- Trustee Pak Tobacco Co Ltd Staff Def Contri Pen Fd 1 3,200 3,200 0.00 Rate
Name Date Purchase Sale Rs. Per Share
- Trustee Pak Tobacco Co Ltd Staff Pension Fund 1 47,400 47,400 0.04
- Trustee ANPL Management Staff Pension Fund 1 2,730 2,730 0.00 - - - - -
- Trustee Millat Tractors Ltd. Employees Pension Fund 1 3,140 3,140 0.00
*** Bonus Shares are withheld and have not been issued due to pending resolution of issue relating to deduction of withholding tax on
- Trustee Engro Corp Ltd Mpt Employees Def Contr Pension Fund 1 6,099 6,099 0.01
issuance of bonus shares.
- Trustee Indus Motor Company Limited Employees Pension Fund 1 3,700 3,700 0.00
- Trustee of Crescent Steel & Allied Products Ltd-Pension Fund 1 292 292 0.00
- Trustee Pakistan Refinery Ltd Management Staff Pension Fund 1 6,000 6,000 0.01

114
- Trustee Sanofi-Aventis Pak. Senior Executive Pension Fund 1 3,200 3,200 0.00
- Trustee Shell Pakistan DC Pension Fund 1 8,130 8,130 0.01
- Trustee Shell Pakistan Management Staff Pension Fund 1 10,350 10,350 0.01
117
Mari Petroleum Company Limited
Annual Report 2018

Directors'
Gross sales for the year under Earnings per share (EPS) for the capital expenditures and repayment
review increased to Rs. 100,043 year increased to Rs. 139.45 per of long term loans.

REPORT million from Rs. 96,776 million for


the last year. The increase is mainly
share as compared to last year’s Rs.
82.87 per share. EPS on the basis DIVIDENDS
due to increase in sales volume. of distributable profits increased to The Company has declared an
Company’s contribution to the Rs. 6.44 per share from Rs. 5.91 per interim dividend @ Rs. 3.50 per
We are pleased to FINANCIAL RESULTS Government Exchequer amounted to share for the last year. ordinary share (35%) for the year
The profit and appropriations for the year are as follows: Rs. 70,409 million against Rs. 74,298 ended June 30, 2018. Further, final
present our report Rupees inthousand million, in the last year. The operating The rate of return to the cash dividend @ Rs. 2.20 per share
expenses were Rs. 9,985 million as shareholders for the year has (22%) for the year ended June 30,
together with the Profit
against Rs. 7,450 million for the last increased to 44.40% against 2017 was also declared during the
Profit for the year after taxation 15,374,340
audited financial Other comprehensive loss (91,847)
year. last year’s 42.59%, which is
in proportion to increase in
year.

Un-appropriated profit brought forward 12,748,733


statements of the 28,031,226
The operating results in the financial
statements for the year show profit
production level. FOREIGN EXCHANGE SAVINGS
AND GOVERNMENT REVENUES
Company and the Appropriations for the year of Rs. 15,374 million CASH FLOW STRATEGY MPCL is a major contributor to the
Final dividend @ 22% for the year ended June 30, 2017 (138,805) as against Rs. 9,136 million of the Cash and cash equivalents were national economy. The Company’s
Auditors’ report First interim cash dividend @ 35% for the previous year. Increase in net sales Rs. 15,706 million as against Rs. share of production of natural
year ended June 30, 2018 (385,875) and finance income and decrease 6,928 million in the previous year. gas, condensate and crude oil
thereon for the Undistributed Percentage Return Reserve (220,418) in other expenses were the major During the year, an amount of from its Mari Field and other
reasons for increase in profitability. Rs. 20,225 million was generated joint ventures for the financial
year ended June Self-insurance reserve (1,000,000)
This was offset with increase in from operating activities of the year 2017-18 in terms of energy

116
Total for the year (1,745,098)
equivalent was 34,023,810 barrels
30, 2018. 26,286,128
royalty, operating expenses, other
charges and provision for taxation.
Company which was used mainly
to undertake exploration activities, (2017: 32,316,176 barrels). This has
119
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

resulted in foreign exchange saving OPERATIONAL EXCELLENCE


of around Rs. 237 billion (2017: Rs. Hydrocarbon production levels from all company operated
172 billion) for the current year fields have been managed optimally, which resulted in
assuming an average crude oil enhanced overall production in FY 2017-18. Although
price of US$ 62.90 per barrel and the field production rates are naturally declining due
average foreign exchange rate of to depletion, however, productivity has been
US$ = Rs. 110.59 during the year enhanced through minimizing the plant
(2017: average crude oil price of and equipment downtime and ensuring
US$ 50.69 per barrel and average maximum availability of equipment by
foreign exchange rate of US$ = Rs. efficient utilization of manpower and
104.75). resources. Asset integrity surveys
were blended with professional
In addition, MPCL contributed experiences and technological usage to
around Rs. 70,409 million to the find advance solutions for up keeping the health of
Government exchequer during Production Operations at Ghauri Block assets.
the year (Rs. 74,298 million during
2016-17) mainly on account of condensate (209 barrels per day), 12,688 MMSCF of gas (35 MMSCF per day) A well-planned and efficiently executed
gas development surcharge, gas and 20 metric ton of LPG (0.07 metric ton per day) was produced and sold shutdown ensures a safe and reliable
infrastructure development cess, from joint ventures in the comparative year. process.
sales tax, excise duty, royalty and
income taxes. The Company’s customers include Engro Fertilizer Limited, Fauji Fertilizer Sujawal Annual Turnaround
Company Limited, Fatima Fertilizer Company Limited, Foundation Power (ATA)
OPERATIONS Company Daharki Limited, Central Power Generation Company Limited, Sui First ATA of Sujawal plant was
The Company in continuation of its Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, Attock performed from 8th – 14th July-2017
longstanding tradition, continued Refinery Limited, National Refinery Limited, Pakistan Refinery Limited, Pak Arab (7 days) against 11 target days. ATA has
un-interrupted gas supply to all its Refinery Limited, Pak Arab Fertilizers Limited, EGAS (Pvt) Limited, Petrosin CNG resulted into enhanced life of production
customers during the year 2017-18. (Private) Limited and Foundation Gas. and processing equipment. This has
been manifested by the fact that zero
A cumulative 243,403 MMSCF EXPLORATION, OPERATIONAL AND DEVELOPMENT ACTIVITIES unscheduled outage on processing
of gas at a daily average of 667 The Company’s working interests in onshore blocks in Pakistan are as follows: plant has been noted since ATA.
MMSCF and 17,369 barrels of
condensate (48 barrels per day) S. No Name of Block / Field MPCL’s Working Interest Name of Operator Challenges
were produced from Mari Field • Limited time span to cover plant activities
1 Mari Field 100% MPCL
during the year as against 231,147 • Welding, Fabrication and Crane
2 Zarghun South Field 35% MPCL
MMSCF of gas at daily average of Operations in cramped area
3 Sujawal block 100% MPCL
633 MMSCF and 16,149 barrels of
4 Karak block 60% MPCL
condensate (44 barrels per day) for Zarghun Annual Turnaround
5 Ghauri block 65% MPCL
the corresponding year as per the First comprehensive ATA of Zarghun field
6 Sukkur block 58.82% MPCL
requirement / withdrawal of the was started on 1st July for target duration
7 Ziarat block 60% MPCL
customers. of 11 days. On-spec gas supply resumed
8 Harnai block 60% MPCL
9 Peshawar East block 98.16% MPCL to customer on 6th July (5 days ahead of
In addition, 426,581 barrels of planned date).
10 Bannu West block 55% MPCL
crude oil (1,169 barrels per day),
11 Hala block 35% PPL
99,870 barrels of condensate Challenges
12 Shah Bandar block 32% PPL
(274 barrels per day) and 13,752
13 Block 28 95%* OGDCL • Limited time span to cover plant activities
MMSCF of gas (38 MMSCF per day)
14 Kohlu block 30% OGDCL • Unavailability of backup support due to
was produced and sold from joint
15 Kalchas block 50% OGDCL remoteness of field
ventures during the year, whereas

118
16 Kohat block 20% OGDCL • Limited vendors willing to perform the job due
461,771 barrels of crude oil (1,265
barrels per day), 76,161 barrels of * Transfer of operatorship of the block from OGDCL to MPCL is in progress. to remote area
121
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

HIGHEST PRODUCTION SEISMIC DATA


MPCL produced 770 MMSCF gas from all operated fields on January 30, 2018, ACQUISITION 2017-18
which is the highest ever daily production level attained. This volume of gas is Details of the Company plan to
equivalent to 101,000 Barrel of crude oil in terms of energy equivalence. acquire 2D and 3D Seismic data and
actual data obtained are as follows:
PLANNED/DRILLED WELLS 2017-18
Operated blocks and D&P Leases Operated

Well Type Block / Field Status


Sukkur Block:
Planned: 617 Line km (Firm) and 214
Tipu-1 Exploratory Mari Field Gas discovery in B Sand Line km (Contingent) 2D
Azadi-1 Development Mari Field Gas producer in B Sand Actual: 758.76 Line km 2D seismic
Bhitai-5 Appraisal Mari Field Gas producer in SML data acquisition has been
Dharian-1 Exploratory Ghauri Drilling is in progress completed on December
Sufi-1 Exploratory Sukkur Drilled and temporarily 03, 2017. to connect the wellheads with
suspended for future
existing gas gathering pipeline
evaluation Bannu West Block: network.
Bolan East-1 Exploratory Ziarat Wireline logs have been Planned: 3D: Zipper-I: 672 sq. km and Incremental Production from HRL
acquired and preparations Zipper-II: 178 sq. km During the fiscal year 2017-18, Enhancement of Produced Water
are in progress to conduct
2D: 285 Line km (Firm) and 27,797 MMSCF gas from HRL Handling facilities
testing
100 Line km (Contingent) reservoir was sold at incremental In order to effectively deal with the
Shaheen-2 Appraisal Mari Field Location stacked and well
price. Volume supplied at higher water rates being separated
shall be drilled during 2018-19 Actual: Acquisition of 99 line km
distinguished price supported in at manifolds since enhancement of
19 HRL Wells Development Mari Field Wells stacked: 6 (Mari-102, 2D seismic data completed
generation of Rs. 10.5 billion of production in 2016, two additional
Mari-103, Mari-104, Mari-105, on April 3, 2018. Parameter MARI D&P LEASE revenues. knock-out-drums (KOD) 60” & 64”
Mari-106, Mari-107) testing for 3D seismic data
Golden Jubilee of Uninterrupted have been installed at CMF-I and
Drilling completed: has been completed and
Gas Supplies From Mari Field HRL Plateau Maintained CMF-II respectively. These large
Mari-102 and Mari-103 recording has commenced.
Daharki Persistent measures are being sized KODs were designed in-house
Drilling in progress: Mari-104 Currently, 62 sq.km 3D
22nd of December is of great taken to extend the full production and installed through utilization of
seismic data has been
significance for Mari Field Daharki, plateau of Habib Rahi Limestone indigenous field resources. With the
Non Operated blocks acquired as of August 20,
as the field started its journey of gas formation. In view of the preceding installation of additional knockout
Well Type Block / Field Status
2018.
sales on December 22, 1967 and resolve, drilling of 19 additional drums and the associated headers,
completed 50 years of uninterrupted development wells is planned. The the gas handling capacity of both the
Zarbab X-1 Exploratory Hala Drilled and suspended Non-Operated
gas supplies on December 22, 2017. wells in HRL formation shall help in central manifolds is increased from
Benari X-1 Exploratory Shah Bandar Drilling in progress Kalchas Block: uniform depletion, enhanced and 525 to 725 MMSCFD.
Qamar X-1 Exploratory Hala Preparations are in progress Planned: 306 Line km (Firm) and We started this voyage with a sustained production, effective
to conduct testing 119.5 Line km (Contingent) meagre production of 6 MMSCFD reservoir management and revenue Gas Sales from SML/SUL Structure
2D and now have attained the generations for another 4 ~ 5 years After the MOU was signed with Pak
At the beginning of the year 2017-18, 13 wells were planned including firm
Actual: Bids for acquisition of production capability of about against the incremental price. Arab Fertilizers Limited for supply
and contingent as per best industry practices. Out of which 3 contingent wells
seismic data received 900 MMSCFD. Irrespective of the of 35 MMSCFD gas from SML/
namely; Sheikhan South-1, Prospect-3 and Surghar X-1 required further de-
on December 26, 2017. daily plateau vis-à-vis volume, The drilling campaign has been SUL wells including Shaheen and
risking before firming up and placing the well. Accordingly, plan was revised
Three vendors i.e. M/s we remained committed to meet triggered in the month of June 2018. Shahbaz wells, the development
to drill 10 wells as part of the 2017-18 drilling campaign. However, drilling of
BGP, M/s Senshe and M/s the requirement of downstream Production facilities engineering activities were immediately
Shaheen-2 was carried forward to 2018-19 for arranging LLIs as it was planned
Sino Geophysical have customers and served them 24/7 design has already been completed started for interconnection of 5
to be drilled as a dual lateral well. In addition, 19 development wells have
submitted their bids. and that too without availing any for all 19 wells. The project involves wells, construction of pipeline

120
been planned back to back in Mari D&P Lease to extend production plateau of
Currently, Bid evaluation is scheduled outages permitted in the the installation of 30 km loop lines infrastructure and gas delivery
Habib Rahi reservoir, out of which Mari 102 well was spud-in during 2017-18.
in progress. GSA. and 20-25 km of spur lines in order station at CMF-II in Daharki field. The
123
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

project was completed well in-time of unutilized gas resource. Both the included simultaneous loss/ gain B sand reservoir. Spud-in of well is
and company was ready to supply companies are pursuing the case situation, string stuck and multiple expected during end of September
gas to Pak Arab Fertilizer Limited for gas allocation with GOP for early fishing occurrences. These were 2018.
since April 15, 2018. The hallmarks resolution. successfully handled through
of the project was the utilization of improvisation of technology and G&G Studies
in-house resources for construction Liquid CO2 Plant experienced manpower in shortest Integrated G&G study was conducted
and engineering works, which could The installation and setup of Liquid downtime, leading to substantial to evaluate the stratigraphic and
have led to about 60% more cost, CO2 Plant to produce and sell savings against otherwise loss in remaining conventional potential
had the same been outsourced. Liquid CO2 from gas produced at terms of side-tracking the well. of Mari D&PL area at following
Daharki was part of the business Horizons:-
Gas Sales from Goru-B (Tipu Field) diversification strategy of the During the DST of primary target ‘B • PKL
MPCL signed an MOU with Pak Company. Accordingly, a conceptual/ Sands in Lower Goru Formation’, • SML/SUL
Arab Fertilizers Limited for sales of feasibility study was undertaken to well flowed natural gas with the • Lower Goru B Sand
40 MMSCFD gas from new finds in determine the type of processes potential of 15.5 MMSCFD gas @
• Sembar
Goru-B reservoir under the name involved for Liquid CO2 generation 2152 Psi flowing pressure at 40/64”
• Conventional Exploration
of Tipu field. In order to meet the and subsequently a life cycle based choke size. Gas heating value ranges
Potential in Chiltan
daily production level, second well economics study on the proposed between 450-462 BTU/SCF.
(Tipu -2) shall be added in future options was conducted to determine
to maintain the plateau. Gas is the best solution (both technically Development Well Azadi-1 The study results revealed possible
accepted by customer on raw and commercially) for the production In order to appraise southern side Well Mari-102 additional potential of Mari D&P
compositional basis thus saving of Liquid CO2. of Lower Goru ‘B’ Sand, well Azadi-1 The well was spud-in on June 23, Lease, accordingly based on
the Company from investing in gas was spud-in on September 30, 2018. Well has been drilled down to its recommendations, PSDM
processing facilities at gathering Based on the outcomes of the 2017 and successfully drilled down the depth of 784m and completed reprocessing of 3D seismic data
station. However, wellhead facilities study, the Company has engaged to the total depth of 2,995 M. Well as gas producer in HRL reservoir. and core sedimentology study for
and pipeline infrastructure within the an engineering consultancy firm to was drilled, tested and completed The well is a part of 19 development sweet spot identification have been
field premises shall be constructed undertake Front End Engineering in 61 days against planned 81 days wells planned to extend production planned.
by the Company. First gas is Study (FEED). The scope of the firm resulting in savings of approximately plateau of Habib Rahi reservoir.
expected to be produced by March includes submission of deliverables USD 3.5 million. Well testing SUJAWAL D&P LEASE
2019. that shall allow the Company to revealed production potential of 18.3 Wells Mari 103, Mari 104, Mari First Gas from Aqeeq-1 –
proceed with the hiring of EPC MMSCFD gas along with 12 barrels 105, Mari 106 and Mari 107 Sujawal D&P Lease
Gas Sales from Goru-B (44 contractor for deliverance of Liquid of condensate at 40/64” choke with These wells were stacked on ground Fourth well in Sujawal block,
MMSCFD) CO2 project on turnkey basis. 2472 psi WHFP. on June 25, 2018 to be drilled back Aqeeq-1, was drilled and completed
44 MMSCFD low BTU gas from Goru to back. The well Mari 103 was spud- in April 2017. The well was tested
B reservoir is currently available Exploratory Well Tipu-1 Appraisal Well Bhitai-5 in on July 24, 2018 and has been successfully for the production of
and unutilized as it has not been Exploratory Well Tipu-1 was spud in In order to further appraise SML drilled down to the depth of 751M 4.8 MMSCFD gas and 15 barrels
taken by Star Power since 2009. on July 05, 2017. The well was drilled formation, well Bhitai-5 was spud completed in both formations using and completed as gas producer in of condensate from Goru “A” Sand
The Company offered said volumes successfully to total depth of 3936M in on December 11, 2017 and was straddle completion technique. SUL HRL reservoir. formation.
to SNGPL on unprocessed, raw within the planned period of 94 days. successfully drilled to the target formation was kept behind Sliding
gas terms to which the customer depth of 1,180 M. Well was drilled Sleeve Door (SSD) while well can be The well Mari-104 was spud-in on In order to target early revenue
submitted their acceptance. The First three sections (26”, 17 ½” and cased in 16.65 Days against 22 produced from SML formation in the August 13, 2018. Well has been generation from the new find, the
Company shall carry out wellhead and 12 ¼”) were drilled, cased and planned days. Two separate DSTs current completion scenario. drilled to the depth of 360M as of possibility of transporting gas from
construction and interconnection cemented as planned while 8 ½” were conducted. DST-1 was carried August 17, 2018 and further drilling Aqeeq-1 to Sujawal X-1 through
gathering pipelines, however, the section was successfully drilled, out in SML formation and after Shaheen-2 Appraisal Well is in progress. construction of pipeline and to get
downstream gas sales line of around logged and subsequently plugged acid stimulation, well flowed 6.03 Shaheen-2 appraisal well in Mari this gas treated and compressed at
23 km from CMF-II to tie-in point on the basis of logs evaluation. MMSCFD gas at 40/64” choke size D&P Lease was stacked on ground Tipu-2 Sujawal CPF was evaluated. This was
of SNGPL shall be constructed by This resulted in saving of liner and with 729 psi WHFP. DST-2 was carried on December 30, 2017 to appraise Tipu-2, appraisal well has been found technically and commercially
customer. This project shall connect associated equipment amounting out in SUL formation and after Shaheen Compartment at SML and stacked on ground on June 25, 2018. the best option. Construction of 6”
Company’s production facilities to USD 650,000. Moreover, acid stimulation, well has flowed SUL reservoirs levels. The spud-in of The well will be drilled down to the diameter pipeline of 5.5 km from

122
with national grid. This will result in several subsurface challenges 3.42 MMSCFD gas at 40/64” choke well is expected during December depth of ± 2860M to appraise the Aqeeq-1 to Sujawal CPF was a
additional cash inflows due to sales were faced during drilling. These size with 428 psi WHFP. Well was 2018. Tipu-1 discovery area at Lower Goru challenge to complete in 10 days
125
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

under highly wet conditions of ROW Sukkur Block to test the hydrocarbon potential After drilling of Upper Sands of
in presence of paddy crops and of Dunghan, Mughalkot and Chiltan Lower Goru formation, wireline
G&G Studies
irrigated fields all along. However, formations. Severe mud losses at logs were conducted, which upon
Based on in-house data evaluation,
owing to prudent planning, these 1,296 M depth coupled with a gas interpretation and integration
a lead namely; Mian Miro has been
record targets were achieved well kick resulted into a challenging well indicated encouraging results
identified at Lower Goru / Sembar
in time. After integrating Aqeeq-1 control situation. Accordingly, well against Upper Goru A Sand level
Sands level in the block, which
at Sujawal CPF and convincing was sidetracked and drilled down to for conducting testing. Further,
will be firmed up or otherwise
SSGCL for immediate acceptance of a total depth of 1,500 M into Chiltan drilling is in progress down to the
on 3D seismic data. Accordingly,
gas under their conditions of high formation. Currently, wireline logs planned total depth to evaluate the
preparations are in process to
pressure supply, the first gas was have been acquired and preparations hydrocarbon potential of Massive
acquire 370 sq. km 3D seismic data
produced on November 08, 2017 @ are in progress to conduct testing. Sands.
over the identified lead.
4.8 MMSCFD.
Kohat Block
Processing/reprocessing and NON-OPERATED BLOCKS
OPERATED BLOCKS interpretation of ~2739 Line km G&G Studies
Hala Block
Karak Block 2D seismic data is in progress, Advance reprocessing of ~319
Qamar X-1 sq km 3D and ~240 Line km 2D
which will be followed by G&G data
G&G Studies Based on the interpretation of newly
integration to firm up identified leads seismic data is in progress at M/s
Based on the interpretation of reprocessed 525 sq km 3D seismic
at SML level or otherwise. DGPC GRI China. Initial PSTM data has
processed and reprocessed data data coupled with seismic inversion
has granted six months extension been received. After the review of
and its integration with available study and integration of available
till October 20, 2018 in third year of initial volume, comments have been
G&G data, Surghar Prospect has G&G data, location of seventh
Phase-I of exploration license. provided to operator to improve the
been firmed up for drilling of fourth exploratory well Qamar X-1 was data quality. The interpretation of
exploratory well in the block. The finalized.
Exploratory Well Sufi-01 finalized volume will be carried out
well is expected to be spud-in by
Fourth exploratory well Sufi-1 in subsequent to the final processing
April/May 2019 and its results are The well was spud-in on June
Sukkur Block was spud-in on March to firm up / finalize the location of
expected in 2019-20. The stacking of 28, 2018 to test the hydrocarbon
16, 2018. The well was successfully exploratory well or otherwise.
fourth exploratory well over Surghar from October 2018 and expected to and its integration with seismic data, potential of Lower Goru Massive
drilled down to the depth of 2,350
Prospect is planned in August 2018. complete by early December 2018. Dharian-1 has been side tracked sand down to the total depth of
meter. The primary targets for this
It shall be followed by processing, to the northeast direction with +4550m. Currently, the well has
well were SML and Lower Goru
Ghauri Block interpretation and G&G data objective to target the encounter reached its total depth of (TD) 4607
formations. Based on wireline
G&G Studies integration for placing exploratory of anticipated reservoirs in the M (MD) and 4564.5 M (TVD) into
logging and MDT results, well has
Based on acquisition of 456 sq km well or otherwise. borehole. Window for Dharian-1 ST-1 Massive Sand as of August 17, 2018.
been temporarily suspended for
3D seismic data, two prospects was cut at 3316M TVD, resultantly; Based on the wireline logging and
future evaluation. The well was
namely, Dharian and Miraj have been Exploratory Well Dharian-01 total depth of well has been revised its interpretation, Massive Sands
completed in ~28 days within the
finalized for back to back drilling. Second exploratory Well Dharian-1 from 4900M (TVD) to 5675M is interpreted as worth for testing.
planned duration and budget. Rig
Drilling of exploratory well Dharian-1 in Ghauri Block was spud-in on (MD). Currently, drilling of Murree Accordingly, preparations are in
was released on April 13, 2018. The
is in progress while civil works for December 21, 2017 with targeted Formation at a depth of 4062M TVD progress to conduct testing.
complete project encompassing
exploratory well Miraj-1 have been vertical depth of 4,900 meters and and 4217M MD is in progress as of
the planning and engineering
completed. Miraj-1 will be spud- estimated well cost of USD 23.7 August 17, 2018.
works, arrangement of LLIs and Shah Bandar Block
in after completion of Dharian-1 million. The well is planned to be
miscellaneous drilling services, site Benari X-1
well. DGPC has granted extension drilled, tested and completed in 293 Miraj-1
preparation and drilling operations The well was spud-in on May 22,
till October 31, 2018 in Phase-II of days with the objective to test the Miraj-1, third exploratory well in
etc. were completed on fast track 2018 to test the hydrocarbon
exploration license for completion of hydrocarbon potential of multiple Ghauri Block, has been stacked on
basis in 3 months. potential of Upper & Massive sands
Dharian-1 Well. reservoir rocks from Cambrian to ground on March 01, 2018 to test the
Eocene age. A number of formations hydrocarbon potential of multiple of Lower Goru formation down to
Ziarat Block the total depth of ±3776M (MD).
Ghauri Joint Venture is planning shall be tested during DST including reservoirs from Eocene to Cambrian
Sakesar, Khewra, Lower Part of Age rocks down to the depth of Exploratory Well Bolan East-1 Currently, the well has been drilled
to acquire 100 sq. km 3D seismic
Murree, Chorgali, Lockhart, Tobra ±5500 M. The well is expected to be Well Bolan East-1 in Ziarat Block down to the depth of 3484M (MD)
data over the Harno West lead to

124
and Kussak, with primary target as spud-in after completion of Dharian was spud-in on May 22, 2018 with into Massive Sand as of August 17,
firm up as prospect or otherwise.
Sakesar and Khewra. Based on VSP Well-1. the targeted depth of 1,550 meter 2018.
Seismic data acquisition is planned
127
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

EXPLORATION PORTFOLIOS l Kohat Block: MPCL agreed MARI SERVICES DIVISION (MSD) Mari Drilling Services Unit (MDU) INDUSTRIAL RELATIONS
EXPANSION–LOCAL & to acquire Tullow’s share on MSD is well poised to cater for Rig Mari 1 (1500HP) spud Azadi-1 The working environment and
INTERNATIONAL pro-rata basis (13.33%) as per growing services requirements, well on September 30, 2017 and overall industrial relations climate
In order to achieve long term provisions of Article 7.3 of Kohat consisting of state of the art completed the well to target remained cordial at all locations of
sustainability, growth and to target PCA and Article 13.1 of Joint technology drilling rigs, 2D/3D depth of 2,995 meters. Rig Mari the Company including Mari Field.
the depleting reserves, MPCL is Operating Agreement for which seismic data acquisition unit, 2D/3D 1 was released from Azadi-1 well Recreational and motivational
aggressively pursuing expansion of approval of DOA by DGPC is in seismic data processing unit along on November 30, 2017 and was activities at these locations helped
its exploration portfolios, both locally progress. with AVO Inversion services by mobilized to Bhitai 5. in improving harmony in the work
as well as internationally. Out-look of maintaining world class quality as environment and were very well
acreages being pursued is given as l Bela West Block: PPL’s BoD has per international oilfield standards. Rig Mari 1 spud Bhitai-5 development received by the employees at
below:- approved farm-out of 25% W.I. well on December 11, 2017 which various fields/locations.
to MPCL which shall be followed Mari Seismic Services Unit (MSU) was completed on January 11, 2018.
l Tullow Blocks: DOA for transfer by execution of Farm Out MSU successfully acquired 758.76 HUMAN RESOURCE
of Tullow’s entire W.I in Bannu Agreement and approval of DOA Line km 2D data in the challenging Rig Mari 1 was mobilized from DEVELOPMENT
West (20%), Block 28 (95%) by DGPC. terrain of Sukkur block during August Bhitai-5 in Mari D&P Lease to Sufi-1 Success of E&P companies
and Kalchas (30%) has been to December 2017. exploration well in Sukkur block and indisputably lies in the quality of
approved by DGPC. International Blocks/Countries after reaching depth of 2,350 meters, their human resource. In MPCL, the
MPCL is continuously evaluating MSU mobilized its crew/unit to rig was released on April 13, 2018. basic and most valuable intangible
l Ghauri (30%): DOA for transfer of selected International Blocks/ acquire 2D followed by 3D seismic Bolan East-1 was spud by Rig Mari 1 but indefatigable asset is its human
30% MOL’s W.I to MPCL has been Countries for possible farm-in data acquisition in Bannu West block. on May 22, 2018. Currently, drilling is capital. Human Capital is not just the Schlumberger and Halliburton.
approved by DGPC. opportunities. Currently, various Mobilization completed in January in process. people working in an organisation; Integrated workflows provide
international blocks with different 2018, after which acquisition of 2D rather, it is a fine blend of their geophysicists and geologists with
E&P Companies are being evaluated. Seismic data of 99 Line km (Phase 1) Rig Mari 3 (2500HP) was mobilized experience, attitudes, abilities, critical collaborative capabilities
commenced in February 2018 and in July 2017 to Tipu-1 exploration culture and skills etc. The Company that yield better geological insights.
got completed in April 2018. MSU is site which was spud on July 5, 2017 makes all out efforts to provide These systems help improve
now engaged in acquiring 3D data in and drilled to depth of 3,936 meters. conducive working environment to discoveries’ success rates and make
Bannu West block. Tipu-1 was completed on October 22, increase the efficiency graph of the the Company well distinguished in
2017. The rig was mobilized in first employees with a view to optimising the E&P sector.
week of December 2017 from Mari on its fortes and projecting its repute
D&P Lease to Ghauri block. country wide. Accurate and quality data availability
is the life blood of Exploration and
Rig Mari 3 spud Dahrian-1 exploration INFORMATION TECHNOLOGY Production (E&P) companies. They
well on December 21, 2017. The company focuses strongly need to handle large data volume for
Currently, drilling is in process. towards heightened collaboration analysis, correct selection of drilling
between its technical and functional targets, and efficient management
Mari Seismic Processing Services areas which helps steer the of oil and gas producing reservoirs.
Center (MSPC) selection and implementation Effective E&P data management
MSPC processed around 2,700 Line of its information systems. The plays a crucial role in meeting
kms Time processing of seismic data implementation of information these objectives. Implementation of
of Sukkur Block and 1,080 sq. km of systems provides greater integration state of the art integrated E&P data
3D depth imaging of seismic data of amongst cross-functional teams management system has led MPCL
Mari D&P Lease. MSPC completed to induce effective planning, to the introduction and adoption of
Pre stack deterministic inversion coordination and decision making industry’s best practices regarding
of Sujawal-3D during first week of during various E&P related activities. standardized data management
March 2018. Pre stack inversion work related workflows in the Company.
of Mari-3D commenced on March Our exploration and reservoir The system is helping exploration,
26, 2018 and priority area has been departments use industry leading operation and reservoir professionals
Vibroseis Truck at Bannu West Block processed and delivered in June 2018 G&G interpretation and reservoir for effective planning, coordination

126
while the remaining project is still in modeling software suites developed and timely decision making during
process. by renowned companies like E&P related lifecycle.
129
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

Employees were encouraged to plant


trees at their locations. Fruit Orchards
were developed at our major facilities
with indigenous fruit trees.

We ensured compliance to National


Environment Quality Standards
(NEQS) for disposal of liquid and solid
waste at all locations. Environmental
spills if any were immediately
handled following the best industry
practices.

One of the most important


environmental challenges at Sujawal
field was flaring of flash gases. To
reduce the effect of global warming, CORPORATE SOCIAL Annual CSR spending for Mari Field
HSE Workshop at Guns Club, Islamabad Sujawal field is using flash gases RESPONSIBILITY (CSR) was Rs. 112 million and Rs. 40 Million
as fuel gas in Reboiler of Amine MPCL’s CSR programme is distributed was spent for other significant
Sweetening Unit. This allows us to into four major categories: projects (Over & above Obligations)
HEALTH, SAFETY AND while adding new facilities to Impact of the Company’s Business save valuable energy, reduce the in Islamabad.
ENVIRONMENT (HSE) certification scope. By following on the Environment emissions and hence protecting the l Annual CSR Obligations
In MPCL, assessment and continuous this practice, we are saving USD MPCL’s production facilities went environment. Another environment (Commitment as per Petroleum INTERNAL CONTROLS
monitoring of HSE is considered 21,000 annually. A company with through a series of Environmental friendly practice at Sujawal Field Concession Agreement (PCA):
USD 30,000 per Block) Internal Control Framework and
an important step to ensure that individual certification of facilities Risk assessments to identify any is removal of moisture from the
Role of Internal Audit
our facilities are reliable and maintains the certification for adverse impacts on the surroundings raw gas in glycol dehydration unit
l Over & above Obligations In compliance of requirements
available. Likewise, there are KPIs other facilities; one major non- and accordingly mitigation measures (GDU) using TEG. This results in the
of Listed Companies (Code of
for performance assessment of compliance can jeopardize the were undertaken to bring the risk absorption of BTEX components.
l CSR at Mari Field Daharki Corporate Governance) Regulations,
Occupational Health, Safety and whole certification process. Our to an ALARP (As Low As Reasonably BTEX refers to Benzene, Toulene,
2017, the Board of Directors of the
Environment Management (HSE). manpower and facilities have also Practicable) level. All significant Xylene and Ethyl Benzene which is
l Production Bonus (funds Company has set up Internal Audit
Selection of the KPIs to establish the grown three times as compared to impacts identified were logged in the hazardous to expose and carcinogen
allocated / deposited for Social function, which is headed by Head
required benchmarking leading to 2010, thereby increasing the Risk of Environmental Aspect Registers to in nature. In order to eliminate/
Welfare Schemes, maintained Internal Audit who reports to Audit
better loss control management was Non-compliance to HSEQ Standards; ensure timely action for protection mitigate the associated hazard, BTEX
with the concerned Local Committee of the Board of Directors.
deliberated among the management but Management Commitment, of environment. recovery system has been installed in
team and implemented to satisfy consistent HSEQ awareness conjunction with GDU to ensure safe Administration)
Internal Audit Function is an
the statutory compliance as well campaigns and ownership of Our certification of facilities for disposal of BTEX and reduce the BTEX
2017-18 – At a Glance independent assurance and
as IMS requirements. Being IMS HSE by employees have been Environmental standard ISO 14001 emissions from the plant.
MPCL CSR Strategy remains focused consulting activity, designed to
certified company where activities the major factor in achieving this ensured that we are not exposed to
on provision of quality service add value and improve MPCL’s
like exploration, well completion, huge challenge of maintaining the any major Non-conformance. MPCL Company has adopted the best
delivery to its communities and operations. It helps the Company
production, maintenance, pipeline standard requirements. has shown strong commitment by industrial practices in waste
sustainability of education, health & accomplish its objectives by bringing
network and all associated services establishing and upholding high management by the assistance
water related projects, in and around a systematic, disciplined approach
are available and undertaken The number of injurious incidents environmental standards while at of concerned external contract
its areas of operations. to evaluate and improve the
in-house, the selection of the significantly reduced in 2017-18. the same time pursuing capabilities body. HSE team at all locations
effectiveness of risk management,
performance parameters and While maintaining HSE standards, and expertise towards softening is supervising all types of waste
In respect of Social Welfare control, and governance processes.
assessment system adopted, are we achieved Total Recordable Case impact of our E&P activities on handling.
required to be very elaborate and Frequency (TRCF) of 0.11 against the communities and Flora & Fauna. Obligations (SWOs), Rs. 69.40 million,
as per the PCA, have been deposited Objectives of ‘Internal Control
comprehensive. target of 0.45. This is the best-ever MPCL has been awarded 2nd Prize
into the respective Joint Accounts Framework’ are:
combined (employee and contractor As in the past, we further enhanced in Oil, Gas and Energy sector for its

128
In order to be cost effective, we workforce) TRCF ever achieved by our tree plantation campaign at all HSE Performance by the Employer’s being maintained with the concerned a. Effectiveness and efficiency of
adopted one umbrella approach MPCL. locations to conserve the ecosystem. Federation of Pakistan (EFP). District Administrations. operations;
131
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

b. Reliability of internal / external c) Control Activities: These are strengthen the overall control
reporting; the policies and procedures system.
that help ensure Management
c. Compliance with laws, rules and directives are carried out Access of Head of Internal Audit
regulations; and effectively; to Audit Committee
In accordance with the requirements
d. Safeguarding of Company’s d) Information and Communication: of Code of Corporate Governance,
assets. Pertinent information is Head of Internal Audit has direct
identified, captured and access to the President and other
To achieve Internal Control communicated in a structured members of the Audit Committee.
Framework objectives, following form and time frame that
Internal Control components are enables people to carry out their Comments in Respect of
assessed and evaluated by Internal responsibilities; and Adequacy of Internal Financial
Audit Department: Controls (IFC)
e) Monitoring: Internal Control The Company has a comprehensive
a) Control Environment: It sets the Systems is monitored by Internal IFC framework, commensurate with
tone of Company and influences Audit Department. This process the size, scale and complexity of
the control consciousness of assesses the quality of Internal its operations. The framework has
personnel. It is the foundation of Control Framework in place. been designed to provide reasonable
all other components of Internal assurance with respect to recording
Control providing discipline and In addition, Internal Audit also and providing reliable financial and Based on the framework of internal observed. The framework on internal including Internal Financial Controls
structure; undertakes special tasks as operational information, complying financial controls established and Financial Controls over Financial over Financial Reporting that
and when directed by the Audit with applicable laws, safeguarding maintained by the Company, work Reporting has been reviewed by the facilitates efficiency, reliability
b) Risk Assessment: Management Committee of the Board. Internal assets from unauthorised use, performed by the internal and internal and external auditors. and completeness of accounting
of Company is responsible Audit plays a central role in executing transactions with external auditors and the reviews records and timely preparation of
for ensuring adequate risk highlighting weaknesses in the proper authorization and ensuring performed by Management and Company’s Risk Framework reliable financial and management
identification and analysis of existing system and processes compliance with corporate policies the relevant Board Committees, The Board of Directors has overall information. The internal control
relevant risks to achieve Internal and identifying implementation and controls. including the Audit Committee, the responsibility for the establishment system ensures compliance with
Control Framework objectives; of effective controls needed to Board is of the opinion that the and oversight of the Company’s all applicable laws and regulations,
Company’s internal financial controls Management Framework. The promises optimum utilization
were adequate and effectively Company is in the process of of resources and protect the
implemented during the financial constituting Risk Management Company’s assets and stakeholder's
year 2017-18. Committee of the Board, which shall interests.
have defined Terms of Reference
Directors' Responsibility in including development, review The Company has a properly laid
respect of Adequacy of Internal and recommendation of Risk down organisational structure and
Financial Controls Management Plan for approval of the system of documenting processes,
The Board of Directors of the Board. in form of Management System
Company is responsible for ensuring Procedures, to ensure orderly and
that Internal Financial Controls The Company has also adopted a efficient conduct of its business
have been properly designed and robust Risk Management Policy operations. The state-of-the-art
implemented in the Company and for self-regulated processes ERP solution (SAP) has inbuilt
that such controls are adequate and and procedures for ensuring the controls including authorization
operating effectively. conduct of the business operations controls. This further enhances
in an adequate Risk Management control environment and provides
The controls, based on the prevailing Environment. seamless exchange of information
business conditions and processes, with access controls. In addition,
have been tested during the year Internal Control System the Company has a Whistle Blower’s

130
and no reportable material weakness The Company has well-founded Policy to address fraud and other
in the design or effectiveness was system of internal controls wrongdoings at workplace.
133
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

As part of risk mitigation, the system spot prices will average $70-75/ dioxide (a component of its produced gas) into marketable Food grade CO2, as
of internal controls is reviewed on barrel in 2018-19. Upside price risks well as evaluating the potential of venturing into mid-stream and down-stream
an ongoing basis and necessary stem largely from the possibility sector.
improvements are effected to of supply outages amid political
align with the changing business upheavals and a market where CORPORATE GOVERNANCE
requirements. petroleum inventories are lower
than average and OPEC spare Board Structure
S.No Director * Category
crude oil production capacity is low.
COMPANY’S BUSINESS
Downside price risks stem largely
1. Lt Gen Syed Tariq Nadeem Gilani (Retd.) Non-executive director
Principal activities and the from the demand side, because
2. Lt. Gen. Ishfaq Nadeem Ahmad (Retd.) Executive director
development and performance of economic growth could be lower
3. Mr. Qaiser Javed Non-executive director
the company’s business during than expected and put downward
4. Dr. Nadeem Inayat Non-executive director
the financial year pressure on oil demand growth and
5. Maj Gen Javaid Iqbal Nasar (Retd.) Non-executive director
The recovery of oil prices in the fiscal prices.
6. Brig. Raashid Wali Janjua (Retd.) Non-executive director
year has provided fuel for growth 7. Mr. Sajid Mehmood Qazi Non-executive director
to all the E&P companies, and has During the year 2017-18, MPCL
8. Qazi Mohammad Saleem Siddiqui Non-executive director
impacted MPCL in the increase of Main trends and factors likely to towards long-term investment in didn’t face any significant changes
9. Mr. Shahid Yousaf Non-executive director
revenues. Moreover, MPCL’s strategy affect the future development, avenues that can help in protecting in petroleum related policies and
10. Mr. Zahid Mir Non-executive director
of optimum monetization of reserves performance and position of the the global environment and adapt regulations.
11. Mr. Ahmed Hayat Lak Non-executive director
resulted in the production increase company’s business itself to the changing context hand- 12. Mr. Manzoor Ahmed Non-executive director
and has increased the revenues. Company is constantly looking for in-hand with the global community. Future prospects of the Profits
13. Engr. S. H. Mehdi Jamal Independent director
This fast track production from avenues to hedge itself from the MPCL is poised for sustainable
new discoveries has resulted in the growth in the foreseeable years * Board consists of 13 male directors.
pricing risk that faces the E&P sector Principal risks and uncertainties
allocation of 75 MMSCFD gas to Pak as a whole. In view of this, MPCL facing the Company ahead, where the prices and
Arab Fertilizer Limited. During the production are projected to be Lt Gen Khalid Nawaz Khan (Retd), Maj Gen Mumtaz Ahmed Bajwa (Retd), Mr.
is exploring avenues in the energy The principal risks and uncertainties
year 2017-18, MPCL also applied for stable. The acquisition of new Sabino Sikandar Jalal and Mr. Shahid Ghaffar left the Board during the
sector that can add value to the being faced by the Company
commerciality in the Aqeeq-1 and as well as additional interests in FY 2017-18.
Company while allowing company to emanate from depletion of reserves,
Halini field and has been granted avoid price related risks. Moreover, crude oil prices and external exploration/production blocks, as
Development & Production Lease well as evaluating other possible Chairman of the Board other than the CEO
the company is also looking for regulations. In the absence of any
over Koonj-1A discovery. opportunities of high reward frontier Lt Gen Syed Tariq Nadeem Gilani (Retd.) is the Chairman of the Board and Lt.
acreages in the international market major gas discovery during the
exploration acreages both locally Gen. Ishfaq Nadeem Ahmad (Retd.) is the CEO of the Company. Therefore,
and is working on leads that can past decade, the Country is facing
This increase in the production has and internationally, are poised to Chairman of the Board is other than the CEO of the Company.
generate revenues for the company a sharp decline in the remaining
been supported by a corresponding beyond national boundaries. reserves of natural gas; which is increase the reserves and enhance
increase in acquisition of acreages the mainstay of our indigenous the production revenues and
to arrest the depletion of reserves. The feasibility study on MPCL’s energy production. One of the major returns in the long-term. Moreover
In view of above, MPCL acquired power project is also progressing contributing reasons is the shortage the recovery of oil prices which
interest share from Tullow Pakistan and the Company aims to get the of new exploration areas because of are projected to not sink to 2015
in Bannu West Block (20%), Block-28 requisite regulatory approvals in the delays in the bidding round for levels in at least the next couple
(95%) and Kalchas Block (30%). place during the next fiscal year. new blocks. Like all E&P companies of years, would increase the cash
Moreover MPCL also acquired MOL’s The timely completion of MPCL’s in Pakistan, MPCL is also facing flow of the company with incredible
30% interests in the Ghauri Block. power project would provide a much this challenge and needs additional opportunity to hedge, diversify and
needed diversified income stream to acreage for new discoveries to augment portfolio by reinvesting
Any changes that have occurred the company. reverse the reserves depletion trend. this increased cash flows into
during the financial year prospects that can provide a robust
concerning the nature of the The company is also looking into the Crude oil prices are driven by and sustainable returns for the
business of the company changing trends of the E&P sector geo-political situations and all shareholders.
There were no significant changes and is aware of oil business outlook forecasts worldwide are based on
which significantly affected the MPCL is at advance stages of

132
in the wake of developments which the assumptions which might or
Company’s business in the financial are taking place after the Paris might not hold true in the future. diversifying into low BTU power
year under review. accord. MPCL remains committed Independent analysts expect Brent generation, processing carbon
135
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

COMMITTEES OF THE BOARD OF DIRECTORS Mechanism for Board’s Self


Evaluation was approved by MPCL
The Board of Directors of the Company oversees the operations and affairs Board in its Meeting held on
of the Company in an efficient and effective manner. For the sake of smooth September 30, 2014. The approved
functioning, the Board has constituted three committees. These committees Board Performance Evaluation
are entrusted with the task of ensuring speedy management decisions relating Template contains 36 Performance
to their respective domains. Factors covering areas such as
Composition of the Board and
Audit Committee: its Committees, Functions and
Composition Performance of the Board and its
Audit Committee of the Board currently comprises of the following directors: Committees, Governance Structure
and Practices, and Company
Director Designation
Performance Monitoring System.
Engr. S.H. Mehdi Jamal President (independent director)
Mr. Qaiser Javed Member Mechanism for Board’s Committees’
Mr. Shahid Yousaf Member Evaluation was approved by MPCL
Board in its Meeting held on In addition to the Identified Factors, Directors’ Remuneration Policy accordance with the accounting and
Mr. Ahmed Hayat Lak Member
April 16, 2018. Committees’ Self Directors can also provide their As per Board’s approved Directors’ reporting standards as applicable
Mr. Manzoor Ahmed Member
Evaluation Template consists of 15 subjective comments in the Remuneration Policy, non-executive in Pakistan and the requirements
Performance Factors pertaining to Comments Section of the Templates. directors are entitled to receive a of Companies Act, 2017 (XIX of
Technical Committee:
the Composition of the Committee, fixed fee for attending each Board 2017) and for such internal control
Composition Mandate and Functioning of the Board Evaluation Template and and Committee meeting. The fee is as management determines is
Technical Committee of the Board currently comprises of the following Committee, Role of Committee’s Individual Director’s Template are determined by the Board and revised necessary to enable the preparation
directors: Chairman, General Atmosphere forwarded to all Board Members, from time to time. No fee is paid of financial statements that are
and Contribution of Committee while Committees Evaluation to the executive directors. Further, free from material misstatement,
Director Designation Template is forwarded to Members no fee is paid for attending General whether due to fraud or error.
Members.
of the respective Committees. The Meetings of the Company. No extra
Brig. Raashid Wali Janjua (Retd) President
Mechanism for Individual Directors Directors are requested to rate payment is made on account of In preparing the financial statements,
Maj Gen Javaid Iqbal Nasar (Retd) Member
Evaluation was approved by MPCL each Factor on a scale of 1 to 5. The being an Independent Director, management is responsible for
Mr. Qazi Mohammad Saleem Siddiqui Member
Board in its Meeting held on May scores are consolidated through a Chairman of the Board or President assessing the Company's ability
Mr. Sajid Mehmood Qazi Member
31, 2018. Individual Director’s specially designed programme and of a Committee. All directors are to continue as a going concern,
Mr. Zahid Mir Member
Self Evaluation Template consists Mean Values, Standard Deviations also entitled to receive travelling and disclosing, as applicable, matters
of 24 Performance Factors and Bar Charts for each factor are daily allowances as per approved related to going concern and
HR and Remuneration Committee
which provide Directors with an calculated. MSP (Travel & Transfer-Management using the going concern basis of
Composition opportunity to reflect upon their own Employees), when on the Company accounting unless management
HR and Remuneration Committee of the Board currently comprises of the competencies, their role, behavior, As per the methodology, if the mean business. either intends to liquidate the
following directors: contributions and performance as value against any performance Company or to cease operations, or
Member of the Board. factor is less than 3, it needs PATTERN OF SHAREHOLDING has no realistic alternative but to do
Director Designation improvement. If the mean value is A statement showing the pattern of so.
above 3, the performance Factor is shareholding as at June 30, 2018 is
Engr. S.H. Mehdi Jamal President (independent director)
acceptable. Further, the standard attached. CODE OF CORPORATE
Dr. Nadeem Inayat Member
deviation indicates the degree of GOVERNANCE (CCG)
Mr. Zahid Mir Member
dispersion in the opinion of Board MANAGEMENT’S The Securities and Exchange
Members against any specific factor. RESPONSIBILITY TOWARDS Commission of Pakistan (SECP) has
Annual Evaluation of the Performance of the Board, Board’s Committees If the value of standard deviation is THE PREPARATION AND issued Listed Companies (Code of
and Individual Directors Along With Description of Criteria used less than 1, then there is unanimity PRESENTATION OF THE Corporate Governance) Regulations,
In line with the requirements of clause 10 (v) of Listed Companies (Code of in board opinion. If the value is FINANCIAL STATEMENTS 2017 to establish a framework of
Corporate Governance) Regulations 2017, a formal and effective mechanism more than 1, the opinion of Board is Management is responsible for the good corporate governance whereby

134
is in place for annual evaluation of the Board’s own performance, Members of dispersed against that performance preparation and fair presentation every listed company is managed in
the Board and of Board’s Committees. factor. of the financial statements in compliance with the best practices.
137
Mari Petroleum Company Limited
Directors' Report Annual Report 2018

The Company makes every effort has recommended re-appointment of M/s Deloitte Yousuf Adil, Chartered
to achieve full compliance with Accountants as auditors for the financial year ending June 30, 2019.
the Best Practices of CCG. The
Statement of Compliance with ACKNOWLEDGEMENT
the Listed Companies (Code of The Board of Directors would like to express its appreciation for the
Corporate Governance) Regulations, efforts and dedication of all employees of the Company, which enabled
2017 prepared by the Board of the management to run the Company efficiently during the year resulting
Directors of the Company is also in continued production and supply of hydrocarbons to its customers. The
reviewed and verified by the External Board also wishes to express its appreciation for continued assistance and
Auditors of the Company. cooperation received from the local administration at Daharki as well as all
the other locations, Provincial Governments, various departments of Federal
POST STATEMENT OF FINANCIAL Government especially the Ministry of Energy, Ministry of Finance, Oil and Gas
POSITION EVENTS Regulatory Authority, Directorates of Petroleum Concessions, Oil and Gas, Fauji
The Board of Directors in its meeting Foundation, Oil & Gas Development Company Limited and law enforcement
held on August 30, 2018 have agencies.
proposed (i) final cash dividend for
the year ended June 30, 2018 @ Rs. For and on behalf of the Board
2.5 per share, and (ii) issuance of
Bonus Shares in ratio of one share
for every ten shares held (i.e. 10%),
for approval of the members in
Annual General Meeting.

AUDITORS
The present auditors, M/s Deloitte Lt Gen Ishfaq Nadeem Ahmad, HI (M), (Retd) Qaiser Javed
Yousuf Adil, Chartered Accountants, Managing Director / CEO Director
will retire and being eligible,
have offered themselves for re-

136
appointment as auditors of the Islamabad
Company. The Audit Committee August 30, 2018

Mari Seismic Crew at Bannu West Block
139
Mari Petroleum Company Limited
Annual Report 2018

Geographical Presence
POST STATEMENT OF

Financial Posit ion Events MPCL CONCESSIONS AND WORKING INTEREST

FINAL CASH DIVIDEND AND BLOCK:


BLOCK:
PESHAWAR EAST BLOCK:

BONUS SHARES GHAURI


OPERATOR: MPCL
KOHAT
OPERATOR: OGDCL MPCL 98.19% OPERATOR: MPCL
OGDCL 50.00% KPOGCL 1.81% MPCL 65%

The Board of Directors in its meeting held on August MPCL*


SEL
33.33%
16.67%
PPL 35%

BLOCK:
30, 2018 have proposed (i) final cash dividend for the
* Acquisition of Tullow’s 13.33%
working interest by MPCL has been
approved by the DGPC KOHLU
OPERATOR: OGDCL
year ended June 30, 2018 @ Rs. 2.5 per share, and BLOCK: BLOCK:
OGDCL
MPCL
40%
30%
BANNU WEST KARAK TULLOW 30%
(ii) issuance of Bonus Shares in ratio of one share for OPERATOR:
MPCL
MPCL
55%
OPERATOR:
MPCL
MPCL
60%

every ten shares held (i.e. 10%), for approval of the


OGDCL 35% MOL 40%
SEL 10%

members in Annual General Meeting. BLOCK:


HARNAI D&PL:
OPERATOR: MPCL
ZARGHUN SOUTH
MPCL 60% OPERATOR: MPCL
PPL Europe 40% MPCL 35%
SPUD 40%
BLOCK: PKP 7.50%
BLOCK:
ZIARAT GHPL 17.50%
OPERATOR: MPCL
KALCHAS
OPERATOR: OGDCL
MPCL 60%
OGDCL 50%
PPL Europe 40%
MPCL 50%

BLOCK: D&PL:
SUKKUR KOONJ
OPERATOR: MPCL OPERATOR: MPCL
MPCL 58.82% MPCL 58.82%
PEL* 41.18% PEL 41.18%
*Acquisition of PEL’s entire 41.18%
shares by MPCL is in progress D&PL:
MARI
BLOCK: MPCL 100%
BLOCK-28 BLOCK:
OPERATOR: OGDCL
MPCL 95% HALA
OPERATOR: PPL
OGDCL* 05%
PPL 65%
*Transfer of operatorship of the Block
from OGDCL to MPCL is in progress MPCL 35%

D&PL:
BLOCK:
ADAM - X
SUJAWAL OPERATOR: PPL
OPERATOR: MPCL
PPL 65%
D&PL: MPCL 100% MPCL 35%
ADAM WEST
OPERATOR: PPL
PPL 65%
MPCL 35% BLOCK:

D&PL: SHAH BANDAR


OPERATOR: PPL
D&PL: SUJAWAL PPL 63.0%
FAZL OPERATOR: MPCL MPCL 32.0%
OPERATOR: PPL MPCL 100% GHPL 2.5%
PPL 65% SEHPL 2.5% LEGEND
MPCL 35%
AREAS AS OPERATOR

AREAS AS JOINT VENTURE PARTNER

D & P LEASES (OPERATED)

D & P LEASE (NON OPERATED)

138
141
Mari Petroleum Company Limited
Annual Report 2018

Statement of Compliance
with Listed Companies (Code of Corporate Governance) Regulations, 2017

Mari Petroleum Company limited


Year ended June 30, 2018

T
he Company has complied with the requirements of Listed Companies
(Code of Corporate Governance) Regulations, 2017 (the Regulations) in
the following manner:

1. The total number of directors is 14 as per the detail below:


a. Male: 13*
b. Female: 0
* One position vacant.

2. The composition of the board is as follows:


Category Names

Independent Director Engr S. H. Mehdi Jamal

Executive Director Lt Gen Ishfaq Nadeem Ahmad (Retd)

Non-Executive Directors Lt Gen Syed Tariq Nadeem Gilani (Retd)


Mr Qaiser Javed
Dr Nadeem Inayat
Maj Gen Javaid Iqbal Nasar (Retd)
Brig Raashid Wali Janjua (Retd)
Mr Sajid Mehmood Qazi
Mr Qazi Mohammad Saleem Siddiqui
Mr Shahid Yousaf
Mr Manzoor Ahmed
Mr Zahid Mir
Mr Ahmed Hayat Lak

During the year, four vacancies occurred on the Board on September


25, 2017, January 09, 2018, January 31, 2018, and March 16, 2018
respectively, which were filled within 90 days. A previous casual vacancy
which occurred on August 23, 2013 is still unfilled as no nomination
has been received from the nominating institution. As per Article of
Association, a vacancy among nominee directors can only be filled
when the nominating institution’s shareholders communicate in
writing. The Company has fulfilled its responsibility by communicating
to the nominating institution. However, response from the nominating
institution is still awaited.

3. The requirements of Directors confirmation related to not serving as


director of more than five listed companies, including this company
(excluding the listed subsidiaries of listed holding companies where

140
applicable) will be applicable on the Company w.e.f January 01, 2019.

4. The Company has prepared a Code of Conduct and has ensured that
143
Mari Petroleum Company Limited
Statement of Compliance with the Code of Corporate Governance Annual Report 2018

appropriate steps have been taken to disseminate it 10. The board has approved appointments of the CFO, 14. The frequency of meetings (quarterly / half yearly / yearly) of the
throughout the Company along with its supporting the Company Secretary and the Head of Internal committees were as follows:
policies and procedures. Audit, including their remuneration and terms
and conditions of employment and complied with Committee Frequency of meeting
5. The board has developed a vision/mission relevant requirements of the Regulations. Audit Committee Quarterly
statement, overall corporate strategy and significant HR and Remuneration Committee Yearly
policies of the Company. A complete record of 11. The CFO and the CEO duly endorsed the financial Technical Committee Required basis
particulars of significant policies along with the statements before approval by the board.
dates on which they were approved or amended 15. The board has set up an effective internal audit function staffed with
has been maintained. 12. The Board has formed following committees persons who are suitably qualified and experienced for the purpose and
comprising of members as given below: are well conversant with the policies and procedures of the Company.
6. All the powers of the board
have been duly exercised and a) Audit Committee 16. The statutory auditors of the Company have confirmed that they
decisions on relevant matters Director Designation have been given a satisfactory rating under the quality control review
have been taken by the board/ programme of the Institute of Chartered Accountants of Pakistan, that
Engr S.H. Mehdi Jamal President (Independent Director)
shareholders as empowered by they are registered with Audit Oversight Board of Pakistan, that they
Mr Qaiser Javed Member
the relevant provisions of the or any of the partners of the firm, their spouses and minor children do
Mr Shahid Yousaf Member
Companies Act 2017 (the Act) not hold shares of the Company and that the firm and all its partners
Mr Ahmed Hayat Lak Member
and the Regulations. are in compliance with International Federation of Accountants (IFAC)
Mr Manzoor Ahmed Member
guidelines on code of ethics as adopted by the Institute of Chartered
7. The meetings of the board were Accountants of Pakistan.
b) HR and Remuneration Committee
presided over by the Chairman
and, in his absence, by a director Director Designation 17. The statutory auditors or the persons associated with them have not
elected by the board for this Engr S.H. Mehdi Jamal President (Independent Director) been appointed to provide other services except in accordance with
purpose. The board has complied Dr Nadeem Inayat Member the Act, the Regulations or any other regulatory requirement and the
with the requirements of the Act Mr Zahid Mir Member auditors have confirmed that they have observed IFAC guidelines in this
and the Regulations with respect regard.
to frequency of the board c) Technical Committee
meetings, and recording and Director Designation 18. We confirm that all other requirements of the Regulations, to the extent
circulating the minutes thereof. they are applicable to the Company, have been complied with.
Brig Raashid Wali Janjua (Retd) President
Mr Zahid Mir Member
8. The board of directors has a For and on behalf of the Board
Maj Gen Javaid Iqbal Nasar (Retd) Member
formal policy and transparent
Mr Sajid Mehmood Qazi Member
procedure for determining the
Qazi Mohammed Saleem Siddiqui Member
remuneration of directors in
accordance with the Act and the Regulations.
13. The terms of reference of the aforesaid committees
9. During the year, following director on the Board have been formed, documented and advised to the Islamabad Lt Gen Syed Tariq Nadeem Gilani, HI (M), (Retd)
of the Company has obtained certification under respective committees for compliance. August 30, 2018 Chairman
approved Directors’ Training programme:
a. Mr Zahid Mir

Out of the fourteen, seven directors have


either obtained certificate of Directors’ Training
programme or are exempted from the requirement
of Directors’ Training programme as per Regulation

142
20 of the Regulations.
145
Mari Petroleum Company Limited
Annual Report 2018

Independent Auditors’ Review Report


to the members of Mari Petroleum Company Limited

Review Report on the Statement of Compliance


contained in Listed Companies (Code of Corporate Governance) Regulations, 2017

W Financial Statements
e have reviewed the enclosed Statement of and have ensured compliance of this requirement to the
Compliance with the Listed Companies (Code of extent of the approval of the related party transactions by
Corporate Governance) Regulations, 2017 (the the Board of Directors upon recommendation of the Audit
Regulations) prepared by the Board of Directors of Mari Committee. We have not carried out procedures to assess of Mari Petroleum Company Limited for the year ended June 30, 2018
Petroleum Company Limited (the Company) for the year and determine the Company’s process for identification
ended June 30, 2018 in accordance with the requirements of related parties and that whether the related party
of regulation 40 of the Regulations. transactions were undertaken at arm’s length price or not. 147 Independent Auditors’ Report to the Members
152 Statement of Financial Position
The responsibility for compliance with the Regulations Based on our review, nothing has come to our attention
is that of the Board of Directors of the Company. Our which causes us to believe that the Statement of
154 Statement of Profit or Loss
responsibility is to review whether the Statement Compliance does not appropriately reflect the Company’s 155 Statement of Other Comprehensive Income
of Compliance reflects the status of the Company’s compliance, in all material respects, with the requirements 156 Statement of Cash Flows
compliance with the provisions of the Regulations and contained in the Regulations as applicable to the Company 157 Statement of Changes in Equity
report if it does not and to highlight any non-compliance for the year ended June 30, 2018. 158 Notes to and Forming Part of the Financial Statements
with the requirements of the Regulations. A review is
limited primarily to inquiries of the Company’s personnel
and review of various documents prepared by the
Company to comply with the Regulations.

As part of our audit of the financial statements, we are


required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and
develop an effective audit approach. We are not required
to consider whether the Board of Directors’ statement on
internal control covers all risks and controls or to form an Chartered Accountants
opinion on the effectiveness of such internal controls, the Place: Islamabad
Company’s corporate governance procedures and risks. Date: August 30, 2018

The Regulations require the Company to place before the


Audit Committee, and upon recommendation of the Audit
Committee, place before the Board of Directors for their
review and approval, its related party transactions and
also ensure compliance with the requirements of section
208 of the Companies Act, 2017. We are only required

144
147
Mari Petroleum Company Limited
Annual Report 2018

Independent Auditors’ Report


to the Members of Mari Petroleum Company Limited

Report on the Audit of the Financial Statements

Opinion

W
e have audited the annexed financial statements of Mari Petroleum Company Limited (the Company), which
comprise the statement of financial position as at June 30, 2018, and the statement of profit or loss, statement of
other comprehensive income, the statement of changes in equity, the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory
information, and we state that we have obtained all the information and explanations which, to the best of our knowledge
and belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial
position, statement of profit or loss, statement of other comprehensive income, the statement of changes in equity and the
statement of cash flows together with the notes forming part thereof conform with the accounting and reporting standards
as applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so
required and respectively give a true and fair view of the state of the Company’s affairs as at June 30, 2018 and of the profit,
Page intentionally left blank. other comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion


We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants
of Pakistan and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters


Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

146
149
Mari Petroleum Company Limited
Annual Report 2018

Following are the key audit matters:


Information Other than the Financial Statements and to issue an auditor’s report that includes our opinion.
S.
Key audit matter How the matter was addressed in our audit and Auditor’s Report Thereon Reasonable assurance is a high level of assurance, but is
No.
Management is responsible for the other information. The not a guarantee that an audit conducted in accordance with
1 The estimate of oil and gas reserves has a sig- We performed the following procedures to address this
other information comprises of the information included ISAs as applicable in Pakistan will always detect a material
nificant impact on the financial statements, area:
in the annual report, but does not include the financial misstatement when it exists. Misstatements can arise from
particularly impairment testing and depreciation
statements and our auditor’s report thereon. fraud or error and are considered material if, individually
and amor