Karachi: The Oil and Gas Development Company (OGDC) has reaffirmed its commitment to expansion and financial growth, projecting a 48% total return by March 2027. This includes a 5% dividend yield, despite a recent 12.1% decline in stock price due to concerns over the Reko Diq project. The company has already delivered a 19% return since being highlighted as a top pick in a 2026 strategy report.
According to JS Global, OGDC's positive outlook is driven by several strategic initiatives. The company's increased focus on frontier regions such as KPK and Balochistan is expected to yield promising prospects. The company reported a significant discovery at Baragzai, KPK, delivering oil flows of 9,480 barrels per day and gas volumes of 24.3 million cubic feet per day. Moreover, efforts under the International Monetary Fund program aim to address the gas sector's circular debt, which stands at Rs501 billion.
OGDC anticipates a 37% earnings growth by fiscal year 2027, attributed to volume recoveries and new discoveries following the easing of production curtailments. The redirection of LNG cargoes is expected to boost local production, with oil and gas output projected to normalize significantly. Additionally, the recent upturn in metals prices enhances the economic viability of the Reko Diq project, despite ongoing security concerns.
The company's stock is valued with a target price of Rs419 per share, based on blended valuation methods. Key risks to this outlook include potential security challenges, delays in the Reko Diq project, and fluctuations in global crude oil prices.
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