Can gas price reforms fuel investor returns in energy stocks?
Key Takeaways:
- Pakistan has awarded 13 new exploration blocks under the DGPC’s 2025 Bid Round.
- E&P companies’ cash flows have improved, enabling long-delayed drilling plans.
- Balochistan emerges as the new frontier, with over 80% of the new acreage awarded in the province.
After years of stagnation, Pakistan’s Exploration & Production (E&P) sector finally seems ready to turn a corner. With improving cash flows, a fresh round of exploration block awards, and rising drilling activity, the government’s efforts to reignite domestic energy exploration are starting to gain traction.
New exploration blocks set the tone for revival
In May 2025, the Directorate General of Petroleum Concessions (DGPC) provisionally awarded 13 onshore blocks, marking a clear push to expand domestic exploration. The winners? Industry giants like OGDC, MARI, PPL, and POL, who together secured the lion’s share of these blocks.
Notably:
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Of these, 9 blocks are in Balochistan, the country’s second-largest sedimentary basin—an area long overlooked due to security and logistical hurdles. The remaining 4 are spread across Sindh and Punjab.
With 33 blocks awarded in the past 34 months (compared to just 23 between FY15–22), the pace of exploration awards is accelerating meaningfully.
Drilling activity and discoveries are trending up
Encouragingly, this isn’t just about licensing—it’s translating into real activity on the ground.
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- In 10MFY25, 40 wells have been drilled, including 17 for exploration and 23 for development.
- The sector recorded 20 discoveries, up from 15 in FY24 and 11 in FY23.
- Listed E&P companies have spent an estimated US$362 million on E&P capex in 9MFY25—up over 50% year-on-year.
Though this spending remains below historical averages (US$500mn+ between FY15–20), the upward trend signals renewed confidence and capability.
The Balochistan basin deserves serious attention
Historically underexplored, Balochistan is now seeing aggressive block allocations. As per the Pakistan Petroleum Information Service (PPIS), the province holds an estimated 78 TCF of gas and 8.6 billion barrels of oil. Yet, it currently accounts for just 7.6% of total development and production acreage.
In 10MFY25 alone, 22,000 sq. km of exploration area in Balochistan was awarded, by far the largest in any single year.
This shift, supported by improving security and CPEC Phase-II projects, could help unlock vast reserves in a region that’s remained under the radar for far too long.
Liquidity, policy support, and security are driving confidence
Improved gas pricing has been a game-changer. Since FY23, consumer gas prices have risen nearly threefold. As a result, companies like OGDC and PPL are now receiving 105% and 93% of their billed amounts, respectively, compared to an average of just 75% and 64% between FY19–24.
This cash recovery has empowered these firms to restart postponed development strategies and venture into riskier, high-reward plays. With SIFC (Special Investment Facilitation Council) promoting resource investments and security steadily improving, the environment is now far more conducive for E&P companies to operate in difficult terrains like Balochistan and KPK.
A Sector Ready to Recharge
With fresh capital flowing in, exploration licenses being fast-tracked, and policy reforms finally bearing fruit, Pakistan’s E&P sector could be on the brink of a multi-year growth phase. For investors, this marks a potential inflection point—especially for those closely watching names like OGDC, MARI, PPL, and POL.
While challenges remain, the momentum is building, and the energy sector, once seen as sluggish and cash-strapped, is beginning to pulse with life again.
Source: AKD Securities Limited
⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →
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