Orient Petroleum Inc. (Pakistan Branch)

RATING REPORT | Dec-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
11-Dec-25 A A2 Stable Upgrade -
20-Dec-24 A- A2 Stable Maintain -
21-Dec-23 A- A2 Stable Maintain -
21-Dec-22 A- A2 Stable Maintain -
22-Dec-21 A- A2 Stable Maintain -
About the Entity

Orient Petroleum Inc. (Pakistan Branch) ('Orient Petroleum') operates in Pakistan as a branch office of a foreign entity and is engaged in the exploration, development, and production of oil and natural gas reserves.
Orient Petroleum is ultimately 100% owned by Mr. Hasan Ali Hashwani. The Board comprises four members, with Mr. Hasan Ali Hashwani chairing the Board and Mr. Kamran Ahmed heading Orient Petroleum as the CEO. They are assisted by a team of seasoned professionals.

Rating Rationale

Orient Petroleum Inc. (Pakistan Branch) ('Orient Petroleum') benefits significantly from its robust sponsor base, which maintains diversified interests across the energy value chain, including oil and gas exploration (Orient Petroleum Pty Limited, Zaver Petroleum), LPG distribution (OPI Gas), and hospitality (Hashwani Hotels). Orient Petroleum is actively involved in the exploration, development, and production of crude oil and natural gas, holding working interests in six production leases and seven exploration licenses. Its revenue mix is primarily derived from condensate (~34%), natural gas (~27%), LPG (~20%), and crude oil (~18%). Orient Petroleum has demonstrated strong revenue growth, posting an upward trajectory with YoY growth of ~11% during CY24 and ~15% during 6MCY25, supported by stable oil prices and consistent production levels. Business margins have notably strengthened with net profit margin reported at ~49.8% in 6MCY25 (6MCY24: ~18.5%), reflecting improved operational efficiency, stable market dynamics, and support from risk-adjusted recoverable reserves across its asset portfolio. The addition of production from the Waziristan block has further strengthened the business profile of Orient Petroleum. Orient Petroleum maintains a sound financial risk profile characterised by moderate leverage of ~36.2% as of 6MCY25 (6MCY24: ~57%), stable coverage metrics, and a strong working capital position. Future expansion plans involving development block wells necessitate a clearly defined financial metric to ensure manageable future working capital requirements. PACRA has upgraded Orient Petroleum's entity ratings backed by continued growth in its financial performance and position. Transparency, along with an effective and streamlined governance framework, is of utmost importance for Orient Petroleum as it works with regulated and sound partners (OGDCL, Mari Energies, Fatima Petroleum, POL, and AOC, etc.) in the upstream energy segment. This bodes well for Orient Petroleum, going forward. As Orient Petroleum plans to expand its offshore and onshore sites, its financial viability is expected to further improve. While sustaining financial discipline and enhancing Orient Petroleum's governance framework remain pivotal to the assigned ratings

Key Rating Drivers

The ratings are dependent on the sustained relative positioning of Orient Petroleum in the oil and gas exploration segment. Stability in the topline and profitability remains important. The ratings would take positive benefit from the increase in volumes handled by Orient Petroleum. Strict financial discipline, along with the Sponsor's support, is imperative to ratings, while improving the coverage ratios is paramount.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Orient Petroleum Inc. (Pakistan Branch)

rating analysis

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Profile
Legal Structure

Orient Petroleum Inc. (Pakistan Branch) ('Orient Petroleum') operates in Pakistan as a branch office of a foreign entity registered with SECP.  Its branch office is located in Islamabad.


Background

Occidental Pakistan Inc., a USA-based organization, has worked in Pakistan's oil and gas exploration segment since 1979 and made Pakistan’s largest oil discovery from its Dhurnal field in Potwar Basin, Punjab. In 1995, the company was acquired through Zaver Petroleum and was renamed Orient Petroleum Inc. Besides Orient Petroleum, other group entities include Orient Petroleum Pty Ltd. (OPPL), Zaver Petroleum Corporation (Pvt.) Ltd (ZPCL), OPI Gas (Private) Limited, and Hashwani Hotels Limited.


Operations

Orient Petroleum is engaged in the exploration, development, production, and sale of crude oil, natural gas, and liquefied petroleum gas (LPG). Orient Petroleum is producing from six blocks, and production is assigned to gas companies and refineries, being the nominee of Govt. of Pakistan. In addition, Orient Petroleum holds working interests in seven exploration licenses located all across Pakistan.


Ownership
Ownership Structure

The ownership of Orient Petroleum ultimately lies 100% with Mr. Hasan Ali Hashwani.


Stability

Orient Petroleum's ownership has remained stable over the years.



Business Acumen

The Group, with over 40 years of experience in oil & gas exploration and production, demonstrates strong business acumen. The Group also operates a chain of Marriott hotels in Pakistan.



Financial Strength

The Group holds considerable financial footing to support Orient Petroleum in distress, if need be.



Governance
Board Structure

Overall control of Orient Petroleum vests with a four-member Board (BoD), comprising three Executive Directors and one Non-Executive Director.


Members’ Profile

Mr. Hasan Ali Hashwani currently chairs the Board and brings an overall experience of more than two decades. He has been associated with Orient Petroleum Inc. since 1999 in different roles. Mr. Kamran Ahmed, an Executive Director, has more than four decades of experience in investment banking and the oil & gas industry. Other board members include Mr. Ludovic De Labrusse and Mr. Alex Bloch Jorgensen, each having over 20 years of international experience.


Board Effectiveness

The Board plays an active role in supervising and overseeing management to make informed decisions, thereby contributing to achieving Orient Petroleum's objectives as one of the active players in Pakistan’s E&P sector. The Board meetings are convened as per the requirement, but minimum once in a quarter. 


Financial Transparency

The External Auditors of Orient Petroleum, M/s Grant Thornton Anjum Rahman, have expressed an unqualified opinion on the financial statements for CY 2024. The firm is QCR-rated and listed on SBPs 'A' category panel.


Management
Organizational Structure

Orient Petroleum operates through 13 departments: Reservoir Engineering, Exploration, Surface Operations, Drilling, Petroleum Engineering, HSE, Commercial, Finance, Admin, MIS, HR, Internal Audit, and Procurement & Supply Chain. All departmental heads report to the CEO, who then reports to the Board.



Management Team

Mr. Kamran Ahmed, the CEO, has more than four decades of experience in investment banking and the oil & gas industry. He has been a part of Shell Pakistan and Islamic Investment Bank Ltd and an integral part of the Group for more than two decades. Mr. Tauqeer Ahmad Nayyar (VP Finance & Corporate Affairs), Mr. Shahid Zahidi (VP Exploration & Reservoir), Mr. Akbar Ali Khan (GM Operations) and Mr. Naeem Ehsan (GM Drilling) bring together substantial experience in oil & gas upstream industry. Rest of the management team comprises of seasoned professionals, each bringing a range of expertise in their respective fields.


Effectiveness

The management at Orient Petroleum plays a vital role in empowering the operational team to achieve targeted outcomes and ensuring a structured decision-making process. However, there are no committees established at the management level.


MIS

Oracle ERP has been implemented at Orient Petroleum, which provides real-time end-to-end integrated solutions for all operations, including financial, purchasing, inventory, HRMS, allocation, payroll, and approval management systems. Orient Petroleum has a dedicated team of professionals for in-house development, customization, and maintenance of Oracle applications for Oil & Gas specific requirements.



Control Environment

Orient Petroleum has placed an effective internal audit department, forming SOPs and ensuring their compliance. The department directly reports to the Board.


Business Risk
Industry Dynamics

Pakistan relies significantly on imports to meet its demand for crude oil, with recoverable crude oil reserves estimated at ~72.5mln MT as of Jun-24. During 2MFY25, total crude oil imports in terms of value were recorded at USD~945mln (2MFY24: USD~456mln). Whereas, in volumetric terms, crude oil imports stood at ~1.7mln MT (2MFY24: ~0.8mln MT). The crude prices displayed mixed trends due to factors like low demand from China, excess supply, the Israel-Gaza conflict, loose FED monetary policy, etc. However, going forward, prices of crude oil are expected to rise due to ongoing tension between Israel and Iran. Subdued demand in tandem with structural deficiencies, in terms of technology obsolesce and low storage capacities is expected to keep capacity utilization under check. Therefore, utilizing the services of entities providing seismic acquisition services is going to improve the efficiency of oil exploration companies. While improved pricing is reasonably expected to support financial performance, it is subject to crude and POL product price movements in the international market.


Relative Position

At present, there are 14 foreign and 10 local companies operating in Pakistan. Market share is dominated by the state-owned Oil and Gas Development Company Limited (OGDCL). The other large-tier companies comprise Pakistan Petroleum Limited, Mari Energies Limited, and Pakistan Oil Field, etc. Mid-tier companies include MOL Pakistan and Orient Petroleum.


Revenues

Orient Petroleum's revenue mix during CY24 comprises Condensate ~34% followed by Gas ~27%, LPG ~20% and Crude oil ~18%. During CY24, Orient Petroleum reported an uptick of ~11% in revenue due to volumetric growth. During 6MCY25, Orient Petroleum reported an uptick of ~15%, primarily from a value-driven increase. Going forward, revenues are expected to increase with an increase in the network of wells.



Margins

During CY24, the gross margin of Orient Petroleum remained stable at ~76.4% (CY23: ~76%). However, the operating profit margin declined significantly to 39% during CY24 (CY23: ~49%) due to an increase in admin and general expenses. However, net profit margin increased to ~55% (CY23: ~50%) due to the realization of Chanda concession purchase. During 6MCY25, Orient Petroleum's gross profit margin was reported at ~72.4% (6MCY24: ~78.3%) due to an increase in production expenses, whereas operating margin and net margin were reported at ~35.8% (6MCY24: ~45.1%) and ~49.8% (6MCY25: ~18.5%), respectively. The increase in net profit margin is due to an increase in non-operating income. Margins are expected to follow a similar trend going forward.



Sustainability

The management is expanding its network of wells in current development blocks to further strengthen its operations. PACRA has upgraded Orient Petroleum's entity ratings, backed by continued growth in its financial performance and position. Transparency, along with an effective and streamlined governance framework, is of utmost importance for Orient Petroleum as it works with regulated and sound partners (OGDCL, Mari Energies, Fatima Petroleum, POL, and AOC, etc.) in the upstream energy segment. This bodes well for Orient Petroleum, going forward.


Financial Risk
Working capital

As of CY24, Orient Petroleum's net working capital reduced to ~140 days (CY23: ~152 days) due to a decrease in trade receivable days, standing at ~196 days (CY23: ~206 days) as the trade receivables have decreased by ~29%. Inventory days increased slightly to ~2 days (CY23: ~1 day), whereas trade payable days have increased to ~58 days (CY23: ~56 days). As of 6MCY25, the net working capital stands at ~106 days (6MCY24: ~142 days). Orient Petroleum holds a stable borrowing cushion on its balance sheet. The working capital cycle will remain stable going forward. 


Coverages

As of CY24, the free cash flow from operations (FCFO) experienced a notable increase, marking a growth of about ~74% primarily because of increased PBT. This uptick in FCFO contributed to an improved interest coverage ratio, reaching ~4.4x in CY24 (CY23: ~3.7x). As of 6MCY25, Orient Petroleum reported an uptick of ~5.5% in FCFO, which resulted in an interest coverage ratio of ~4.4x (6MCY24: ~2.2x), an improvement attributed to a decrease in finance cost. Coverages are expected to remain stable going forward. 


Capitalization

Orient Petroleum's capital structure exhibited fluctuating patterns, with the debt-to-equity ratio at ~41% as of CY24 (CY23: ~46%). The decrease in the debt-to-equity ratio is primarily attributed to an increase in equity. The shareholders' equity reported an uptick of ~41% during CY24 due to an increase in unappropriated profit. As of 6MCY25, Orient Petroleum reported a debt-to-equity ratio of ~36%. (6MCY24: ~57%). The decrease in leverage is due to a decrease in borrowings. The leveraging is expected to depict a similar pattern, going forward. 
 
 

Dec-25

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Orient Petroleum Inc. (Pakistan Branch)

financial summary

(PKR mln)

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Jun-25
6M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
Management Audited Audited Audited
A. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 14.8% 10.7% 25.6% 77.9%
b. Gross Profit Margin 72.4% 76.4% 76.0% 76.5%
c. Net Profit Margin 49.8% 55.0% 49.8% -14.2%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 47.9% 118.3% 37.5% 64.4%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 38.6% 46.1% 52.4% -12.5%
2. Working Capital Management
a. Gross Working Capital (Average Days) 147 198 208 147
b. Net Working Capital (Average Days) 106 140 152 84
c. Current Ratio (Current Assets / Current Liabilities) 1.3 1.2 1.5 1.1
3. Coverages
a. EBITDA / Finance Cost 3.7 4.2 2.7 2.9
b. FCFO / Finance Cost+CMLTB+Excess STB 2.0 2.0 1.5 1.4
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 1.4 0.8 1.3 2.2
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 36.2% 40.9% 45.5% 50.8%
b. Interest or Markup Payable (Days) 0.0 0.0 0.0 0.0
c. Entity Average Borrowing Rate 17.6% 33.5% 28.1% 25.2%

Dec-25

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Orient Petroleum Inc. (Pakistan Branch)

rating scale

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Dec-25

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Orient Petroleum Inc. (Pakistan Branch)

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
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    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
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  4. Independence & Conflict of Interest
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    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  5. Monitoring and Review
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  6. Probability of Default
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Dec-25

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