Research Analysis of Ogdcl

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I have always considered the preparation of research and analysis project (RAP) for obtaining BSc Honors Degree as an important milestone in my academic career. In this session I decided to prepare RAP on the business and financial performance of the company. Reasons of Choosing Topic, Sector and Organization:

One of the most notable reasons of choosing this topic from the list of topics provided in the guidelines for the preparation of RAP was in depth understanding of the tools and techniques related to performing the business and financial analysis. I developed an understanding of performing the business and financial analysis during my ACCA studies. My mentor was also more helpful in providing me guidance on this topic.

After taking into consideration several factors I decided to prepare RAP on one of the players of the oil sectors of Pakistan. The oil sector is one of the most important sectors of Pakistan. It contributes significantly to the country’s GDP as well as employment. It is, in fact, considered as the backbone of the Pakistani economy. Oil has been produced in what is now the republic of Pakistan from the early 1920's. According to Oil and Gas Journal (OGJ), Pakistan had proven oil reserves of 300 million barrels. A number of fields were discovered in the upper Indus basin in the 1930's and 1940's. Since around 1980 a large number of hydrocarbon discoveries have been made in the central and southern parts of the country. In 1999 there were at least 70 oil and condensate fields in production, although none of them was of any great size. Total output has fluctuated within a range of about 55 000-65 000 b/d since 1989. Pakistan produced an average of 58,000 bbl/d of crude oil. According to the BP Statistical Energy Survey, Pakistan consumed an average of 362.38 thousand barrels a day of oil. The Government of Pakistan signed an agreement with USSR on the 4th of March 1961 to revive exploration in the country's energy sector. The Agreement entitled Pakistan to 27 million Rubles to finance equipment and services of Soviet experts for exploration. Subsequently, OGDCL was created under an Ordinance dated 20th September 1961 with the prime responsibility to undertake an organized and systematic exploratory program and to plan and promote Pakistan's oil and gas prospects. Initially stages the financial resources were arranged by the Government of Pakistan as the OGDC lacked the ways and means to raise the risk capital. A number of donor agencies such as the World Bank, Canadian International Development Agency (CIDA) and the Asian Development Bank provided the impetus through assistance for major development projects in the form of loans and grants. OGDCL's concerted efforts were very successful as they resulted in a number of major oil and gas discoveries between 1968 and 1982. Toot oil field was discovered in 1968 which paved the way for further exploratory work in the North. During the period 1970-75, the Company reformed the strategy for updating its equipment base and undertook a very aggressive work programme. This resulted in discovery of a number of oil and gas fields in the Eighties, thus giving the Company a measure of financial independence. These include the Thora, Sono, Lashari, Bobi, Tando Alam & Dhodak oil/condensate fields and Pirkoh, Uch, Loti, Nandpur and Panjpir gas fields which are commercial discoveries that testify to the professional capabilities of the Corporation. Later, in July 1989, as the company progressed as a result of major oil and gas discoveries, the Government off-loaded the Company from the Federal Budget and allowed it to manage its activities with self generated funds. The year 1989-90 was the company's first year of self-financing. Today, OGDCL is the largest Exploration and Production Company in Pakistan having remaining recoverable reserves as of June 30, 2009 stood at 145.427million barrels of oil and 10,211.76 billion cubic feet of gas. OGDCL is listed on all three...
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