Report on OGDCL

Oil and Gas Development Company Limited

To my Parents, whose encouragement and prayers are remained with me during the whole session of MBA.

To my respected teachers, whose guidance and cooperation helped me in achieving this important milestone.

To my Office Colleagues & bosses by whose cooperation’s and assistance I am able to complete this report.

To everyone who has participated in any manner during preparation & compilation of this report.


All the praise is for Allah, the most merciful and beneficent, who blessed us with the knowledge, gave us the courage and allowed us to accomplish this task. We are especially indebted to our supervisors and teachers.

Their inspiring guidance remarkable suggestions, constant encouragement, keen interest, constructive criticism, and friendly discussion enabled us to complete this report efficiently. Without their support and proper guidance, it would be almost impossible to accomplish this task successfully.

We offer our heartiest tribute and cordial gratitude to present our thanks to General manager OGDCL whose cooperation helped us to achieve our target. We have fortunate of having a very nice company of friends and seniors especially who cooperated with us in all matters relating to the report.


S.No Contents Page No.

1 Introduction 11.1 Company History 31.2 Objectives1.3 ORGANIZATIONAL STRUCTURE 7

MAIN DEPARTMENTS 9STRUCTURE OF THE FINANCE DEPARTMENT 14

Personal Department 181.4 Products and Services Offered 411.4.1 Product Lines 42

2 Learning & Experience 48

2.1 Details of Training Department Wise / task performed

50

2.3 SWOT ANALYSIS 52

2.4 Recommendations 55

Conclusion 56

References 57

Appendix 58

Acknowledgment 59

Personal Resume 60


Before the emergence of OGDC, Exploratory duties are carried out by Pakistan oil field and Pakistan Petroleum. With the advent of huge gas reservoirs in Sui in 1952, the interest in exploration increase and five foreign oil firm signed agreement with govt. to do exploration of oil and gas. But in late 1950’s, these companies loose their interest and due to no proper infrastructure and non existence of demand. So in order to save this industry and explore the huge undiscovered reservoirs, Govt. of Pakistan signed a loan agreement with USSR and gets the Russian Exploratory experts and technology and laid the foundation of OGDC in 1961. Before all of the funding and rule and regulations are imposed by govt. of Pakistan. In start the more concentration was given to the development of human resource and making a strong infrastructure to conduct huge exploratory projects.

At start with the financial assistance by different donor agencies, OGDC completed many exploratory projects in Pakistan during 1968 to 1972. Toot oil field was the major success in 1968. In 1970, company concentrated on developing its technical capabilities. 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. In 1982 Pirkoh Gas Company Ltd, a wholly owned subsidiary was established to look after the oil field in Dera Bughti.

OGDC also concentrated on developing its human resource because human resource has its own importance. So to fulfill this objective OGDC established its own institute with the name of Oil and Gas Training Institute (OGTI) to train it own professionals as well as fresh engineers. This institute is equipped with latest technology and instrument to keep professionals up-to-date with new emerging technologies in oil and gas industry.

An important shift in the policy during the Seventh Five Year Plan period was a change in the financing of the development program of various public sector entities, including OGDC. The Seventh Plan envisaged that OGDC will be strengthened and restructured and its operations streamlined to transform it into a financially viable and administratively autonomous entity.

Noting the Company's success, due to major oil and gas discoveries in the eighties, the Government in July 1989, off-loaded the Company from the Federal Budget and allowed it to manage its activities with self generated funds.


The financial year 1989-90, was OGDC's first year of self-financing. It was a great challenge for OGDC. The obvious initial target during the first year of self-financing was to generate sufficient resources to maintain the momentum of exploration and development at a pace envisaged in the Public Sector Development Program (PSDP) as well as to meet its debt servicing obligations. OGDC not only generated enough internal funds to meet its debt obligations but also invested enough resources in exploration and development to increase the country's reserves and production.

Prior to 23rd October 1997, OGDC was a statutory Corporation and was known as OGDC (Oil and Gas Development Corporation).

Strengthening of its Board of Directors and allowing it more autonomy in all administrative, operational and financial matters. The Petroleum Policy 1994 also envisaged conversion of OGDC from a statutory Corporation into a public limited joint stock company and restructuring of Government investment in OGDC.

Hence w.e.f. 23rd October 1997, the statutory Corporation was converted into a Public Limited Company henceforth known as OGDCL (Oil and Gas Development Company Limited) with an authorized capital of Rs.50 billion.

The position of Chairman/CEO has been bifurcated into a non-executive Chairman and Managing Director/CEO, underscoring transparency and accountability. The Board of Directors of the Company has been reconstituted w.e.f. 16th February 2000 and made independent.

Today OGDCL is working hard to explore undiscovered oil and gas reservoirs and started a lot of projects all over the country independently or making joint venture with different oil and gas firm. In some joint venture OGDCL is operator and in some it is performing non-operator role.

OGDCL has also socially responsible role. Today company is spending huge amount on the welfare of public. There are hospitals, schools, training institutes in different parts of country that are financed by OGDCL. The Company has also provided Rs. 70 million for earthquake relief (Rs. 50 million to the President’s relief fund, and Rs. 20 million for medicines and other facilities).

OGDCL is growing at very great pace and is in very strong financial position. During my internship I did analysis of the organization by using various tools like as COMMON SIZE analysis, ratio analysis, SWOT analysis, BCG matrix etc. All of my findings reflect that organization has a lot of opportunities and at


the same time has resource to capitalize these opportunities. So Organization should do more and more exploration to fulfill the increasing demand of country.

Since my area of specialization is “Finance”, the organization I have chosen for internship is “Oil and Gas Development


Company Limited (OGDCL)” a major Oil & Gas Company of Pakistan having Head Office in Islamabad. The company is engaged in Exploration, Drilling and Production of Oil & Gas resources through-out Pakistan.

Till-date, OGDCL is owned by the Government of Pakistan and is working under the control of Ministry of Petroleum & Natural Resources. The Government of Pakistan off loaded a portion of its equity equivalent to 5% of the paid-up capital of the company through Initial Public Offering (IPO) in October 2006. The Company is now listed on all the three Stock Exchanges of the country and has the earning per share of Rs. 5.21.

Consisting of 13 Technical Departments and 17 Serving Departments, it is the major Oil and Gas Company in Pakistan. The company has achieved all time high net sales revenue of Rs. 51.294 billion during 2005-2006, representing 14% growth over last year.

The report covers the overall operations of the company with specific emphasis on its Finance & Accounts Department. It also discusses financial growth in profitability of the company due to new discoveries of Oil & Gas reservoirs in Sindh & Panjab areas and the use of latest technology in exploration, drilling and production operations of the company. Various financial analysis made thereof are based on financial year 2005-2006.

Basic purpose of working in this company was to fulfill the requirement of my course i.e. MBA because it’s a compulsory


part of it. Secondly, it attracts me and I was keen to gain some knowledge about this sector. Moreover, I studied about the functioning of these particular sections, so I got some idea about the corporate level. I worked with the intentions to point out the strengths and weaknesses of the oil companies in Pakistan in accordance with foreign companies.

OGDCL is a big organization which is working all over the Pakistan and it is really a much difficult to study this organization in 06 weeks that is very short period of time. But I tried my best to learn as much as I can. With shortage of time there was so much security constraints that it was very difficult for an internee to move from the allocated department for working in other departments. This report can be help full for other MBA (finance) students of Comsats institute of information technology Attock campus.

06 weeks internship duration was very limited time for organization like OGDCL of Pakistan having almost 16 departments and at least 06 weeks training can cover the main functions and operations of the OGDCL. To prepare a report I have a very limited time.

The research methodology is a prerequisite for carrying out research. It defines the procedure to be followed during the course of internship report research methodology provides a guidelines for collecting information. The study is both on primary data and secondary data.

Data collected in the raw form and have not undergone any sort of statistical treatment are called primary data.

Personal observation interviews


Data that have undergone any sort of the treatment by statistical method at least once that is data have been collected, classified, tabulated or presented in some form for a certain purpose are called secondary data.

Departments manuals Annual reports Text books Internet research

PETROLIUM (rock oil from the Latin Petra, rock or stone and petroleum oil) occurs widely in the earth as gas, liquid, semi solid or solid or in more then one of these states at a single place. Chemically any petroleum is an extremely complex mixture of hydrocarbon compound with minor amounts of nitrogen, oxygen and sulpher as impurities.Chester in his dictionary of mineral, defines petroleum as“MINERAL HYDROCARBONS”

over millions of years plant and animal remains fall to the floor of shallow seas recede the plant materials is covered by sediment layer, such as slit, sand, clay & other plant material. Buried deep beneath layer of rock, the organic material partially decomposes, under an absence of oxygen into petroleum that eventually seeps into the spaces between rock layers. As the earth’s tectonic plate’s move the rock is bent or wrapped into folds or it “breaks” along fault lines. Allowing the petroleum to collect in pools. Early man was not unfamiliar with crude oil. In the Middle East escaping petroleum gases burned continuously giving rise to fire worship.

The oil industry began over five thousand years ago. In the Middle East oil seeping up through the ground was used in water proofing boats and baskets in paints, lighting and even medication. Whale oil has been used in more recent times as a source of light. However the high premium for whale oil decimated whale population and as their number dropped the prices rose further. The demand for oil was then far higher than the supply. Many companies and individual were looking for an alternative and longer lasting source of what would later become known as BLACK GOLD .a part from a brief period of coal oil, the answer came with the development of drilling for crude oil. Land oil wells were first and as demand continued to grow exploration


companies began to look below the seabed. The first oil well structured to built in open water were in the gulf of Mexico they were in water depth of up to 100m and constructed of a piled jacket formation in which a framed template has pile driven through it to pin the structure to the sea bed.

To a support frame was added the working parts of the rig such as the deck and accommodation.

These structures were the forerunners for the massive plate forms that now stand in very deep water and in many locations around the world .clues around the coast of green land gave geologist the idea that there may be oil and gas around Scottish water. There have been land oil wells an England since the 1920s.it wasn’t until 1960s that exploration in the north sea really begun, with out success I the early years. They finally stuck oil in 1969 and have been discovering new fields ever since. The subsequent development of the North Sea is one of the greatest investment projects in the world. The development of the off shore oil industry in hostile waters has been made possible by many achievements comparable with the space industry. Many fields are located far from land and they are getting further away. New fields are being explored in ever deeper and wider waters.

Ever since the world energy crisis of early 1870s indigenous resource development has been consistently given high priority by every Pakistani government. This policy is more then likely to be followed well into the future. The up trend in the oil & gas exploration activity as a consequence, has resulted in several recent discoveries .the prospective of the different basin of Pakistan has therefore, attracted world wide attention. A new petroleum policy announced by the government in March 1994 provided further liberal incentives to explorers, producers, refineries and marketing companies which reflect the dynamics of the current exploration scene in Pakistan.


One of the most important pre requisites of an effective exploration program is availability of an exploration data base. This is all the more important in the case of developing countries with petroleum potential and less explored basin such as Pakistan. It is felt that despite liberalized government policies, one of the reasons for lack of sufficient exploration activity in Pakistan has been the dearth of published information on its petroleum potential and related facts. Recognizing this need the ministry of petroleum & natural resource, government of Pakistan has recently undertaken the task of organizing and disseminating geological information. This is an important step towards further accelerating petroleum exploration in Pakistan.

To promote and regulate exploration after independence in 1947, the petroleum production rules were promulgated in 1949. Very limited published literature on geology applied to petroleum was available to meet the specific need of the fledging petroleum industry of Pakistan in the early 50s. Some excellent geological literature, published by institute such as geological survey of Pakistan (GSP) and author, mainly dealing with stratigraphy /paleontology/structural geology etc, was available and formed the basis of early petroleum exploration. The oil companies undertook grass roots studies and geological geophysical data collection. These investigations met the immediate needs of the industry and also provided opportunities for Pakistan geoscientists to learn the trade. However the data acquisition and assimilation process was often time consuming and could not be integrated satisfactorily in the limited time due to large areas of investigation structural /stratrigraphic complexities et. This frequently resulted in delayed completion of exploration activities. In some instances exploratory wells, drilled with out assimilation of all the available information proved abortive causing large tracts of prospective acreage being down graded such as southern Indus basin (Badin area), off shore Indus. Makran basin the Punjab platform and certain areas of the potwar-kohat basin. Most of these areas have subsequently proved to be oil/gas bearing with commercial potential.

Initial understanding of the basin architecture was based mainly on surface geological features (structural and stratigraphic) as the subsurface information was lacking for the alluvium covered and off shore areas. The evolutationary process through which the oil / gas industry progressed in Pakistan is clearly seen during the period from 60s through 80s. This is reflected in the introduction of modern seismic data acquisition techniques, seismic stratigraphy, basin modeling, source rock studies, satellite imagery plate tectonics and geodynamic concept as well as increase in the level of exploratory drilling on shore and off shore. In the last 2 decades some excellent studies and research papers on petroleum geology of Pakistan have been published by


several foreign and Pakistani organizations like the hydrocarbon development institute of Pakistan (HDIP).

Prior to OGDCL PPL & POL also carried out exploration activities in the country. In 1952 PPL discovered a giant gas field at Sui in Balochistan province. This discovery generates immense interest in exploration and few major foreign oil companies entered into concession with the government.

During 1950s these companies carried out extensive geological and geophysical surveys. As a result few oil & gas wells were discovered. Despite these gas discoveries exploration activities after having reached its peak in mid 1950s declined in the late 50s. Private companies whose main objective was to earn profit were least interested in developing small gas fields especially when infrastructure and demand for gas was non existent. With exploration and activities at its lowest point. Several foreign exploration contrasting companies terminated their operations and either reduced or relinquished land holding in the beginning of 1960.


To be a leading, regional Pakistani E & P Company, recognized for its people, partnerships and performance

Our mission is to become a competitive, dynamic and growing E & P Company, rapidly enhancing our reserves through world class workforce, best management practices and technology and maximizing returns to all stakeholders by capturing high value business opportunities within the country and abroad, while being a responsible corporate citizen.

Merit

Integrity

Team Work

Dedication

Innovation

To promote an enabling environment between local communities and the OGDCL.

To fulfill the aspirations and expectation of communities in its operational areas- by providing access to basic amenities, thus improving the qualities of their lives.

To promote social investment in the area of education, Health, Water Supply and Sanitation in collaboration with local relevant departments.

To undertake poverty alleviation efforts among marginalized communities.

Transferring project responsibility to the communities for security, sustainability and empowerment.

The Company also aims to excel in performance standards prevalent in the industry. This is not possible without updating the equipment base and systems of seismic operations, data processing and data interpretation.


Modernization of rigs is also one of the key objectives for which major overhauls and up-gradations have been undertaken. The Computer packages / simulators for design of production facilities and down-hole completions are also being procured

Prior to OGDCL's emergence, exploration activities in the country were carried out by Pakistan Petroleum Ltd. (PPL) and Pakistan Oilfields Ltd. (POL). In 1952, PPL discovered a giant gas field at Sui in Balochistan. This discovery generated immense interest in exploration and five major foreign oil companies entered into concession agreements with the Government.

During the 1950s, these companies carried out extensive geological and geophysical surveys and drilled 47 exploratory wells. As a result, a few small gas fields were discovered. Despite these gas discoveries, exploration activity after having reached its peak in mid-1950s, declined in the late fifties. Private Companies whose main objective was to earn profit were not interested in developing the gas discoveries especially when infrastructure and demand for gas was non-existent. With exploration activity at its lowest ebb several foreign exploration contracting companies terminated their operation and either reduced or relinquished land holdings in 1961.

Oil and Gas Development Company Limited (OGDCL) was initially created under an Ordinance in 1961, as public sector Corporation which subsequently in pursuance of the Petroleum Policy, 1994 was converted from a statutory Corporation into a public limited joint stock Company on commercial lines w.e.f 23 October, 1997.

On conversion all the properties, rights, assets, obligations and liabilities of the Oil and Gas Development Corporation (OGDC) were vested in the Company for having issued ordinary fully paid shares of Rs. 10/- each against the capital contribution made by the Government. Company's Board of Directors was reconstituted by nominating experts in different fields on its Board. In April/May 1999, Government of Pakistan approved privatization of OGDCL and a Financial Advisor was appointed for the purpose. In October 2006 Government of Pakistan further decided to disinvest part of its shareholding in the Company after issuing bonus shares at three shares per one share. Initially 2.5% of the equity with an additional green-shoe option up to 2.5% of equity was offered to general public under IPO (Initial Public Offering).


The authorized share capital of OGDCL is Rs. 50 billion. The issued, subscribed and paid-up capital is Rs. 43.009 billion of which 5% is held by the general public and the rest is owned by the Government of Pakistan. OGDCL is the largest and most profitable oil company of Pakistan. The company’s head office is located in Islamabad. The Company is now listed on all the three Stock Exchanges of Pakistan with highest market capitalization

Noting the Company’s success, due to major oil and gas discoveries in the eighties, the Government in July 1989, off-loaded the company from the Federal Budget and allowed it to manage its activities with self-generated funds. The financial year 1989-90 was OGDC’s first year of self-financing. It was a great challenge for OGDC. A number of oil and gas discoveries in the eighties provided an impetus to the Corporation’s activities. It also completed some major oil and gas projects which increased its profits and revenues manifold. Six new discoveries made in the first year of self-financing i.e. 1989-90 resulted in a 57 percent increase in net sales revenues over 1988-89 including that of its subsidiary, Pirkoh Gas Company Limited. Now OGDCL not only generating enough internal funds to meet its debt obligations but also invested enough resources in exploration and development to increase the country’s reserves and production.

Oil and Gas Development Limited (OGDCL) is the largest exploration and production (E&P) company in the Pakistan oil and gas sector. The Company carries out the Geological & Geophysical surveys in various area allocated by the Government of Pakistan, for exploring Oil & Gas reserves. 02 Geological Parties and 06 Seismic Parties are responsible to carry out these surveys. The results of these surveys forwarded to Data Processing Centre (DPC) at Islamabad for processing in terms of the selection of “shot points”. “Shot Points” are the markings of exact locations where exploratory well to be drilled by the drilling Rig.


09 Rigs are currently owned by the Company for carrying out the drilling of wells at the “shot points”. Before carrying out the drilling activities the Company utilize its Engineering Field Parties (06 No’s) for the surface preparation and laying down the foundation work for deployment of rigs at that location.

If the wells are successful in terms of high flow of Oil or Gas, they are connected to the Processing plants for obtaining production. The Company has installed various complex Oil & Gas Condensate Processing Plants during the last 43 years giving opportunities to the local construction firms to have the experience of installation / erections of such plants.

The main activities of the company are to explore and develop the indigenous resources. Company also takes care of the environment protection and the welfares of locals by laying metallic roads, opening schools and dispensaries for them under exploration or development phase.OGDCL’s equipment base includes nine drilling rigs, two work over rigs, six seismic data acquisition crews, civil works and gas pipeline laying crews, a seismic data processing centre, geological analysis laboratory, logging units.

The company has its own training centre called as Oil and Gas Training Institute for providing training to the company employees as well as to the professionals from foreign oil companies operating in Pakistan.OGDCL has implemented a number of major projects for the developments of its oil and gas field including Dhodak gas/condensate field in district D.G. Khan, Punjab, Qadirpur gas field in district Sukkur, Sindh, Pirkoh and Uch gas fields in Dera Bugti Agency, Balochistan, and Nandpur and Panjpir gas fields in Khanewal and Jhang Districts, Punjab.


Product MeasurementScale

2001-02

2005-03

2006-04

2007-05

2005-06

Crude Oil ThousandsBarrels

8,907 8,535 8,705 9,413 9,941

Gas MMcf 161,534

217,927

245,537

274,006

277,408

LPG M.Tons 93,004 77,402 93,136 90,304 101,322

Sulphur M.Tons 13,445 16,670 23,234 15,889 18,917

White PetroleumProducts

ThousandsBarrels

1,038 998 989 859 890

Business Volume for last Five Years

Oil Production

7500

8000

8500

9000

9500

10000

10500

2001-02 2005-03 2006-04 2007-05 2005-06

Years

Qua

ntiti

es T

hous

ands

Bar

rels

Gas Production

0

50,000

100,000

150,000

200,000

250,000

300,000

2001-02 2005-03 2006-04 2007-05 2005-06

Years

Q ua

nti

tie s Th

ou

sa nd

s Ba

rre

ls


The Net sales & other revenues for the last five years are as under:

(Rupees in Million)

YEARS 2001-02

2005-03

2006-04

2007-05

2005-06

Net SalesRevenue 26,20

939,892

41,845 47,058 52,641

The business volume and the sales revenues are the reflection of an operator’s management judgment, execution and skills.

LPG Production

0

20,000

40,000

60,000

80,000

100,000

120,000

2001-02 2005-03 2006-04 2007-05 2005-06

Years

Q ua

nti

tie s M.

To ns

Sulphur Production

0

5,000

10,000

15,000

20,000

25,000

2001-02 2005-03 2006-04 2007-05 2005-06

Years

Qu

an

titie

s M

. To

ns

0

10000

20000

30000

40000

50000

60000

Sales Revenues

(Rs in Millions)

2001-02 2005-03 2006-04 2007-05 2005-06

Years

Net Sales Revenues


OGDCL‘s financial performance has been consistently improving since becoming a self-financing entity.

EXECUTIVE CADRE

EG VII 3 37 6 1 7 11 1 1 0 60

EG VI 12 102 18 13 31 31 10 4 5 195

EG V 19 116 36 49 85 28 11 10 5 274

EG IV 28 109 29 36 65 34 6 14 6 262

EG III 28 178 57 46 103 28 9 7 3 356

EG II 22 204 17 39 56 38 7 8 3 338

EG I 15 132 28 47 75 18 7 3 2 252

TRAINEES 12 69 13 20 33 15 11 8 6 154

TOTAL 143

952 205 252 457 205

63 55 30

1905

The main product lines of the company are as under:

1. Crude Oil2. Gas3. Liquefied Petroleum Gas (LPG)4. Naphtha5. Solvent Oil6. Kerosine Oil7. High Speed Diesel Oil8. Sulphur

The detail of the Gross Revenue earned on sale of the above line of products is given at Annexure “A”.

OGDCL Head Office is situated at Jinnah Avenue, Blue Area Islamabad and Regional Offices are located in Karachi and Multan. Besides this OGDCL has its Liaison Offices in Hyderabad,


Sukkhur, and Quetta for operational activities. The overall organizational structure / organogram is as under

A Board of Directors comprising twelve Directors, all of whom are nominated by the Ministry of Petroleum and Natural Resources, is responsible for policy related issues. The autonomous Board is headed by a non-executive Chairman and there is a Managing Director/Chief Executive Officer.

Following are the main offices located throughout Pakistan:

1. OGDCL Head Office, Jinnah Avenue Islamabad.

2. Pirkoh Gas Company Private Limited, Islamabad.

3. OGDCL Regional Office, Shafi Chamber, Karachi

4. OGDCL Regional Office, Multan

5. OGDCL Liaison Office, Quetta

6. OGDCL Liaison Office, Sukkur

7. OGDCL West Wharf Office, Karachi

8. OGDCL Base Store, Islamabad

9. OGDCL Base Store, Khadiji, Karachi

10. OGDCL Base Store, Korangi

11. OGDCL Base Store, Kot Addu

12. OGDCL Base Store, Kot Sarang

13. Medical Centers, Islamabad, Rawalpindi & Karachi

14. OGDCL Workshops, Islamabad

15. Oil & Gas Training Institute, Islamabad.


Corporate Department

1. Administration Department

2. Human Resource Department

3. Personnel Department

4. Security Department

5. Legal / Regulation Department

6. Communication Department

7. Procurement Department

8. Stores Department

9. Finance & Accounts Department

10. Audit Department

E&P Departments

1. Exploration Department

2. Exploitation Department

3. Production Department

4. Process Department

Technical Services Department

1. Drilling Department

2. Data Logging Department

3. Mud Engineering Department

4. Well Services Department

5. Cementation Department


6. Geological Well Supervision Department

7. Engineering Department

8. Wire line Logging Department

9. Geophysical Department

10. Geological Department

11. Data Processing Department


OGDCL’s annual sales for the year 2007 are 30,085 barrels of oil per day, 717 million cubic feet per day of gas, 281 metric tons per day of LPG and 53 metric tons per day of Sulphur. OGDCL’s share in the total oil and gas production has been 34% and 21% respectively during the year 2006-04.

OGDCL's financial performance has been consistently improving since becoming a self financing entity. The gross sales of OGDCL have increased to Rs.51.294 billion (equivalent to US$ 870 million) in 2006-04 while its profit after tax has increased to Rs.22.414 billion (equivalent to US$ 380 million) in 2006-04. Nine Months gross sales for the year 2007-05 are Rs. 53.113 billion; however profit after tax is Rs. 24.416 billion.

OGDCL holds the largest share of oil and gas reserves in the country, being 48% of total oil and 35% of total gas reserves, amounting to 139.7 million barrels of oil and 9.8 trillion cubic feet of gas as of July 1, 2007. OGDCL has implemented a number of major projects for the developments of its oil and gas field including Dhodak gas/condensate field in district D.G. Khan, Punjab, Padirpur gas field in district Sukkur, Sindh, pirkoh and Uch gas fields in Dera bugti agency, Balochistan, and nandpur and Panjpir gas fields in khanewal and Jhang districts, Punjab.

OGDCL carries out exploration and development activities on its own as well as in joint ventures with other oil companies. OGDCL presently holds the largest acreage position in Pakistan and as on 30 June, 2007 was operating in 16 concessions covering an area of 25,656 Km2 of which OGDCL owns 100% interest in 7 concessions. In addition, OGDCL holds non-operating working interest in another 7 concessions operated by other companies covering an area of 32,499 Km2 including 15,000 Km2 for Offshore blocks.

OGDCL’s equipment base includes nine drilling rigs, two Workover rigs, six seismic data acquisition crews, civil works and gas pipeline laying crews, a seismic data processing centre, geological analysis laboratory, logging units. It has an Oil and Gas Training Institute with fully equipped laboratories which have also provided training to professionals from foreign oil companies operating in Pakistan.


The authorized share capital of OGDCL is Rs. 50 billion. The issued, subscribed and paid-up capital is Rs. 43.009 billion of which 5% is held by the general public and the rest is owned by the Government of Pakistan. OGDCL is the largest and most profitable oil company of Pakistan.

KEY FIGURES FOR THE FINANCIAL YEARS ENDING JUNE 30, 2005, 2006 AND JUNE 30, 2007 ARE GIVEN BELOW:

(Amounts in million rupees)

OGDCL Financial Data

FY 2005 FY 2006 FY 2007

Sales less government levies 39,739 45,008 51,294

Operating Costs 12,740 15,083 16,244Profit before taxation 25,688 26,417 30,515

Profit after taxation 16,775 20,673 22,414

Total assets 75,341 84,922 95,926Shareholder’s Equity 57,240 65,461 70,671

Total Liabilities 18,102 19,461 25,255Sales Volumes:Oil & Condensate (mmbbl) 8.705 9.413 9.941

Gas (mmcf)* 276,931 274,006 277,408


FINANCIAL SUMMARY OF LAST THREE YEARS

Rs. Billions Year 2007-05

Year 2005-06

Year 2006-07

Revenues 47.1 52.6 33.4Profit Before Tax

26.5 30.5 23.2

Profit After Tax 20.6 22.4 15.7Dividend Declared %

30% 40% 30% (17.5%3Q)

Earning per Share (Rs. only)

4.81 5.21 0.67

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. OGDC'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.

As of August 2007, OGDCL has drilled 187 exploratory wells and 239 development wells. On the basis of its activities since inception, has until June 2007, made 60 discoveries with a success ratio of 1:3. In the last 3 years, OGDCL has been successful in making 10 discoveries – two oil discoveries and eight gas/condensate discoveries.


A liquidity ratio measures the firm ability to meet its current obligation, or liquidity of short-term assets; related debt-paying ability. Several comparisons can be made to determine this ability:-

Net Working Capital Current Ration Acid Test/Quick Ratio Cash/Absolute Ratio

Net Working Capital:A current asset minus current liabilities is known as Net Working Capital.

Formula:

Net Working Capital = Current Assets-Current LiabilitiesFor Example:-

Amount Rs. (000)Fiscal Year 2007 2006 2005Working Capital =

43,352,478 37,584,878 29,535,358

Current Ratio:Measures ability to meet current debts with current assets.

Formula:Current Ration = Current Assets/Current Liabilities

For Example:-

Fiscal Year 2007 2006 2005Current Ratio = 5.48

Times6.82 Times

5.13 times


Acid Test/Quick Ratio:Measures ability to meet current debts with most-liquid (quick) current assets.

Formula:Acid Test/Quick Ratio = Current Assets-Inventory/Current Liabilities

For Example:-Fiscal Year 2007 2006 2005Acid Test/Quick Ratio =

4.64 Times

5.88 Times

4.2 times

This ratio shows the firm’s long-term debt-paying ability. One approach view the firm’s ability to carry the debt as indicated by the income statement; and the other considers the firm’s ability to carry debt as indicated by the balance sheet. These ratios are now reviewed:-

Debt Ratio Debt/Equity Ratio

Debt Ratio:Shows the relative extent to which the firm is using borrowed money.

Formula:Debt Ratio = Total Liabilities/Total Assets

For Example:-Fiscal Year 2007 2006 2005Debt Ratio = 26% 23% 24%


Debt/Equity Ratio:Indicates the extent to which debt financing is used relative to equity financing.

Formula:Debt/Equity Ratio = Total Liabilities/Share Holder’s Equity

For Example:-Fiscal Year 2007 2006 2005Debt/Equity Ratio =

35.7% 29.7% 31.6%

Comments on the Leverage of Company:

From the perspective of long-term debt-paying ability, the Lower this ratio, the better the company’s debt position. Either ratios debt ratio or debt/equity ratio which are used in this analysis show same situation that the lower these ratio, the better the position of the company. Actually the debt ratio indicates the percentage of assets financed by creditors, and it helps to determine how well creditors are protected in case of insolvency. If creditors are not well protected, the company is not in a position to issue additional long-term debt.

In case of Debt Ratio which is calculated above. We can say that the company’s position to pay its debts is strong because the


ratio is less than one <1, which is 0.26 in 2007 and 0.23 in year 2006 and 0.24 in 2005, so from this finding we can conclude that the creditors are more protected because company’s debt paying ability is good. If the company’s assets are financed by the creditors then company can easily pays its debts due to better debts paying position, which is 23% in 2007.

If we talk about the company’s Debt paying ability from its shareholders’ equity then it’s also same as debt/equity ratio which is good to pay its debts and creditors are also protected in case of insolvency of the company. Company can pay its debts bitterly and easily because debt/equity ratio shows which is 35.7 in 2007 and 29.7 in 2006 and 31.6 in 2005 here it is visible that in all years company’s position is strong to meet its debts from its shareholders’ equity.

Profitability is the ability of the firm to generate earning or earning ability of the firm. In other words; Profitability ratio is that ratio which relates profit to sales and investment.

Net Profit Margin Gross Profit Margin

Net Profit Margin:

Measures profitability with respect to sales generated; net income per dollar of sales.

Formula:Net Profit Margin = Net Income/Net Sales*100

For Example:-Fiscal Year 2007 2006 2005Net Profit Margin =

51% 46.85% 45.2%


Gross Profit Margin:

Measures profitability with respect to sales generated; Gross income per dollar of sales.

Formula:Gross Profit Margin = Gross Profit/Net Sales*100

For Example:-Fiscal Year 2007 2006 2005

Gross Profit Margin =

62% 61% 65%

Comments on the Profitability of Company :

Profitability ratio shows the earning ability of the firm that how much the company earn. Here it is found in two ratios Net profit margin and Gross profit margin both ratios indicate that company’s earning ability is too much strong. Net Profit Margin ratio shows profitability in 2007 which is 51% and 47% in 2006 and 45% in 2005. Therefore we can say that the trend is also upward and company’s profitability is increasing stepwise and in last year company’s Profit is 51% of its Net Sales.

When we take the Gross Profit Margin ratio of the company which is also better and shows good profitability because Company’s Gross Profit gives return about 62% in 2007, 61% in 2006 and 65% in 2005. So company earning ability is too much strong. Therefore company uses the statement…! (A Company on the move)……


Common Size Analysis expresses the comparison in percentage and this analysis has two types:

Vertical Analysis Horizontal or Trend Analysis

Vertical Analysis:

This analysis compares each amount with the base amount selected from the same year and usually Total Assets are taken in Balance Sheet and Sales is taken in Income Statement.

Formula:Common Size Analysis = Individual Asset / Total Assets *100

For Example:

Common Size Analysis of Balance Sheets

ASSETS

Regular in thousands(000)

Common Size (%)

2005 2006 2007 2005 2006 2007

Current Assets 36,677,661

44,039,954

53,027,262

48.68

51.86

55.28

Fixed Assets 34,571,853

37,535,227

39,716,082

45.89

44.20

41.10

Other Long-term Assets

4091710

3346574

3182951 5.43 3.94 3.32

Total Assets 75,341,224

84,921,805

95,926,295 100 100 100

LIABILITIES & SHARE HOLDERS’S EQUITY

Current Liabilities

7,142,303

6,455,075

9,674,784

9.48 7.6 10

Long-term Liabilities

10,959,353

14,369,951

15,580,018

14.55

15.32 16.24

Share Holder’s Equity

57,239,568

64,096,779

70,671,493

75.97

75.48 73.67

Total Liabilities & Eqt.

75,341,224

84,921,805

95,926,295 10

0 100 100


Common Size Analysis of Income StatementsFormula:Common Size Analysis = Individual Items / Net Sales*100

For Example:

DESCRIPTIONS

Regular in thousands(000) Common Size (%)

2005 2006 2007 2005

2006

2007

Net Sales 39,739,477

45,008,279

51,293,653 100 100 100

-Cost of Good Sold

25,869,085

27,461,459

31,082,458

65.10 61 61.7

7

Gross Profit 13870392

17546820

20211195 34.9 39 38.2

3-Gen. & Admn. Expenses

2,221,555

3,031,775

2,483,357 5.59 6.73 4.84

Operating Income

11,648,837

14,515,045

17727838

29.31

32.27

33.39

+Other Income 2,040,297

1,987,402

1,314,156 5.13 4.42 2.56

EBT 25,687,827

26,417,086

30,515,350

34.44

36.69

35.95

- Taxes 8,913,000

5,744,000

8,100,889

22.43

12.76

15.69

Profit After Taxes

16,774,16,774,827827

20,673,20,673,086086

22,414,22,414,461461

12.00

23.93

20.16

Comments on the Common Size Analysis of Company:

Common Size Analysis is the comparison in percentage and in Balance Sheet Total Assets are consider 100% and in Income Statement Net Sale is consider as 100%, then all items are compare with these two base amount. After all we conclude that, in Balance Sheet the items especially Current assets of the company are very high in all fiscal years which are: 55.28% in 2007, 51.86% in 2006 and 48.68% in 2005. However we can say that company’s Working Capital is very high this is approximately 50+.


If we take the Items of Income Statement for Common Size Analysis then we can say that it’s also show the better performance of the company. Company earned 12% of total sales in 2007, 24% in 2006 and 20.16% in 2005. In 2007 the net sales is low as compare to the Sales of 2006.

Horizontal or Trend Analysis

Horizontal Analysis is also known as Trend analysis and it is another type of Common Size Analysis. It shows the trend among different financial years which is as under:-

TEN YEARS AT A GLANCE

COMMENTS ON THE TREND ANALYSIS OF OGDCL:If we compare the company’s performance with last ten years, then we can derive that the company’s progress is moving upward gradually, because company’s sale of Crude Oil, gas, Sales Revenue, Profit after taxes, Assets and Dividend and earning per share is increasing so trend shows upward or positive relation which shows better performance of the company.


SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of Strategic planning and helps managers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

Strengths and weaknesses are internal factors. For example:

STRENGTHS COULD BE:

Largest Oil and gas company in the Pakistan.

Monopoly of the company and having confidence due to govt. support.

Dynamic & Strong Financial Position due to the 45 years experience.

A new, Exploration and innovative of Wells.

Best location of business which is choosing after long process.

Quality processes and procedures.

Large number of field of oil and gas.

Experienced and Technical Staff involving no. of expert Geologist.

Confidence of the Customers.

All other aspect of the company that adds value to the product or service.

WEAKNESSESS COULD BE:

Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to the competitors)

Lack of coordination of operations.

Government Influence.

Untrained Staff.

Slow promotion process which reduces the performance.


Lack of Check and balance.

Weak quality goods or services (can be only one of more than one)

Opportunities and threats are external factors. For example:

OPPORTUNITIES COULD BE:

A developing market such as the Internet.

Mergers, joint ventures or strategic alliances

Moving into new market segments that offer improved profits

A new international market

A market vacated by an ineffective competitor.

Large workshops for training and development.

Support of the Ministry of P&NR (Petroleum and Natural Resources).

Better Competitive Position.

THREATS COULD BE:

A new competitor in the home market.

Price wars with competitors.

Fear of Privatization.

Tuff Competition

Globalization is the factor which brings the strong companies in Pakistan

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Taxation is introduced on the product or service.

Currently OGDCL is operator in Nineteen Exploratory Blocks and working interest in nine non-operated blocks. In addition company has got 34 mining and D & PL leases. Targets have been based on risks and opportunities. Physical targets for the year 200-02 was envisage drilling of fourteen wells (nine


exploratory and five development), 2950 Km of seismic survey, production of 28,111 barrels per day, 730 MMcf per day gas, 313 metric tones per day pf LPG and 60 tones per days pf sulphur. To accelerate exploration activities by covering 3,200 km of seismic Survey and drilling of 12 exploratory wells with the clear objective of a net increase in oil and gas reserves. It is expected that exploratory program will result in increase in OGDCL reservoir in oil and Gas and also to the country‘s reservoir.

To develop the already discovered oil and gas fields with a view to enhance production and improve revenues of US$ 35 million per annum and 24,500 barrels of oil per day and 565,605 Mmcfd of gas is expected to be produced during 1999-2000. Exploratory wells are being drilled on various points i.e.

Sanjharo , Norijagir, Ghari, &, Chanda etc; from these points oil and gas are discoved to achieve the future targets.

To modernize, replace and effectively maintain the drilling, seismic and processing equipment in order to keep the equipment in sound operating condition at all times.

To develop OGDCL ‘s human resources through transfer of technology and training.

To rationalize stores and spares inventory to the optimum level.To improve the organization and system in order to ensure

accountability, transparency, efficiency and cost effectiveness.

OGDCL is providing gas to IPPs like Uch power from Uch Gas Filed Project and from Nandpur / Panjpir to Fauji Kabirwala Power Limited. All these projects are contributing a lot of income to the OGDCL’s current revenues. Despite number of Joint ventures and competitors in the oil and gas sector, OGDCL has drilled different concessions independently as well as it has ventures with other company’s successfully. OGDCL Seismic Crews are busy in G&G

survey on different concession like Kharar, Basal, Ranpathani, Sanghar and Zin etc.

FUTURE GOALS & STRATEGY:

OGDCL plans to drill 45 wells during current financial year (2005-06), to explore new drillable prospects. The Company has also started three new development projects – Tando Allah Yar, Sinjhoro and Uch-II. The Company has placed great emphasis on fast track completion of these projects and on progressive project management concepts.


The duties which I perform through out my training program. 1st of all I report to all my sections which are assigned to me. Weekly report writing is also included in my duties and sends it to my supervisor miss mahreen. During my 06 weeks internship program I worked in the following sections of the finance department.

PENSION AND FUND SECTION

IMPREST SECTION

BANK SECTION

ADVANCE SECTION

ACCOUNT PAYABLE SECTION

BUDGET SECTION

1ST of all they guides me about the section over all then I go to other rooms where all processes goes on at 1st I see how they do their duties then I do some activities i.e. preparation of a voucher ,how to enter a data in oracle system, how to analyze some cases about field remittances ,and others cases like bid opening ,studying tendering processes studying clauses mentioned in a contract, prepare invoices.

In budget section I analyzed the financial health of a company and also search about the consumption and production of oil and gas in Pakistan and how much is the share of the OGDCL the detail about these sections is mentioned in this report above in departmentation section .In that section I explain all my activities which I perform in those sections these all activities are a part of my duties which I explain in above section and also I explain in my weekly reports .


As a student of comsats I completed my all projects successfully and now the requirement is a practical experience so that’s why I choose the best and leading organization for the best interest of my benefit as a student internee I m successfully accomplish my task 1st of all I report to all the sections assigned to me for the visit in the OGDCL.

The sections which are not assigned to me but I take an over view of all the sections with in a limited time period. I analyze company growth share matrix for which I explain Boston consultant growth share matrix Analyzing the overall strength, weaknesses and opportunities available to that organization. To know the procedures for collection of funds, transfer of funds, on-line payments, short & long term loans, import of plant & equipments, etc.


I got too much knowledge by joining this organization I realize how the theoretical world is and practical world is different and how our studies are implemented in real world. By this program I come to know about petroleum industry in Pakistan and through out the world.

I learn how to send letters to other departments and the procedure of tendering process. I also got knowledge about analyzing an organization.

Knowledge which I acquired in this sense that practical experience is so much important because through particle experience we learn about different organization. Like

Attitude of our self towards work in practical manners

Understanding the Work of organization

Its goal and objectives

how we completed the task in time

how to face Problems

In the OGDCL I learn so much about practical work that how to make cheque, how we make different kind of vouchers. The person who authorized it. I learn about our attitude that what the attitude which we behave from different people. How the task can be completed in time. How many problems come in our ways and how we encountered these problems and which is most suitable to way to deal with those employees who are involved to achieve our department goals.in imprest section I come to know about the drilling processes and after drilling process how to built developmet wells and on which location we develop this kind of wells and how to analyze the situation when we have a risk so at that spot we take suggestions of the technical departments and also finance analyst


Problems and hurdles are the main thing which helps us to know about the reality of the world. So I also face some problems in the taxation department a person gives me a question about financial management and I solve it. In the bank section a person who guides me is only metric level employee so he can’t easily understand my questions but I mange it and then I asked those questions to chief accountant. here I face the behavioral experience of others.

One day an employee who guides me he gave me some files for stamp purpose I done almost 5 files but I don’t like this work so I tells him and he appreciates my potential towards work .i have very limited time but I need to take an over view of OGDCL so I convince other department head to help me about that I want to know some other departments so I m successfully convinced him and he allows me for spending time in some other sections.

The experience was such a great experience and it gives me a confidence level to express my thoughts to any one. By this training I m able to do some thing change and creative as I want to do now I have a complete vision to do some thing in future INSHALLAH.


OGDCL growing at very great pace and has a big pool of qualified professionals I learned a lot during my internship period. This was my very first experience of working in any professional organization. This experience might help me more, if i join the oil and gas industry but it would be helpful in other case because working environment might be almost same in all organization like as how to prepare reports, how to send letters to other departments or other organization and what is the procedure for auction of anything and also how to purchase any new equipment for any department I also very interested in the tender‘s selection process. So I can say that it was a really good experience of working.


Contract base employees should be given some extra

benefits and chances for promotion as permanent

employee.

Marketing Department head should visit the department

frequently to ensure that every one is present in office and

working especially after lunch break and should engage all

employees.

There are no specific criteria for training internees. Every

department should be given special tasks to students.

There must be proper man power planning and work

assignment planning by time to time. It can be made by

restructuring the department.

There is no central data storage system in the OGDCL.

Initiatives have been taken but no further process after

sending letters all departments.

There should be proper surveillance system to measure

the employee’s performance and then decision should be

taken for promotion and bonuses.


The success of OGDCL depends upon the professional competence of its work force. OGDCL has engaged top professionals in Geology, Drilling, Engineering and petroleum engineering who are working for the exploration and production of petroleum. In the support services. Finance & Accounts, Procurement & Store, Administration & Personnel, Qualified professionals like FCMAs. MBAs, M.Coms, and masters in other disciplines are backbone of the technical wings.

The tenure of the generalist bureaucrats appointed as CEO on political basis has performance is totally depends upon the performance of technical professionals, the CEO should have highest standard of technical expertise and management skills. If we look at the last five year performance we see that the return on capital employed, Acid test, and debt service coverage remained quite satisfactory as per minimum criteria prescribed by the World Bank.

OGDCL’s contribution to national exchequer in the form of royalty, excise duty and taxes remained matchless.

OGDCL is producing oil products, which meets almost 23% of our total requirement, in this saving the import bill.

OGDCL is the second d largest gas producers in the country after PPL, increased gs productions saves import bill, as most of industrial units use gas as energy for their production process. Due to domestic consumption of gas our forest and environment have been saved.

Power generation by IPPs in the country is major source of energy. UCH gas field and Panjpir gas fields are the two projects, which are supplying low BTU gas for power generation. In this way the requirement of electricity of country will met as well as exported to other countries.

OGDCL entered into new JV agreement in various exploration Blocks with Government Holding and other


foreign oil companies like Zaver Petroleum, Lasmo, British gas, Premier, OMV &MOL.

In order to compete in the present world of Globalization and specialization, availability of trained human resources is pre-requisite. OGDCL being conscious of this requirement has established

(PetroResearcj Training Institute) to provide updated technical know-how to its professionals. A total of 47 courses in the technical discipline were conducted during the year and a total number of 568 participants availed the training facility during the period of 2004-06.

For better performance, congenial relationship of the management and workers is of great importance. OGDCL has always been very generous in dealing with CBA (Collective Bargaining Agents) for their annual demands; therefore, the relationship between the Management and CBA always remained very cordial.

Well versed, highly trained and qualified professionals consist of 09 FCMAs, 15 ACMAs, 05 MBAs, AND 08M.Coms are working in this esteemed company.


In order to prepare annual account in timely manner quarterly review of accounts is undertaken

Quarterly comparison of actual verses budgeted expenditure is carried out to ascertain weakness and cost over-runs.

Timely payment to the vendor, supplier and contractors is affective tool for image building of OGDCL. To achieve this, internal procedure should be well defined which will reduce time in these payments.

To save time of the employees chasing their payments employee related payments should be excluded from the ambit of pre-audit.

All accountants should be given training on different accounting modules and chart of accounts. So that monopoly and dependence on few is eliminated.

Rotation of duties should be made at regular interval to improve the overall work output and to keep the interest of the employee intact.

Responsibility of clearing/correcting the entries should be fixed with the section generating the activities

A professional Accountant should be assigned the job to the review of AFEs with the collaboration of technical professionals for proper and effective control to avoid cost over runs.

For effective cost control, standardization of different stationery items and consumable is approved for purchasing in bulk from the manufacturer directly.

A good internal Control is a key to success for an organization, but in OGDCL there is a lack of internal control, which should be improved and implemented effectively.


1. Jac K. Shim and Joel G. Siegel, Schaum’s Series “Managerial

Finance”, McGraw Hill Inc.

2. Timothy J. Gallagher and Joseph D. Andrew, Jr., “Financial

Management”, International Edition. Prentice Hall.

3. Eugene F.Brigham and Michael C. Ehrhardt. “ Financial

Management“, I0th Edition,

4. M.Y. Khan and P. K. Jain, “Financial Management” 3rd

Edition, Tata McGraw Hill.

5. Van Horne, J.C. and J.M. Wachowicz, JR.11th Edition,

“Foundation of Financial Management” New Jersey:

Prentice-Hall, Inc. 1998.

6. Ministry of Petroleum and Natural Resource’s site.

7. www.ogdcl.com

8. www.google.com.pk

http://www.google.com.pk/

http://www.ogdcl.com/

Report on OGDCL

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