Strategic Business Plan
MPCL has positioned itself for sustainable growth in the foreseeable years ahead. Acquisition of new as well as additional interests in exploration/production blocks, as well as evaluating other possible opportunities of high reward frontier exploration acreages both locally and internationally will help the company to increase the reserves and enhance the production revenues and returns in the long-term. MPCL is evaluating farm-in opportunities in overseas exploration and producing assets in Middle East, Far East and Africa to augment its reserve led growth strategy and sustainable future growth. Negotiations are underway for farm-in/acquire working interest in several other prospective blocks of different E&P companies at home and abroad.
The Strategic Business Plan for 2019 – 20 will serve as a road map for MPCL’s targets for the year. The Management has set these targets in line with Company’s long term strategic focus. The Company shall primarily be pursuing exploration-led growth strategy backed by optimized production to achieve the same, the Business Plan is especially instrumental towards;
- Providing a framework for setting strategic direction of the Company.
- Providing a basis for more detailed planning (setting high level corporate objective & targets)
- Aligning corporate resources and energies towards common objectives
- Assisting benchmarking & corporate performance monitoring.
- Explaining the business objectives to all levels of management in order to inform, motivate & involve them.
- Stimulating change and become building block for next year plan.
The strategic business plan of MPCL is quarterly reviewed by senior management. Using a plan versus actual model for monitoring progress against each objective, the senior management is apprised of the actual standing of the Company vis-à-vis its planned performance. The company has made significant progress in its ongoing projects and successfully achieved the targets set for the year.
In addition to its upstream business, diversification is at the core of Company’s strategic planning. The Company with its far-sightedness believes in continuous evolution and is actively considering multiple avenues and projects for diversification. These include both horizontal and vertical integration projects, i.e., energy infrastructure, power and mining etc.
Overall Strategic and Management Objectives:
Despite relatively stable oil prices, the Company’s management is continuously reviewing and adjusting its strategic focus to optimize its revenue streams. Diversification shall remain an important part of business strategy in the coming years, besides serious efforts to expand Company’s reach to E&P sector outside Pakistan. In this regard, the Company has outlined the following strategic parameters for it business strategy;
- Short-Term: The Company to focus on the core business with the aim is to expand its exploration portfolio and to increase its revenue streams by enhancing production through optimization of existing fields, brining on production new discoveries and reduction in operating cost.
- Medium-Term: By venturing into untapped frontier regions of Pakistan, the company plans to focus on investments in high potential blocks to achieve target reserves replacement ratio. The company also plans to add producing assets or near field development projects in its portfolio to sustain growth. Similarly, in short to medium term MPCL plans to actively pursue oil and gas interests outside Pakistan. Diversification shall also remain the corner stone of its strategy in the coming years.
- Long-Term: Keeping in view the constantly changing environment of the global energy sector, MPCL plans to cater to the expected shift in the global energy sector by redefining its business model. In the long term, the Company plans to significantly modify its existing business model by focusing on renewables options.
Management Control System (MCS)
To ensure achievement of corporate goals within the stipulated time period, a Management Control System (MCS) is used to enable the management to monitor and evaluate the progress for mid-course corrections in case of slippages from the planned targets.
Key Performance Indicators (KPIs):
MPCL’s business planning system is based on key performance indicators. The Company has implemented specialized management control systems for reviewing its past performance vis-à-vis a set of ‘look behind’ key performance indicators (KPIs). The formulation of following year’s business plan draws input from the preceding year’s performance on the ‘look-behind’ KPIs listed in the following:
- Finding and Development Cost per BOE of new reserves added
- Reserves Replacement Ratio (%)
- Exploration success rate
- Drilling cost per meter
- Production cost per BOE produced
- Production growth (%)
- EBITDA per BOE production
- EBITDA per employee
- Petro-technical professionals per MMBOE production
- Reserve growth rate (%)
- Reserve to production rate
Management Strategies to Meet the Objectives
In order to ensure continual monitoring of Company’s progress/performance, the Management has institutionalized a Company-wide mechanism consisting of;
- Monthly Coordination Meetings (MCMs) to apprise/update on overall operations of the Company covering all financial, operational and strategic KPIs which provide a complete overview of the Company’s overall health, performance and industry/sector ranking. MCMs are chaired by the Managing Director and attended by all Heads of Departments and Consultants.
- Open Forum Sessions with Departmental Heads to engage the entire Company in brainstorming sessions for eliciting suggestions for improvement and passing it across to different departments through their departmental heads.
- Policy Committee Meetings (PCMs) to discuss and decide on all policy matters. PCMs are chaired by the Managing Director and attended by all General Managers. PCMs are held on as and when required basis.
- Technical Committee Meetings (TCMs) to discuss all exploration, operations and reservoir management related issues. TCMs are chaired by the Managing Director and attended by GMs of all Technical Departments as well as other Technical professionals. TCMs are held on required basis.
- Pre-MCM Follow-up Meetings to review the progress of MD Instructions and resolve any coordination issues. Pre-MCM Follow-up Meetings are chaired by GM Corporate Affairs and attended by second-in-command from each department.
While Company’s progress is scrutinized during these sessions, the future action plans are also outlined and responsibilities for their execution are also assigned during the subject meetings.
Analysis of Company’s Performance:
- Core Business:
In FY 2018-19, against the reserves addition target of 55.28 MMBO, the Company managed to add 5.83 MMBO from its operated and Non-Operated blocks, the remaining target has been carried forward to 2019-20. During the year, the Company made hydrocarbon discoveries at Daharian-1 in Ghauri block, Bolan East in Ziarat block and Parwaaz-1 in Mari D&PL area.
Moreover, the Company managed to complete appraisal wells Tipu-2 and Shaheen-2. During the year, the Company successfully implemented the biggest and most ambitious HRL Phase-X development project to enhance HRL plateau period. The Project would help the Company to ensure sustainable gas supply to fertilizer sector and contributing to the food security of the Country.
MPCL’s highest gas production rate during 2018-19 was 769 MMSCFD on December 30th, 2018. Currently, the Company daily average gas production is 713 MMSCFT. MPCL strengthened its position as the second largest producer of natural gas in the Country after OGDCL (in terms of volumes).
MPCL’s financial performance in FY 2018-19 remained impressive. The Company outperformed its financial targets by enhancing production and contributing meaningfully in meeting the oil and gas requirements of the Country.
In FY 2018-19, the Company’s net profit remained Rs. 24.33 billion as compared to Rs 15.37 billion last year. The Gross sales reached Rs. 117.54 billion as compared to Rs. 100.04 billion in 2017-18. The Company’s net sales reached Rs. 59.45 billion as compared to Rs. 40.68 billion in the preceding year. Company’s net year on year sales in FY19 increased by 46.15%, while the bottom-line increased by 58%.
- Internal Processes:
In 2018-19, the Company managed to implement the followings initiatives in order to improve its business processes;
- Introduction and Implementation of Competency Management System (CMS) Project for Non-Technical Professionals. The Phase-1 of the project was successfully completed in 2017-18.
- Implementation of SCADA at TIPU Wells, SML/SUL Wells, Shaheen and Shahbaz at CMF-II.
- Implementation of reliable and efficient materials / inventory management system to ensure real-time movement and visibility of inventory.
- The Company managed to formalize and streamlined its Risk Management practices which facilitate the concerned departments to analyse and treating the existing as well as potential risks faced by the Company in all operational areas.
The Company managed to bring down Total Recordable Case Frequency (TRCF) to 0.09 against the target of 0.40.