a single investor cannot submit more than one …offer for sale document by the privatisation...

ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NET-WORTH INDIVIDUAL INVESTORS

THE ELIGIBLE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID APPLICATION WHICH IS BENEFICIALLY

PLACED (FULLY OR PARTIALLY) BY PERSONS OTHER THAN THE ONE NAMED THEREIN SHALL BE DEEMED TO BE A

CONSOLIDATED BID.

THE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS OFFER

FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS GIVEN AT PARAGRAPH 5.14, BEFORE MAKING ANY INVESTMENT DECISION.

A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATION EXCEPT IN THE CASE OF REVISION OF

BID. IF AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATION THEN ALL SUCH APPLICATIONS SHALL BE

SUBJECT TO REJECTION. ADDITIONALLY, MAKING OF CONSOLIDATED BIDDING APPLICATION IS ALSO PROHIBITED

AND SHALL BE SUBJECT TO REJECTION

PLEASE NOTE THAT THIS IS AN OFFER FOR SALE DOCUMENT (OFSD) FOR BOOK BUILDING AND DOES NOT CONTAIN A FLOOR

PRICE FOR THE OFFER. FOR AVOIDANCE OF DOUBT THERE WILL BE NO SUBSEQUENT OFFER FOR SALE DOCUMENT AND THE FLOOR PRICE AFTER APPROVAL BY PC BOARD & CCOP WILL BE NOTIFIED THROUGH ANNOUCEMENT BY STOCK EXCHANGES

AND/OR PLACED ON THEIR WEBSITES AND ON THE WEBSITES OF ARIF HABIB LIMITED, FOUNDATION SECURITIES (PVT.)

LIMITED AND BMA CAPITAL MANAGEMENT LIMITED AFTER MARKET CLOSE OF MARKET HOURS ON JUNE 25th,2014

PAKISTAN PETROLEUM LIMITED

OFFER FOR SALE DOCUMENT

The Present Offer comprises of 70,055,000 Ordinary Shares (3.55% of the Total Paid-Up Capital) at a Floor Price

which shall be at a Premium to the Face Value of PKR 10/- per share

THE OFFER IS BEING MADE THROUGH THE BOOK BUILDING ONLY TO THE INSTITUTIONAL

INVESTORS AND HIGH NETWORTH INDIVIDUAL INVESTORS

THIS IS NOT A PROSPECTUS BY PAKISTAN PETROLEUM LIMITED (THE COMPANY) BUT AN

OFFER FOR SALE DOCUMENT BY THE PRIVATISATION DIVISION, MINISTRY OF FINANCE,

REVENUE, ECONOMIC AFFAIRS, STATISTICS AND PRIVATISATION, THE GOVERNMENT OF

PAKISTAN (THE OFFEROR) THROUGH THE PRIVATISATION COMMISSION OF PAKISTAN, FOR

OFFER FOR SALE OF SHARES OUT OF ITS SHAREHOLDING IN THE COMPANY.

BIDDING PERIOD DATES: From June 26th

, 2014 to June 27th

, 2014 (BOTH DAYS INCLUSIVE)

FROM: 9:00 A.M. TO 5:00 P.M.

JOINT LEAD MANAGERS

JOINT BOOK RUNNERS

Date of Publication of this Offer for Sale Document: 22nd

June 2014

For further queries you may contact: Habib Bank Limited - Mr. Imran Sherani; P: +92 (21) 3243 9400; E: [email protected]; Bank Alfalah

Limited – Mr. M. Zeeshan; P: +92 (21) 111 777 786 Ext 2126;E: [email protected]; Arif Habib Limited – M. Rafique Bhundi; P: +92 (21) 111

245 111 Ext 232;E: [email protected]; Foundation Securities (Pvt.) Limited – Mr. Saifuddin Shamsi; P: +92 (21) 111 000 375 Ext 305 ;E:

[email protected]; BMA Capital Management Limited – Mr. Usman Saeed; P: +92 (21) 111 262 111 Ext 2043; E: [email protected]

mailto:[email protected]





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STATEMENT ON OFFEROR’S ABSOLUTE RESPONSIBILITY

The Offeror, having made all reasonable inquiries, accepts responsibility for the disclosures made in this

Offer for Sale Document and confirms that:

this Offer for Sale Document contains all information with regards to the Offeror, the Company and

the Offer, which is material in the context of the Offer and nothing has been concealed;

the information contained in the Offer for Sale Document is true and correct to the best of our

knowledge and belief;

the opinions and intentions expressed herein are honestly held; and

there are no other facts and information, the omission of which makes this document as a whole or

any part thereof misleading.

For and on behalf of Offeror

-sd-

________________________

-sd-

________________________

Sardar Ahmad Nawaz Sukhera Malik Muhammad Akram Khan

Additional Secretary (Incharge)

Privatisation Division

Ministry of Finance, Revenue, Economic Affairs,

Statistics and Privatisation

Government of Pakistan

Director General (MNR & P)

Privatisation Commission




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GLOSSARY OF TECHNICAL TERMS

AHL Arif Habib Limited

BAFL Bank Alfalah Limited

BBL Barrels

BMA Capital BMA Capital Management Limited

BR The Joint Book Runners

CCOP Cabinet Committee on Privatisation

CDA Central Depositories Act, 1997

CDCPL The Central Depository Company of Pakistan Limited

CDS Central Depository System

CNIC Computerized National Identity Card

Commission / SECP Securities and Exchange Commission of Pakistan. “SECP” and

“Commission” have been used interchangeably in this document

Company / PPL Pakistan Petroleum Limited. “PPL” and “Company” have been

used interchangeably in this document

Exchanges Karachi Stock Exchange Limited, Lahore Stock Exchange Limited

and Islamabad Stock Exchange Limited

FDI Foreign Direct Investment

FSL Foundation Securities Limited

FX Foreign Exchange

GOP Government of Pakistan

HBL Habib Bank Limited

HNWI High Net Worth Individual

ITO Income Tax Ordinance, 2001

KIBOR Karachi Inter Bank Offered Rate

MMBOE Million Barrels of Oil Equivalent

MMSCF Million Standard Cubic Feet

MMSCFD Million Standard Cubic Feet per Day

NGL Natural Gas Liquids

NOC No Objection Certificate

Offer Offer for Sale of Shares of the Company by the Offeror

Offeror Government of Pakistan

OFS Offer for Sale

OFSD Offer for Sale Document

Ordinance The Companies Ordinance, 1984

PC Privatisation Commission

PKR Pakistan Rupee(s)

SCRA Special Convertible Rupee Account

TCF Trillion Cubic Feet

TOE Tonnes of Oil Equivalent

TREC Trading Right Entitlement Certificate

USD US Dollars

WHT Withholding Tax

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DEFINITIONS

Application Money The total amount of money payable by a successful Bidder which is

equivalent to the product of the Strike Price and the number of shares

to be allocated.

Bid An indication to make an offer during the Bidding Period by a

Bidder to subscribe to the Ordinary Shares of Pakistan Petroleum

Limited at or above the Floor Price, including all the revisions

thereto.

Bidder Any eligible prospective investor who makes a Bid pursuant to the

terms of the OFSD and the Bidding Form.

Bid Amount The total amount of the Bid which is equivalent to the product of the

Bid price and the number of shares bid for.

Bid Collection Centre Pre-determined places where applications for bidding of shares are

collected by the Book Runners on behalf of the Offeror and may

include offices of Corporate Brokerage Houses, Scheduled Banks,

Development Financial Institutions and Investment Finance

Companies, subject to appointment of these institutions as agent by

the Book Runners through an agreement in writing for the purpose,

with the consent of the Offeror. For this Offer, addresses of the Bid

Collection Centers are provided at paragraph 2.5(b)(xiv).

Bidding Form The form prepared by the Offeror for the purpose of making Bids

which will be considered as the application for subscription of

Ordinary Shares.

Bidding Period

The period during which Bids for shares of the Company shall be

made by Institutional and HNWI Investors. The Bidding Period

commences on June 26th, 2014 and ends on June 27

th 2014 (daily

from 9:00 a.m. to 5:00 p.m.) both days inclusive.

Bidding Process Ending Date The date after which the Book Runners will not accept any Bid for

the book building portion of the Offer which shall be the last date of

the Bidding Period.

Bidding Process Starting Date The date on which the Book Runners shall start accepting Bids for

the book building portion of the Offer.

Book Building A mechanism of price determination through which indication of

interest for subscription of shares offered by the Offeror is collected

from Eligible Investors. Through this process a book is built which

gives an idea of demand for the shares at different price levels. The

Strike Price is determined based on the price at which demand for

shares at the end of Book Building period is sufficient for the

subscription.

Book Building Account

An account opened by the Offeror with the Collection Bank(s). The

Bidder will pay the Margin Money/Bid Amount through demand

draft or pay order in favor of this account as per the instructions

given in paragraph 2.11 and the balance of the Application Money, if

any, shall be paid through this account after successful allocation of

shares under Book Building.

Dutch Auction Method The method through which the Strike Price is determined. Under this

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method, all the bids are arranged in descending order along with the

number of shares bid for at each price level and the cumulative

number of shares bid for. The strike price is determined by lowering

the price to the extent that the total shares the Offeror intends to offer

through the Book Building process are subscribed.

Floor Price

The minimum price set by the Offeror for the Offer for Sale of

Shares. This will be notified through an announcement through the

Stock Exchanges and/or placed on their website and on websites of

the Joint Book Runners after close of market hours on June 25th,

2014 after approval of PC Board and CCOP. A Bid placed below

the Floor Price will not be entertained by the Joint Book

Runners.

High Net Worth Individual

(HNWI)

Individual investor who bids for shares of the value of PKR

1,000,000/- or above.

Institutional Investors Both local and foreign Institutional Investors.

Joint Book Runners Arif Habib Limited, Foundation Securities (Pvt.) Limited and BMA

Capital Management Limited.

Joint Lead Managers Habib Bank Limited, Bank Alfalah Limited, Arif Habib Limited,

Foundation Securities (Pvt.) Limited and BMA Capital Management

Limited.

Legal Advisor Orr Dignam & Co.

Limit Bid The Bid for a specified number of shares at the Limit Price.

Limit Price The maximum price a prospective Institutional Investor or HNWI

Investor is willing to pay for a share under the Book Building

process.

Margin Money The partial or total amount, as the case may be, paid by a Bidder at

the time of making a Bid.

Offeror The Government of Pakistan.

Offer The present Offer comprises of 70,055,000 Ordinary Shares is being

offered through a Book Building Mechanism to Institutional

Investors and HNWI Investors at a Floor Price which shall be at a

Premium to the Face Value of PKR 10/- per share (the “Offer”). The

Offer constitutes 3.55% of the total paid-up capital of the Company.

Offer Price The price finalized by the Offeror with the approval from the PC

Board & CCOP after completion of the Book Building process, at

which the shares are offered to the successful Bidders.

Ordinary Shares Ordinary Shares of Pakistan Petroleum Limited having face value

PKR 10.00/- each unless otherwise specified in the context thereof.

PPL Operated The fields/blocks where PPL is the Operator. Operator means

the entity designated to carry out the petroleum exploration,

development, production and other activities in accordance

with joint operating agreements entered into with other

partners, if any.

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Partner Operated The fields/blocks where PPL holds an interest but it is not the

Operator.

PC Board PC Board shall have the meaning assigned to the Board in the

Privatisation Ordinance, 2000

Privatisation Privatisation shall have the meaning assigned to the same in the

Privatisation Ordinance, 2000

Reserve Replenishment Ratio It is the ratio of the amount of hydrocarbons added to a company's

proven reserves to the total amount of the hydrocarbons produced

during the same year.

Step Bid

Strike Order

A series of limit bids at increasing prices. In case of step bid, the

amount of any step shall not be less than PKR 250,000/-

The Bid for a specified number of shares at the Strike Price to be

determined through the Book Building process.

Strike Price

The price of share determined/discovered on the basis of Book

Building process in the manner provided in the Listing Regulations

of the Exchanges.

http://www.investorwords.com/205/amount.html

http://www.investorwords.com/17761/reserves.html

http://www.investorwords.com/11320/total.html

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TABLE OF CONTENTS

Part Content Page

1 APPROVALS AND LISTING ON THE EXCHANGES .............................................................. 8

2 BOOK BUILDING PROCEDURE .............................................................................................. 12

3 SHARE CAPITAL AND RELATED MATTERS ....................................................................... 27

4 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES ............... 33

5 HISTORY AND PROSPECTS ..................................................................................................... 34

6 FINANCIAL INFORMATION ..................................................................................................... 44

7 MANAGEMENT OF THE COMPANY ...................................................................................... 67

8 MISCELLANEOUS INFORMATION ........................................................................................ 77

9 BIDDING FORM OF PAKISTAN PETROLEUM LIMITED .................................................. 80

10 SIGNATORIES TO THE OFFER FOR SALE DOCUMENT .................................................. 81

11 MEMORANDUM OF ASSOCIATION ..................................................................................... 82

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PART 1

1 APPROVALS AND LISTING ON THE EXCHANGES

1.1. APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities & Exchange Commission of Pakistan (“SECP” or the “Commission”)

as required under section 62 read with section 57(1) of the Ordinance has been obtained by the

Offeror for the issue, circulation and publication of this Offer for Sale Document.

DISCLAIMER:

IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP

DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF

THE COMPANY AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE

CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED

WITH REGARDS TO THEM BY THE OFFEROR IN THIS OFFER FOR SALE

DOCUMENT.

SECP HAS NOT EVALUATED QUALITY OF THE OFFER AND ITS APPROVAL FOR

ISSUE, CIRCULATION AND PUBLICATION OF THIS OFFER FOR SALE DOCUMENT

SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE

PUBLIC/INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT DUE

DILIGENCE AND ANALYSIS REGARDING THE QUALITY OF THE OFFER BEFORE

BIDDING / SUBSCRIBING.

1.2. CLEARANCE OF THE OFFER FOR SALE DOCUMENT BY THE EXCHANGES

The OFSD has been cleared by the Karachi Stock Exchange Limited (“KSE”), Lahore Stock

Exchange Limited (“LSE”) and Islamabad Stock Exchange Limited (“ISE”) (collectively referred

to as the “Exchanges”), in accordance with the requirements of its Listing Regulations.

DISCLAIMER:

• THE EXCHANGES HAVE NOT EVALUATED THE QUALITY OF THE OFFER,

AND THEIR CLEARANCE SHOULD NOT BE CONSTRUED AS ANY

COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT

THEIR OWN INDEPENDENT INVESTIGATION AND ANALYSIS REGARDING

THE QUALITY OF THE OFFER BEFORE SUBSCRIBING.

• THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT

SOLICITATION BY THE EXCHANGES.

• THE CONTENTS OF THIS DOCUMENT DO NOT CONSTITUTE AN INVITATION

BY THE EXCHANGES TO INVEST IN SHARES OR SUBSCRIBE FOR ANY

SECURITIES OR OTHER FINANCIAL INSTRUMENT, NOR SHOULD IT OR ANY

PART OF IT FORM THE BASIS OF, OR BE RELIED UPON IN ANY CONNECTION

WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF THE

EXCHANGES.

• IT IS CLARIFIED THAT INFORMATION IN THIS OFFER FOR SALE DOCUMENT

SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY

THE EXCHANGES AND MUST NOT BE TREATED AS A SUBSTITUTE FOR

SPECIFIC ADVICE.

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• THE EXCHANGES DISCLAIM ANY LIABILITY WHATSOEVER FOR ANY LOSS

HOWEVER ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANY

ONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO,

INACCURACIES, INCOMPLETENESS AND/OR MISTAKES, FOR DECISIONS

AND/OR ACTIONS TAKEN, BASED ON THIS DOCUMENT.

• THE EXCHANGES NEITHER TAKE RESPONSIBILITY FOR THE CORRECTNESS

OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY OF THE OFFEROR TO

FULFILL ITS OBLIGATIONS THEREUNDER.

• ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE

SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT.

1.3. FILING OF OFFER FOR SALE DOCUMENT AND OTHER DOCUMENTS WITH

THE REGISTRAR OF COMPANIES

On behalf of the Offeror, the Company has filed with the Registrar of Companies, Companies

Registration Office (“CRO”), Karachi, as required under Sections 57(3) and (4) of the Ordinance,

a copy of this OFSD signed by the authorized signatories of the Offeror, together with the

following documents attached thereto:

a) Letter dated May 13th, 2014 from the Auditors of the Company, M/s. Ernst & Young Ford

Rhodes Sidat Hyder Chartered Accountants consenting to the publication of their names in the

OFSD, which contains in Part 6 certain statements and reports issued by them as experts

(which consent has not been withdrawn), as required under Section 57(5) of the Ordinance.

b) Written confirmations of the Legal Advisor to this Offer and the Bankers to this Offer,

mentioned in this OFSD consenting to act in their respective capacities, as required under

Section 57(5) of the Ordinance.

c) Consents of the Directors, the Chief Executive and the Company Secretary of the Company

who have consented to their respective appointments being made and their having been named

or described as such Directors, Chief Executive and Company Secretary in this OFSD, as

required under Section 57(3) of the Ordinance, read with sub-clause (1) of clause (4) of Section

1 of Part 1 of the Second Schedule to the Ordinance.

Note: Material public information has been disclosed by the Company from time to time in the

capacity of a listed company.

1.4. LISTING ON THE EXCHANGES

The Company is already listed on all the three stock exchanges of the country viz. a viz. the

Karachi Stock Exchange Limited, Lahore Stock Exchange Limited and Islamabad Stock Exchange

Limited.

The Market price of Company‟s‟ shares as on June 20th, 2014 stood at PKR 210.99 per share. The

minimum and maximum price during last one year stood at PKR 173.38/- per share (on June 24th,

2013) and PKR 245.61/- per share (on March 11th, 2014) respectively.

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1.5. CERTIFICATE BY REPRESENTATIVES OF THE OFFEROR

We being the representatives of the Offeror certify that the OFSD constitutes a full, true and plain

disclosure of all material facts relating to the shares being offered through this OFSD and that

nothing has been concealed.

The information provided and disclosures made in this OFSD contain no misleading material.

For and on behalf of the Offeror

-sd-

________________________

-sd-

________________________




Ministry of Finance, Revenue, Economic

Affairs, Statistics and Privatisation







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1.6. CERTIFICATE BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL

OFFICER OF PAKISTAN PETROLEUM LIMITED

We, the undersigned, do hereby solemnly affirm and state that we have reviewed the Offer for Sale

Document of Pakistan Petroleum Limited and that to the best of our knowledge and belief, the

Company related information given in the Offer for Sale Document is disclosed correctly and

fairly.

For and on behalf of

-sd-

________________________

-sd-

________________________

Sadiqain Haider Asim Murtaza Khan

Acting Chief Financial Officer

Pakistan Petroleum Limited

Chief Executive Officer


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PART 2

2 BOOK BUILDING PROCEDURE

2.1. BRIEF OFFER STRUCTURE

The Present Offer

The present Offer comprises of 70,055,000 Ordinary Shares being offered through a Book Building

Mechanism to Institutional Investors and HNWI Investors at a Floor Price which shall be at a

Premium to the Face Value of PKR 10/- per share (the “Offer”). The Offer constitutes 3.55% of

the total paid-up capital of the Company (5% of GOP shareholding in the Company)1.

2.2. BOOK BUILDING PROCEDURE

Book Building is a process whereby investors bid for a specific number of shares at various prices.

The Offeror shall set the Floor Price after approval from PC Board and CCOP which is the lowest

price an investor can bid at. An order book of bids from investors is maintained by the Book

Runners, which is then used to determine the Strike Price through the “Dutch Auction Method”.

Under the Dutch Auction Method, as defined above, the Strike Price is determined by lowering the

price to the extent that the total number of shares that the Offeror intends to Offer is subscribed.

However, while determining the Strike Price, bids placed through Strike Orders shall not be

taken into consideration.

Please note that the Offer price is the price finalized by the Offeror with the approval from the PC

Board & CCOP after completion of the Book Building process, at which the shares will be

allocated to the Successful Bidders.

2.2A. TYPES OF BID

A bid by a potential investor can be a “Limit Price”, “Strike Order” or a “Step Bid”, each of

which are explained below.

Limit Price: Limit Price bid is placed at a price which is the maximum price an investor is

willing to pay for a specified number of shares.

In such a case, a Bidder explicitly states a price at which he/she/it is willing to subscribe to a

specific number of shares. For instance, a Bidder may bid for 5.0 million shares at PKR 240

per share. Since the Bidder has placed a limit price of PKR 240 per share, this indicates that

he/she/it is willing to subscribe at or below PKR 240 per share.

Strike Order: A bid for a specified number of shares at the Strike Price to be determined

through the Book Building Process.

In case of Strike Order bid, the Bidder explicitly states the number of shares he/she/it is willing

to subscribe at the Strike Price. For instance, a Bidder may bid for 5.0 million shares at the

Strike Price to be determined through the Book Building Process.

1As per Appendix 4 of the Listing Regulations of the Karachi Stock Exchange (“KSE”), Lahore Stock Exchange (“LSE”) and Islamabad Stock Exchange (“ISE”), an offer for sale of shares through Book building is subject to the following conditions: (i) not more than 75% of the total offer shall be allocated for offer through the Book building to Institutional Investors and High Net Worth Individuals; and (ii) not less than 25% of the total offer shall be allocated for offer to the general public. Relaxation for the aforementioned has been obtained from the Regulators.

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Step Bid: A series of limit price bids at increasing prices. The aggregate amount of step bid

shall not be less than PKR 1,000,000/- and the amount of any individual step shall not be less

than PKR 250,000/-.

Under this bidding strategy, Bidders place a number of limit bids at different increasing price

levels. The Bidders may, for instance, make a bid for 0.5 million shares at PKR 240 per share, 0.4

million shares at PKR 250 per share and 0.3 million shares at PKR 260 per share.

A SINGLE INVESTOR SHALL NOT MAKE MORE THAN ONE BID, HOWEVER, A BID

CAN BE REVISED.

THE ELIGIBLE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID

APPLICATION WHICH IS FULLY OR PARTIALLY BENEFICIALLY OWNED BY

PERSONS OTHER THAN THE ONE NAMED THEREIN IS TO BE CONSIDERED AS

CONSOLIDATED BID.

Once the bid period is over and book has been built, the strike price shall be determined via Dutch

Auction Method. Furthermore, the Offer price shall be determined after approval of PC Board and

CCOP.

Successful Bidders shall be intimated, within two (2) working days of the closing of the bidding

period, the Offer Price and the number of shares provisionally allotted to each of them. The

successful Institutional Bidders shall, within three (3) working days of the closing of the bidding

period, deposit the balance amount as consideration against allotment of shares. Where a

successful Bidder defaults in payment of shares allotted to him/her/it, in any manner

whatsoever, the Margin Money deposited by such Bidder shall be forfeited to the Book

Runners under clause 8.11 of Appendix 4 of the Listing Regulations of KSE, clause 8.10 of

Appendix 4 of the Listing Regulations of LSE and under clause 8.11 of Appendix 4 of the

Listing Regulations of ISE.

AS PER CLAUSE 8.16 OF APPENDIX 4 OF THE LISTING REGULATIONS OF KSE,

CLAUSE 8.15 OF APPENDIX 4 OF THE LISTING REGULATIONS OF LSE AND

CLAUSE 8.16 OF APPENDIX 4 OF THE LISTING REGULATIONS OF ISE, THE

SUCCESSFUL BIDDERS SHALL BE ISSUED SHARES IN THE FORM OF BOOK-

ENTRY SECURITIES TO BE CREDITED IN THEIR CDS ACCOUNTS. ALL THE

INSTITUTIONAL AND HNWI INVESTORS SHALL, THEREFORE, PROVIDE THEIR

CDC ACCOUNT NUMBERS IN THE BID APPLICATION.

2.3. JOINT LEAD MANAGERS

Habib Bank Limited (“HBL”), Bank Alfalah Limited (“BAFL”), Arif Habib Limited (“AHL”),

Foundation Securities (Pvt.) Limited (“FSL”) and BMA Capital Management Limited (“BMA

Capital”) have been mandated by the Offeror to act as Joint Lead Managers to the Offer, which is

being made through the Book Building Process as laid out in Appendix 4 of Listing Regulations of

the Exchanges.

2.4. JOINT BOOK RUNNERS

Arif Habib Limited, Foundation Securities (Pvt.) Limited and BMA Capital Management Limited

have been appointed as the Joint Book Runners to the Offer.

.

2.5. ROLE AND FUNCTIONS OF JOINT LEAD MANAGERS AND BOOK RUNNERS

a) The Joint Lead Managers to the Offer shall:

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i. conduct awareness campaigns through presentations, meetings, road shows etc. jointly with

the Book Runners;

ii. ensure that all disclosures as required under the Ordinance and the Appendix 4 of the

Listing Regulations of the Exchanges have been made in the OFSD;

iii. ensure that necessary infrastructure and electronic system/software is available to collect

bids and to carry out the Book Building process in a fair, efficient and transparent manner;

iv. ensure that they have obtained on behalf of the Offeror, all approvals/consents/NOCs

relating to the Offer;

v. publish an advertisement, approved by the Commission, in at least one Urdu and one

English daily Newspaper having wide circulation in the Federal and all the provincial

capitals, to invite the Institutional investors and HNWI to participate in the bidding

process; and

vi. ensure that the OFSD will, after approval of the Commission, be uploaded on Book

Runners as well as on the Company‟s website.

b) The Joint Book Runners to the Offer shall:

i. conduct awareness campaigns through presentations, meetings, road shows etc. jointly with

the Lead Managers;

ii. ensure that necessary infrastructure and electronic system/software is available to collect

bids and to carry out the Book Building process in a fair, efficient and transparent manner;

iii. collect bid applications and applications‟ money or margin, as the case may be, from

HNWI and the Institutional Investors in the manner as mentioned in Appendix 4 of the

Listing Regulations of the Exchanges, unless exempted;

iv. put serial number, date and time on each bidding application at the time of collection of the

same from the bidders;

v. vet the bidding applications;

vi. build an order book showing demand for the shares at various prices;

vii. discover the strike price at the close of the bidding period;

viii. maintain record of the bids received for subscription of the shares;

ix. use the software for Book Building process developed by KSE, which is based on Dutch

Auction Methodology for display of the order book and determination of the strike price,

on the terms and conditions as may be agreed in writing between KSE, the Offeror and the

Book Runners;

x. ensure live display of the order book on the website of the Exchanges;

xi. ensure that each bid application contains depository account number of the bidder

maintained with CDCPL wherein shares shall be credited in case the bid is successful;

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xii. not accept multiple bids i.e. more than one bid application by the same person;

xiii. circulate copies of the OFSD cleared by the Exchanges and approved by the Commission

along with the bidding forms to the prospective Institutional Investors and HNWI;

xiv. ensure that they have established bid collection centers. The Book Runners have

established bid collection centers at the following addresses:

Karachi

Contact

Officer

Mahmood Kamal Saifuddin Shamsi Usman Saeed

Direct # 021 32462597 021 3561 2255 021 3246 1062

Mobile # 0312-1803448 0300-0455060 0345-3500399

PABX # 021 111245111 021 111 000 375 -

Fax # 021 32429653 021 3561 2580 021 32430748

E-mail mahmood.kamal@arifhabibl

td.com

[email protected]

usman.saeed@bmaca

pital.com

Postal

Address

Arif Habib Centre, 23

M.T.Khan Road, Karachi.

Ground Floor, Bahria

Complex II, M.T. Khan

Road – Karachi

Unitower, Level 8,

I.I.Chundrigar Road –

Karachi

Lahore

Contact

Officer

Tahir Abbas Shahid Ul Haq Furqan Punjani

Direct # 042-35776831 -

Mobile # +923360004896 0321-4854565 0301-8222037

PABX # 042-3577 6821-29 -

Fax # 042-3577 6830 -

E-mail [email protected]

m

[email protected]

Furqan.punjani@bmaca

pital.com

Postal

Address

Room #220 Arif Habib Ltd.

Lahore Stock Exchange,

LSE Plaza, khayaban-e-

Iqbal, Lahore.

11-F/1, Main Gulberg,

Jail Road, Lahore

Lahore Stock Exchange

Auditorium Basement 2

Lahore Stock Exchange

Plaza, khayaban-e-

Iqbal, Lahore

Islamabad

Contact

Officer

Muhammad Irfan Mansoor Ali

Direct # 051-2895228 051 2802354-5

Mobile # 0322-8500085 0300-8206242

PABX # 051-2895221-7 -

Fax # 051-2895229 051 2802357

E-mail [email protected] [email protected]

Postal

Address

1212, 12th

Floor, ISE Tower, Jinnah

Avenue Islamabad

Level 1, Office No. 104, Muhammad

Gulistan Kahn Plaza, Fazal-e-Haq Road,

Blue Area, Islamabad

xv. ensure that all the bids received by the bid collection centers are entered into the system

developed by the KSE for the purpose of Book Building. The Book Runners shall not

accept and ENTER any bid after 5:00 p.m. during the days of the bidding period,

except the last day when no fresh bid(s) shall be collected after 5:00 p.m. and the

bid(s) collected thus far, shall be entered into the system by 7:00 p.m. on the same day

and thereafter no bid shall be entered into the system or be revised in any way and

for any reason even if the bid applications have been received from the investor.

Online revision will however be allowed to the bidder till 7:00 p.m. on the last day.












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2.6. OPENING AND CLOSING OF THE BIDDING PERIOD

The bidding period shall remain open for two [2] working days during business hours i.e. will

commence at 09:00 a.m. on June 26th, 2014 and will close at 05:00 p.m. June 27

th, 2014.

BIDDING PROCESS STARTS ON June 26th, 2014

BIDDING PROCESS ENDS ON June 27th, 2014

*(Both Days Inclusive)

2.7. ELIGIBILITY TO PARTICIPATE IN BIDDING

Eligible investors who can place their bids in the Book Building process are “Institutional

Investors” and “HNWI”.

Institutional Investors include both local and foreign institutional investors

HNWI investors are individual investors who bid for shares of value of PKR 1,000,000/- (Pak

Rupees One Million Only) or above in the Book Building process.

2.8. INFORMATION FOR BIDDERS

a) The OFSD for offer for sale of shares has been duly cleared by the Exchanges and also

approved by the Commission.

b) The OFSD and the Bidding Form can be obtained from the Registered Office of the Company,

the Book Runners and the Bid Collection Centers. OFSD and Bidding Forms can also be

downloaded from the following websites of the Offerors, Company and the Book Runners i.e.

www.privatisation.gov.pk, www.ppl.com.pk, www.arifhabibltd.com, www.fs.com.pk and

www.bmacapital.com.

c) Eligible investors who are interested in subscribing to the Ordinary Shares should approach the

Book Runners at the addresses provided in paragraph 2.5 to register their Bids.

d) THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN

PERSON OR THROUGH FAX NUMBERS GIVEN IN PARAGRAPH 2.5.

2.9. BIDDING FORM AND PROCEDURE FOR BIDDING

a) Standardized Bidding Form has been prescribed by the Book Runners. Bids shall be submitted

at the bid collection centers in person or through fax number given in paragraph 2.5 on the

standard Bidding Form duly filled in and signed in duplicate. The Bidding Form shall be

serially numbered at the bid collection centers and date and time stamped, at the time of

collection of the same from the Bidders

b) The bidding procedure under the Book Building Process is outlined below:

i. As required under clause 8.8 of Appendix 4 of the Listing Regulations of KSE and ISE,

copy of the approved OFSD shall be circulated by the Offeror through Book Runners to a

maximum number of the institutional investors and HNWI, but not less than ten in each of

the two categories for participation in the bidding process and a copy will also be placed

on the websites of the Company and the Joint Book Runners.

http://www.privatisation.gov.pk/

http://www.ppl.com.pk/

http://www.arifhabibltd.com/

http://www.fs.com.pk/

http://www.bmacapital.com/

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ii. An advertisement, approved by the Commission, shall be published at least in one Urdu

and one English daily newspaper having wide circulation in the Federal and all the

provincial capitals, inviting the institutional investors and HNWI for participation in the

bidding.

iii. A Book Building Account shall be opened by the Offeror for collection of bid amount.

iv. The Bidding Form shall be issued in duplicate signed by the Bidder and countersigned by

the Book Runner, with first copy for Book Runner and the second copy for the Bidder.

v. Bids shall be submitted through the bid collection centers or through fax numbers given in

paragraph 2.5 on the standard Bidding Form duly filled in and signed in duplicate. The

addresses for the bid collection centers are given in paragraph 2.5.

vi. Bids can be placed as “limit price”, “strike order” or “step bid”.

vii. Bid money/Margin Money shall be deposited through demand draft or pay order in favor

of “Offer for Sale of Shares of PPL – Book Building Account”.

viii. Book Runner shall collect an amount of 100% of the Application Money as bid money in

respect of bids placed by HNWIs.

ix. Book Runner shall collect an amount of 25% of the Application Money as Margin Money

in respect of bids placed by Institutional Investors.

x. Book Runner may reject a bid placed by an Institutional Investor/HNWI for reasons to be

recorded in writing and the reasons should be disclosed to such Bidder forthwith.

Decision of Book Runner shall not be challengeable by the Bidder or its associates.

xi. Joint Book Runners shall not accept the bids made at a bid price lower than the

Floor Price.

xii. The Bidders will receive back the duplicate form upon submission of their bids which will

be proof of their bid submission. The bidders shall not be provided with any receipt if a

duly filled duplicate form is not submitted along with the bid.

xiii. The bidders shall provide a valid email address in the bid form so that the relevant ID,

password and form number can be emailed to them upon placement of the bid.

xiv. Bidders can revise or withdraw their bids during the bidding period (for details please

refer to paragraphs 2.13 and 2.15).

xv. Joint Book Runners shall maintain record of the bids received / rejected / revised /

withdrawn along with identities of the Bidders and evidence of amounts received.

xvi. Joint Book Runners shall ensure that all the bids received at the bid collection

centers are entered into the system developed by KSE for the purpose of the Book

Building according to the procedure given in paragraph 2.5 (b) (ix) and as per clause

8.6 of Appendix 4 of the Listing Regulations of the Exchanges. The system shall be

capable of displaying live, an order book, in descending order with respect to the bid

price, showing the demand for shares at various prices and accumulative number of

shares bid for along with percentage of the total shares offered. The order book

should also show the revised bids and the bids withdrawn.

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xvii. At the close of bidding period, the Joint Book Runners shall determine the Strike Price.

However, shares will be allocated to successful bidders based on the Offer Price.

xviii. Successful Bidders shall be intimated, within two (2) working days of the closing of the

bidding period, the Offer Price and the number of shares provisionally allotted to each of

them.

xix. The successful institutional Bidders shall, within three (3) working days of the closing of

the bidding period, deposit the balance amount as consideration against allotment of

shares.

xx. Under clause 8.11 of Appendix 4 of the Listing Regulations of KSE, clause 8.10 of

Appendix 4 of the Listing Regulations of LSE, clause 8.11 of Appendix 4 of the

Listing Regulations of ISE, where a successful Institutional Bidder defaults in

payment of shares allotted to it, the Margin Money deposited by such Institutional

Bidder shall be forfeited to the Book Runners.

xxi. Margin money of unsuccessful Bidders will be refunded within five (5) working days of

the close of the bidding period2.

xxii. Final allotment and transfer of shares shall within seven (7) working days after receipt of

full subscription money from the successful Bidders.

2.10. BANK ACCOUNT FOR BOOK BUILDING

The Offeror has opened a separate bank account for collection of applications‟ money.

The Bidders shall draw demand draft or pay order in favor of “Offer for Sale of Shares of PPL –

Book Building Account” which have been opened at Habib Bank Limited and Bank Alfalah

Limited, the Collection Banks. The Collection Banks shall keep and maintain the bid money in the

said account. Once the Offer Price is determined and list of successful applicants is finalized, the

Lead Managers, after obtaining NOC from the Exchanges, may request in writing to the Collection

Banks for transfer of the money of successful and accepted applications to the Offeror‟s account(s)

and advise for refund of the bid money to unsuccessful Bidders.

2.11. PAYMENT INTO THE BOOK BUILDING ACCOUNT

The Bidders shall draw a demand draft, or pay order favoring “Offer for Sale of Shares of PPL –

Book Building Account” and submit it at the designated Bid Collection Center in person along

with a duly filled in Bidding Form.

CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM AT THE BID

COLLECTION CENTER. BID AMOUNT MUST BE PAID ONLY THROUGH PAY

ORDER OR BANK DRAFTARE ACCEPTABLE TO THE BOOK RUNNERS AND

DRAWN IN FAVOR OF “OFFER FOR SALE OF SHARES OF PPL – BOOK BUILDING

ACCOUNT” ARE ACCEPTABLE.

Since the investors can bid for shares through “limit price”, strike order” or “step bid” therefore

payment procedure is explained below for all the three (3) methods.

2As per clause 8.12 of Appendix 4 of the Listing Regulations of KSE and ISE, and clause 8.11 of Appendix 4 of the Listing

Regulations of LSE, margin money of non-successful bidders shall be refunded within three (3) working days of the close

of the bidding period. Exemption for the aforementioned has been obtained from the Regulators.

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a) PAYMENT FOR LIMIT PRICE / LIMIT BID

If investors are placing their bids through “Limit Price” i.e. Limit Bid then they shall deposit

the Margin Money based on the number of shares they are bidding for at their stated Bid Price.

For instance, if an investor is applying for 5.0 million shares at a price of PKR 240/- per share,

then the total Application Money would amount to PKR 1,200 million. In such a case, (i)

HNWI shall deposit PKR 1,200 million in the Book Building account as the bid amount which

is 100% of PKR 1,200 million; and (ii) Institutional Investors shall deposit PKR 300 million in

the Book Building account as the margin amount which is at least 25% of PKR 1,200 million.

b) PAYMENT FOR STRIKE ORDER

If investors are placing a “Strike Order”, then they shall deposit the Margin Money/Bid Money

equal to the product of the number of shares they are bidding for and the Floor Price, for

illustration purpose assuming floor price of PKR 240 per share.

For instance, if an investor is applying for 2.0 million shares then the total Application Money

would be PKR 480 million. In such a case, (i) HNWI shall deposit PKR 480 million as bid

amount which is 100% of PKR 480 million and (ii) Institutional Investors shall deposit at least

PKR 120 million as Margin Money which is 25% of PKR 480 million.

In the event where limit Bids and the Step Bids are insufficient to determine price

through the Book Building mechanism, all strike orders will be considered for allocation

of shares at Floor Price.

c) PAYMENT FOR STEP BIDS

If investors are placing a “Step Bid”, which is a series of limit bids at increasing prices, then

they shall deposit the Margin Money/ Bid money based on the total number of shares they are

bidding for at their stated bid prices.

For instance, if the investor bids for 0.5 million shares at PKR 240/- per share, 0.4 million

shares at PKR 250/- per share and 0.3 million shares at PKR 260/- per share, then in essence

the investor has placed one “step bid” comprising three limit bids at increasing prices. The

Margin Money would amount to PKR 298 million, which is the sum of the products of the

number of shares bid for and the bid price of each limit bid. In such a case, (i) HNWI shall

deposit PKR 298 million in the Book Building Account as bid amount which is 100% of PKR

298 million and (ii) Institutional Investors shall deposit at least PKR 74.5 million in the Book

Building Account as Margin Money which is at least 25% of PKR 298 million.

2.12. PAYMENT BY FOREIGN INVESTORS

Foreign investors may subscribe using their Special Convertible Rupee Accounts (SCRA), as set

out under Chapter XX of the State Bank of Pakistan‟s Foreign Exchange Manual 2002 (Vol-1).

Foreign investors do not require any regulatory approvals to invest in the shares being offered

through this OFSD. Payment in respect of investment in the shares of the Company has to be made

in foreign currency through an inward remittance or through surplus balances in SCRA. Local

currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified

as SCRA. There are no restrictions on repatriation on sale (divestment) at the prevailing market

price and the dividend on the shares of the Company. Underlying client names/beneficial owners

are required to be disclosed at depository level.

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Key Documents required for individual(s):

1. Account opening request

2. Passport / ID

General documentation required for opening of SCRA account by institutional investors are:

1. Account opening request

2. Board Resolution & Signatories list

3. Passport / ID of Board of Directors

4. Passport/ID of all authorized signatories

5. Certificate of Incorporation (COI) or equivalent document (like Trade Registry Certificate,

Business Registration Certificate, and Certificate of Commencement of Business)

6. Memorandum & Articles of Association

7. Withholding tax registration certificate / Certificate of country of domicile of client

8. Latest Annual Report

9. List of Board of Directors

10. List of Shareholders (greater than 10% holdings) and key officers

It is however pertinent to note that the procedure and requirements of each financial institution with

respect to opening of SCRA differs, hence it is advised to request the procedure from respective

financial institution.

Payments made by foreign investors shall be supported by proof of receipt of foreign currency

through normal banking channels. Such proof shall be submitted along with the Application by the

foreign investors.

2.13. REVISION OF BIDS BY THE BIDDER

The Bidders shall have the right to revise their bids any time during the bidding period up to 05:00

pm and on the last day till 7:00 pm. Online revision of the bids may be allowed to the Bidders

through system software. This will however be subject to the condition that the Bidder shall

comply with the requirements of bidding as disclosed under Appendix 4 of the Listing Regulations

and any other condition or procedure disclosed in the OFSD.

2.14. REJECTION OF BIDS BY THE BOOK RUNNER

In terms of clause 8.4 of Appendix 4 of Listing Regulations of the Exchanges, Book Runner may

reject a bid placed by an institutional investor/HNWI for reasons to be recorded in writing and the

reasons should be disclosed to such Bidder forthwith. Decision of the Book Runner shall not be

challengeable by the Bidder or any of its associates.

2.15. WITHDRAWAL OF BIDS BY THE BIDDER

A Bidder has the right to withdraw placed bid from the bidding system any time during the bidding

period and on the last day thereof till 05:00 pm. Online withdrawal of the bids may be allowed to

the Bidders through system software. This will however be subject to the condition that the Bidder

shall comply with the requirements of bidding as disclosed under Appendix 4 of the Listing

Regulations of the Exchanges and any other condition or procedure disclosed in the OFSD.

2.16. WITHDRAWAL OF OFFER BY THE OFFEROR

a) According to clause 3.10 of Appendix 4 of the Listing Regulations of the Exchanges, in case

the Offeror does not receive bids at or above the Floor Price for the number of shares offered, it

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may withdraw the Offer. The decision of withdrawal shall be taken within a period of not more

than three (3) working days from the closing of bidding period.

b) The Offeror shall withdraw the Offer if the total bids received are less than fifteen.

c) The withdrawal shall be immediately intimated to the Commission and the Exchanges.

d) In case the Offer is withdrawn the Margin Money/ bid money will be refunded to Bidders

within three (03) working days of the decision of withdrawal without any markup,

interest etc.

2.17. MECHANISM FOR DETERMINATION OF STRIKE PRICE & OFFER PRICE

a) At the close of the Bidding period, the strike price will be determined on the basis of “Dutch

Auction Method”. Under this Methodology, the Strike Price is determined by lowering the price to

the extent that the total number of shares offered is subscribed. However, while determining the

Strike Price, the bids placed through strike order(s) shall not be taken into consideration.

b) The order book shall display the bid prices in a descending order along with the quantity for

each price level as well as the cumulative quantity at each price level. The bids at strike orders shall,

however, be displayed in the order book in the following manner:

i. after the lowest limit price bid, in case the limit price bids placed are not sufficient for full

allotment of the shares offered, or,

ii.immediately after the limit bid at which all the shares offered can be allotted, in case the limit

price bids placed are sufficient for full allotment of the shares offered.

c) For the purpose of allotment of shares, the limit bid(s) entered at the price

determined/discovered as Strike Price through Book Building Process and the bids placed as

strike order shall be ranked equally and preference will be given to the Bidder who has made

the bid earlier.

d) Once the Offer Price is determined all those Bidders whose bids have been found successful

shall become entitled for allotment of shares. The Bidders, who have made bids at prices above the

Offer Price, will be issued shares at the Offer Price and the differential will be refunded. The

Bidders, who have made bids below the Offer Price, shall not qualify for allotment of shares and

their Margin Money shall be refunded.

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FOR ILLUSTRATION PURPOSE ONLY

BidderPrice (PKR per

share)

Quantity (shares

Millions)

Cumulative

Number of Shares

Category of

OrderDate

Institution - A 290 2 2 Limit Price Day 1

Institution - E 285 18 20 Limit Price Day 3

Institution - B 280 10 12 Limit Price Day 2

Foregin Institution - F 275 16 28 Limit Price Day 2

HNWI - A 270 24 52 Step Bid Day 3

Institution - C 265 26 78 Step Bid Day 1

Institution - Y X 4 82 Strike Order Day 1

Institution - S X 3 85 Strike Order Day 3

HNWI - E 260 5 90 Limit Price Day 2


Institution - B 250 10 106 Limit Price Day 2

HNWI - A 245 2 108 Step Bid Day 3


Bid Withdrawn

Strike Price determined

through Dutch Auction

Method

Bid has been revised

and placed at PKR

280 per share

Total Shares

Subscribed

a) Setting Strike Price – On the basis of the figures provided in the above illustration, according

to the Dutch Auction Method, the Strike Price would be set at PKR 265 per share to sell the

required quantity of 70.055 million ordinary shares.

At PKR 290 per share, investors are willing to buy only 2 million shares. Since 68.055 million

shares are still available, therefore the price will set lower.

At PKR 280 per share, investors are willing to buy 10 million shares. Since 58.055 million

shares are still available, therefore, the price will set lower.





At PKR 265 per share, investors are willing to buy 26 million shares. Since after bidding for 26

million shares at PKR 265 per shares, no share will be available, therefore, the Strike Price will

be set at PKR 265 per share for the entire lot of 70.055 million shares.

After the closing of the book building period and determination of the Strike Price, the Offer

Price shall be determined and the Bidders, who have placed bids at prices above the Offer

Price, will become entitled for allotment of shares at the Offer Price and the differential would

be refunded.

The Bidders, who have placed bids below the Offer Price, will not qualify for allotment of

shares and their money would be refunded.

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After allotment in the aforementioned manner, 18.055 million shares are still available for

allotment. These shares will be allotted to the Bidders who have placed bid(s) at PKR 265 and

who have placed bid(s) at the strike order, however, for the purpose of allotment of these

18.055 million shares, preference will be given to the Bidder who has placed the bid earlier.

2.18. BASIS OF ALLOTMENT OF SHARES

After the closure of the bidding period the Offer Price shall be determined by PC Board and CCOP,

at which successful bidders shall be eligible for allotment and transfer of shares.

Allocation of shares shall be made within seven (7) working days after receipt of full Application

Money from the successful bidders.

2.19. REFUND OF MARGIN MONEY

Investors who have bid lower than the Offer price are not eligible for allotment of shares. Margin

Money of the unsuccessful Bidders shall be refunded by the Offeror within five (5) working days of

the close of the bidding period3.

The bidders, who have made bids at prices above the offer price, will be issued transferred shares at

the offer price and the differential will be refunded by the Offeror.

2.20. UNDERWRITING

A relaxation from the requirement of Clause 5 of Appendix 4 of the Listing Regulations of the

Exchanges for underwriting of the Book Building portion has been obtained from the Regulators,

enabling the Offer to be conducted without any underwriting arrangement.

2.21. ADDRESSES OF BID COLLECTION CENTRES

Bid Collection Centers have been established at Karachi, Lahore and Islamabad to collect the bids

for the Offer by the Book Runners in order to provide convenient access to Bidders to participate in

the bidding process. Addresses, detail of contact persons and fax numbers of the Bid Collection

Centers are given in paragraph 2.5.

2.22. EXEMPTIONS

Following exemptions have been approved by SECP to facilitate seamless and efficient execution of

the transaction:

1. A relaxation from applicability of regulation 6(1)(b) of listing regulation of KSE, ISE and

Regulation 6A(1) of LSE has been given by SECP.

2. A relaxation of certain requirements of Appendix 4 of listing regulation of KSE, ISE and

LSE under regulation 6(5) and 6A(6) read with Clause 11 of Appendix 4 of the listing

regulation of KSE, ISE and LSE has been given by SECP.

3 As per clause 8.12 of Appendix 4 of the Listing Regulations of KSE and ISE, and clause 8.11 of Appendix 4 of the Listing

Regulations of LSE, margin money of non-successful bidders shall be refunded within three (3) working days of the close of

the bidding period. Exemption for the aforementioned has been obtained from Regulators.

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2.23. STATEMENT BY OFFEROR

June 17, 2014

The Managing Director,

Karachi Stock Exchange Limited,

Stock Exchange Building,

Stock Exchange Road,

Karachi


Lahore Stock Exchange Limited,

Lahore Stock Exchange Building,

19 – Khayaban-e-Aiwan-e-Iqbal,

Lahore


Islamabad Stock Exchange Limited,

ISE Towers

55-B Jinnah Avenue

Islamabad

On behalf of the Offeror, I confirm that all material information as required, unless exempted,under the

Companies Ordinance, 1984 and the Listing Regulations of the Karachi Stock Exchange Limited, Lahore

Stock Exchange and Islamabad Stock Exchange Limited have been disclosed in the Offer for Sale Document

and that whatever is stated herein and the supporting documents is true and correct to the best of our

knowledge and belief and that nothing has been concealed.

For and on behalf of the Offeror

-sd-

________________________

-sd-

________________________




Ministry of Finance, Revenue, Economic

Affairs, Statistics and Privatisation







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2.24. STATEMENT BY JOINT LEAD MANAGERS

June 13, 2014





Karachi





Lahore



ISE Towers

55-B Jinnah Avenue

Islamabad

Being mandated as Joint Lead Managers to this Offer for Sale of Shares of Pakistan Petroleum Limited

through the Book Building process, we confirm that all material information as required, unless exempted,

under the Companies Ordinance, 1984 and Appendix 4 of the Listing Regulations of the Karachi Stock

Exchange Limited , Lahore Stock Exchange Limited and Islamabad Stock Exchange Limited have been

disclosed in this Offer for Sale Document and that whatever stated herein and in the supporting documents is

true and correct to the best of our knowledge and belief and that nothing has been concealed.

On behalf of:

-sd-

_____________________

Khurram Iqbal

Head – Advisory & Capital Markets

-sd-

_______________________

Imtiaz Gadar

Head – Public Markets

Habib Bank Limited Bank Alfalah Limited

-sd-

_____________________

Zeshan Afzal

Group Head – Corporate Finance

-sd-

_______________________

Atif Mohammad Khan

Managing Director / C.E.O

Arif Habib Group Foundation Securities (Pvt.) Limited

-sd-

_____________________

Fawaz Valiaani

Executive Director / C.O.O

BMA Capital Management

Limited

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2.25. STATEMENT BY JOINT BOOK RUNNERS

June 13, 2014





Karachi.





Lahore



ISE Towers

55-B Jinnah Avenue

Islamabad

Being mandated as Joint Book Runners to this Offer for Sale of Shares of Pakistan Petroleum Limited

through the Book Building process, we confirm that all material information as required, unless exempted,

under the Companies Ordinance, 1984 and Appendix 4 of the Listing Regulations of the Karachi Stock

Exchange Limited , Lahore Stock Exchange Limited and Islamabad Stock Exchange Limited have been

disclosed in this Offer for Sale Document and that whatever stated herein and in the supporting documents is

true and correct to the best of our knowledge and belief and that nothing has been concealed.

On behalf of:

-sd-

_____________________

Zeshan Afzal

Group Head – Corporate Finance

-sd-

_______________________

Atif Mohammad Khan

Managing Director / C.E.O

Arif Habib Group Foundation Securities (Pvt.) Limited

-sd-

_____________________

Fawaz Valiaani

Executive Director / C.O.O

BMA Capital Management

Limited

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PART 3

3 SHARE CAPITAL AND RELATED MATTERS

3.1. SHARE CAPITAL

No. of shares Total

(PKR)

AUTHORIZED

2,500,000,000 Ordinary shares of PKR 10/- each 25,000,000,000

26,510 Convertible preference shares of PKR 10/- each 265, 100

2,500,026,510 TOTAL 25,000,265,100

ISSUED, SUBSCRIBED AND PAID UP CAPITAL

The existing issued, subscribed & paid up capital of the Company is held as

follows:

683,073,803 Ordinary shares of PKR 10 each issued for Cash 6,830,738,030

1,285,891,812 Ordinary shares of PKR 10 each issued as Bonus 12,858,918,120

2,750,000 Ordinary shares of PKR 10 each issued for consideration other than cash 27,500,000

13,840 Convertible preference shares of PKR 10 each 138,400

1,971,729,455 TOTAL 19,717,294,550

1,401,115,573 71.06% of the existing issued, subscribed and paid up capital of the Company

is held by the Government of Pakistan 14,011,155,730

Directors, CEO and their spouse and minor children

84,496 Mr. Asim Murtaza Khan 844,960

825 Mr. Javed Akbar 8,250

2 Mr. Javed Masud 20

496,229,743 25.17% of the existing issued, subscribed and paid up capital of the Company

is held by Institutions and Associated Persons

4,962,297,430

74,298,816 3.77% of the existing issued, subscribed and paid up capital of the Company is

held by general public (both local and foreign) 742,988,160

1,971,729,455 Total Paid up Capital 19,717,294,550

Note: - The above shares were issued by the Company without any premium,

- Following are the details of shares of the company issued for consideration other than cash:

Shares Issued to Date of Issue No. of Shares issued Particulars

Burmah Oil Company

(Pakistan Concession) Ltd.

(Subsequently renamed as

Burmah Castrol plc.)

May 2nd

, 1953

*275,000 Ordinary Shares

of PKR 100 each

(Subsequently in 1994

shares of PKR 100 each

subdivided into Shares of

PKR 10 each)

Shares issued under and

Agreement for Sale

between PPL and Burmah

Oil Company Limited

dated March 27th

, 1952

*These shares were transferred to the GOP on divestment of Burmah Castrol Plc. Shares in the company in September,

1997.

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3.1.1 PRESENT OFFER

The present Offer comprises of 70,055,000 Ordinary Shares being offered through a Book Building

Mechanism to Institutional Investors and HNWI Investors at a Floor Price which shall be at a

Premium to the Face Value of PKR 10/- per share (the “Offer”). The Offer constitutes 3.55% of the

total paid-up capital of the Company (5% of GOP shareholding in the Company).

3.2. THE OFFEROR

The Government of Pakistan through the Privatization Commission of Pakistan has decided to divest upto

70,055,000 ordinary shares of PKR 10 each out of its holding in the Company. In aggregate the proposed

offer is 3.55% of the issued, subscribed and paid up capital of the Company.

3.3. TRANSFER OF SHARES UNDER BOOK ENTRY SYSTEM

The shares maintained with the CDS in the book entry form shall be transferred in accordance with the

provisions of the Central Depositories Act, 1997 and the CDCPL Regulations.

3.4. SHARES ISSUED IN PRECEDING YEARS SINCE IPO IN 2004

Date of Allotment Number of

shares

Par

Value

Amount

(Par Value) Considerations

30 October, 2007 68,582,311 10 685,823,110 Bonus

18 September, 2008 75,440,569 10 754,405,690 Bonus

29 September, 2009 165,969,285 10 1,659,692,850 Bonus

29 September, 2010 199,163,193 10 1,991,631,930 Bonus

30 September, 2011 119,497,916 10 1,194,979,160 Bonus

28 September, 2012 328,619,269 10 3,286,192,690 Bonus

30 September, 2013 328,619,269 10 3,286,192,690 Bonus

TOTAL 1,285,891,812 12,858,918,120

3.5. DETAILS OF THE INITIAL PUBLIC OFFERING OF THE PPL (2004)

Transaction Date 19th to 22nd July 2004

Number of Shares Offered 102,875,000

Percentage of Paid-up Capital 15% (including 5% green shoe option)

Offer Price (PKR/Share) 55

Premium (PKR/Share) 45

Total Amount Raised (PKR Mn) 5,658

Subscription Received (PKR Mn) 22,176

Over-Subscription (times) 4

3.6. PRINCIPAL PURPOSE OF THE OFFER FOR SALE OF SHARES

The primary purpose of the Offer includes:

Mobilize savings of eligible individuals, households and institutions of Pakistan and allow them to

take ownership in the successful businesses of the economy;

Improving standing of domestic capital markets by attracting maximum Foreign Portfolio and

Institutional Investment (“FPI”), increased investment from overseas Pakistanis and other foreign

investors;

Strengthen domestic capital markets; and

Maximize sale proceeds of GOP

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3.7. INTEREST OF SHAREHOLDERS

None of the holders of the issued shares of the Company have any special or other interest in the property or

profits of the Company other than as holders of the ordinary / convertible preference shares in the capital of

the Company.

3.8. DIVIDEND POLICY

In determining the Company‟s dividend payout, the Board of Directors considers a variety of factors

including financing needs for exploration and development programs, cash flow from operations together

with net free cashflow from equity, potential developed / undeveloped reserves acquisition, the position of

reserves earmarked for special purposes as well as long term financial needs of the Company.

The Board declares interim dividend while the final dividend is proposed by the Board of Directors and

approved by the shareholders at the Annual General Meeting. No dividends shall be paid otherwise than out

of the profits of the Company for the year or any other undistributed profits.

Dividend shall be paid according to the terms of the provisions of the Ordinance. No unpaid dividends shall

bear interest or mark-up against the Company.

3.9. CONVERTIBLE PREFERENCE SHARES AND ITS FEATURES

The company in its Extra-Ordinary General Meeting (EOGM) held on November 1982, increased

authorized Convertible Preference Shares capital, and subsequently issued 1,585,715 Convertible

Preference Shares (CPS) for PKR 100 each to the shareholders.

In September 1994, 1,583,030 Convertible Preference Shares were converted into Ordinary Shares and

2,685 Convertible Preference Shares were remaining. During September 1994, the Company sub-

divided its PKR 100 per shares into PKR 10 per share resulting an increase in CPS from 2,685 to

26,850 CPS.

Subsequently, in the following years, 13,010 CPS were converted into Ordinary Shares. As a result,

13,840 CPS are remaining in the share capital of the Company.

Preference shareholders have the right to a dividend ranking pari-passu with the level of dividend payable to

the holders of the ordinary share subject to a maximum rate of thirty percent (30%) per annum of the value of

the total number of such convertible shares held. Convertible Preference shareholders have the right to return

of capital in priority to the holders of ordinary shares.

In accordance with Article 3(iv) of the Company‟s Articles of Association, shareholders holding convertible

preference shares have the right to convert all or any of their Convertible Preference shares into Ordinary

shares, on the basis of one ordinary share for each convertible preference share converted. Such conversion

to take place upon the expiry of six months following service of written notice to the Company Secretary by

the holders of such convertible preference shares to that effect.

3.10. ELIGIBILITY FOR DIVIDEND

The shares being offered for sale shall rank pari-passu with the existing ordinary shares in all matters,

including the right to such bonus or right issue and dividend as may be declared by the Company subsequent

to the transfer of such shares.

3.11. DEDUCTION OF ZAKAT

Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions of Zakat and

Ushr Ordinance, 1980. (XVIII of 1980) as may be applicable from time to time (except where the said

Ordinance does not apply to any shareholder or where such shareholder is otherwise exempt or has claimed

exemption from payment/deduction of Zakat in terms of and as provided in that Ordinance).

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3.12. CAPITAL GAINS (SECTION 37-A OF THE INCOME TAX ORDINANCE, 2001)

Capital gains derived from sale of listed securities are taxable in the following manner under Section 37A of

the Income Tax Ordinance, 2001 at the following rates:

Tax Rate

Holding period of securities

S. No. Tax Year less than six months more than six months and less

than one year more than one year

1 2014 10.0% 8.0% 0%

2 2015 17.5% 9.5% 0%

3 2016 Not available 10.0% 0%

Through the Finance Bill, 2014, it has been proposed that gain resulting from sale of securities for period

between 12 to 24 months shall also be taxable under the Ordinance and as such exemption is proposed to be

available only where the holding period of securities exceeds 24 months. Accordingly, the gain on disposal

of listed securities for tax year 2015 is proposed to be chargeable to tax at the rate of 12.5% for listed

securities held for a period of less than 12 months, 10% for listed securities held between 12 to 24 months

and 0% for listed securities held for a period of more than 24 months. In the Finance Bill, 2014 no rate has

been prescribed for tax year 2016 and onwards. Please note that Finance Bill 2014, presented on June 3,

2014, is subject to approval of National Assembly.

Banks and insurance companies are liable to capital gains tax at separate rates. Under the Seventh Schedule

to the Ordinance, Banks are subject to capital gains tax on the disposal of shares of listed company at the rate

of 10% where shares are held for a period of more than one year whereas tax will be payable at the rate of

35% if shares are held for a period of less than one year. Through the Finance Bill, 2014, it has been

proposed that „net income from capital gain‟ on sale of listed shares for period of more than one year would

be taxed at the rate of 12.5% (instead of 10%).

Insurance companies are subject to capital gain tax on disposal of shares of listed companies as under:

Tax Rate

Holding period of securities

S. No. Tax Year less than six months more than six months and less

than one year more than one year

1 2014 15.0% 9.0% 0%

2 2015 17.5% 9.0% 0%

Please note that a shareholder (being a non-resident person of Pakistan) can avail concessions, in respect of

capital gains, if any, provided in the respective Double Tax Treaty which Pakistan has signed with the

country of his / her / its residence.

3.13. WITHHOLDING TAX ON DIVIDENDS

Dividend distribution to the shareholders will be subject to withholding tax under section 150 of the Income

Tax Ordinance, 2001 at the rate of 10% as specified in Part I, Division III of First Schedule to the said

Ordinance except for the shareholders who are exempt from tax withholding; or subject to concession, if any,

provided in the Double Tax Treaty. In terms of the provision of Section 8 of the said Ordinance, such tax

deduction at source, shall be full and final discharge of tax liability.

Through the Finance Bill, 2014, the rate of withholding tax on dividends for non-filers is proposed to be

enhanced from 10% to 15%. Moreover, it has also been proposed that tax at the rate of 5% of the value of

„bonus shares‟ determined on the basis of the day end price on the first day of book closure to be collected,

by the Company issuing the „bonus shares‟, which will be final tax liability on such income of the

shareholder.

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3.14. DEFERRED TAXATION

Deferred tax is provided using the balance sheet liability method, on all temporary differences at the balance

sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting

purposes.

Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are

recognised for all deductible temporary differences, carry forward of unused tax losses and unused tax

credits, to the extent it is probable that taxable profit will be available against which the deductible temporary

differences, unused tax losses and unused tax credits can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and is reduced to the extent

that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred

tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when

the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively

enacted at the balance sheet date.

Deferred tax relating to items recognised directly in other comprehensive income or equity is recognised in

other comprehensive income or equity and not in profit and loss account.

Deferred tax assets and deferred tax liabilities are offset only if there is a legally enforceable right to offset

current tax assets and liabilities and they relate to the income tax levied by the same Tax Authority.

Tax benefits acquired as a part of business combination, but not satisfying the criteria for separate

recognition at that date, are recognised subsequently if new information about facts and circumstances

change. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if

it was incurred during the measurement period or recognised in profit and loss account.

The Company has booked deferred tax liability of PKR 8.91 billion as at 30 June 2013. As per the financial

statements for the nine months ended 31 March 2014, the deferred tax liability stands at PKR 14.36 billion.

3.15. TAX ON SALE/PURCHASE OF SHARES

Sales Tax / Federal Excise Duty at the rate of 16 per cent is applicable on gross commission charged by stock

brokers on purchase and sale of shares through a Stock Broker.

3.16. CAPITAL VALUE TAX (CVT) ON PURCHASE OF SHARES

Pursuant to amendments made in the Finance Act 1989 through Finance Act, 2012, 0.01% Capital Value Tax

will be applicable on the purchase value of shares.

3.17. TAX CREDIT FOR INVESTMENT IN SHARES ACQUIRED THROUGH PRIVATISATION

Under section 62 of the Income Tax Ordinance, 2001, a resident person other than a company shall be

entitled to a tax credit for a tax year in respect of the cost of acquiring in the year new shares issued to the

public by a public company listed on a stock exchange in Pakistan, provided the resident person is the

original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan.

Time limit for holding of shares has been designated as 24 months to avail tax credit. The amount of

investment, eligible for tax credit, is prescribed in section 62 of the said Ordinance.

3.18. JUSTIFICATION OF PREMIUM

1. Second Largest Gas Production and Exploration Acreage in Pakistan

PPL is the second largest E&P company in Pakistan with estimated net proven recoverable reserves of 492

MMboe (as of June 30, 2013) and production of 63.5 MMboe during the financial year 2012-13. Currently,

PPL derives its production from 16 producing fields (6 Operated and 10 partner operated). Presently, PPL,

together with its subsidiaries, has a portfolio of 47 exploration blocks out of which 27 are PPL operated

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(including Block-8 in Iraq being operated by PPL Asia E&P B.V.) and remaining 20, including 3 offshore

blocks in Pakistan and 2 onshore blocks in Yemen, are partner-operated. PPL is also the discoverer of

Pakistan's biggest gas find to date, Sui (Original recoverable proven reserves of 12 tcf), and a stakeholder in

other big discoveries as well (Qadirpur, Sawan, Miano, Tal, Nashpa). Discoveries have also been made

recently in Gambat South, Naushahro Firoz and partner operated Ghauri block.

2. Exploring Global Opportunities

As the conventional gas reserves are becoming more and more difficult to find, worldwide greater emphasis

is shifting towards International E&P opportunities in new basins with unexplored potential. In this regard,

PPL has been actively engaged in evaluation of suitable growth opportunities internationally to add reserves

base to the Company and provide long term energy security to the country.

In 2012, PPL participated in Iraq‟s 4th Licensing Round in Baghdad, Iraq and submitted a winning bid for

Block 8 which lies 110 km North East of Baghdad. The entire 100% working interest in Block-8, Iraq was

assigned to PPL‟s wholly owned subsidiary PPL Asia E&P B.V. which is registered in Netherlands.

In 2013, PPL acquired 100% Share Capital of MND Exploration and Production Limited (MND), a

company incorporated in England and Wales. Subsequent to transaction completion, the name of MND was

changed to PPL Europe E&P Limited („PPLE‟). PPLE holds non-operated working interest in one

producing field (Sawan) and three exploration blocks (Harnai, Ziarat and Barkhan) in Pakistan.

Additionally, PPLE also holds a non-operated working interest in Block 3, Yemen.

3. Robust Financial Performance

Investors prefer PPL due to its uniqueness as it has (about 60% gas revenue share) with an unleveraged

balance sheet and heavy exploration and appraisal upside. The Company has shown robust operating

performance, with its top line and profit after tax growing at 5-year CAGR of almost 17.5% and 16.3%

respectively from 2007-08 to 2012-13.

4. Holding by FIIs

As of December 2013, approximately 40% of the free float of PPL is with Foreign Financial Institutions

which shows the attractiveness of the stock for international investors.

5. Experienced and Professional Management

PPL has a strong emphasis on recruiting and retaining the best professionals who are central to its business

model. PPL‟s management team possesses exemplary educational and professional background.

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PART 4

4 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES

4.1. UNDERWRITING

Arif Habib Limited, Foundation Securities (Pvt.) Limited and BMA Capital Management Limited have

been mandated to act as the Book Runners to the Offer. This Offer for Sale has not been underwritten.

Underwriting of the Book Building Portion is required under Clause 5 Appendix 4 as per listing

regulations of the Exchanges. A relaxation from the requirements of the said rules has been obtained by

the Offeror from the SECP.

4.2. BUY BACK/REPURCHASE AGREEMENT

JOINT LEAD MANAGERS AND BOOK RUNNERS HAVE NOT ENTERED INTO ANY BUY-BACK /

REPURCHASE AGREEMENT WITH THE OFFEROR OR ANY OTHER PERSION IN RESPECT OF

THIS OFFER.

4.3. COMMISSION TO THE BANKERS TO THE OFFER

A commission at the rate of 0.125% of the amount collected on allotment in respect of successful applicants

will be paid by the Offeror to the Bankers to the Offer for services to be rendered by them in connection with

this Offer for Sale of Shares plus out of pocket expenses if any.

4.4. BROKERAGE

For the offering, the Offeror will pay brokerage to the TREC holders of the Exchanges at the rate of 0.6% of

the value of shares (including premium) actually sold through them.

4.5. ESTIMATED EXPENSES TO THE OFFER FOR SALE

All such expenses are to be borne by the Offeror. Details of the expenses are mentioned below:

Expenses Rate Amount (PKR)

Joint Lead Arrangers & Joint Book Runners Fee N/A 0.50

Brokerage to Members of the Exchanges* 0.60% [●]

Bankers to the Offer Commission* 0.125% [●]

Printing, Publication & Advertisement Costs 6,600,000

Exchanges‟ Service Charges 110,000

KSE Book Building Software Charges 500,000

SECP Processing Fee 200,000

Miscellaneous Cost 2,500,000

CDC Charges 1,000,000

Legal & Professional Fee 500,000

*Actual amount will be determined based on the Offer Price.

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PART 5

5 HISTORY AND PROSPECTS

5.1. THE COMPANY

Pakistan Petroleum Limited (“PPL / Company”) is the oldest exploration and production company in the country.

The Company‟s history can be traced back to the establishment of a public limited company, incorporated in June

1950, with major shareholding by Burmah Oil Company (BOC) of the United Kingdom for exploration,

prospecting, development and production of oil and natural gas resources.

In September 1997, BOC disinvested from the Exploration and Production (E&P) sector worldwide and sold its

equity in PPL to the Government of Pakistan. Subsequently in June 2004, the GoP disinvested a portion of its

equity in the company equivalent to 15% of the paid up share capital through an Initial Public Offering (IPO)

(refer to section 3.5 for details). The Company is listed on all the three Stock Exchanges of Pakistan with effect

from 16 September, 2004.

During 2009, the GOP transferred 12% of its shareholding in the Company to PPL Employees Empowerment

Trust established under the Benazir Employee Stock Option Scheme (BESOS). Currently the GoP holds 71.06%

equity in PPL whereas 7.35% is held by PPL Employees Empowerment Trust. Remaining 21.59% shares are held

by private investors.

5.2. THE GROUP AND ITS OPERATIONS

The Group consists of Pakistan Petroleum Limited (the Holding Company) and its subsidiary companies i.e. PPL

Europe E&P Limited, PPL Asia E&P B.V. and the Pakistan Petroleum Provident Fund Trust Company (Private)

Limited (PPPFTC). The Group, except PPPFTC, is principally engaged in conducting exploration, prospecting,

development and production of oil and natural gas resources.

PPL Europe E&P Limited

As part of its strategy of growth through acquisitions, PPL acquired the entire Share Capital of MND Exploration

and Production Limited (MND), a company incorporated in England and Wales and the transaction was

successfully completed in March 2013. Subsequently, the name of MND was changed to PPL Europe E&P

Limited („PPLE‟). Currently, PPLE holds working interests in one producing field and three exploration blocks in

Pakistan as well as a working interest in Block 3, Yemen.

PPL Asia E&P B.V.

The Company has also established a wholly-owned subsidiary, PPL Asia E&P B.V., incorporated in Kingdom of

Netherlands in July 2013. The subsidiary focuses on exploration and production of oil and gas activities in Block-

8, Iraq.

5.3. THE BUSINESS

The Company is engaged in the exploration, prospecting, development, and production of oil and gas resources.

Presently, the portfolio of PPL along-with its subsidiaries consists of 47 exploration blocks out of which 27 are

PPL operated (including Block-8 in Iraq being operated by PPL Asia E&P B.V.) and remaining 20, including 3

offshore blocks in Pakistan and 2 onshore blocks in Yemen, are partner-operated. PPL is also among the first

local E&P companies in the public sector to extend its operations beyond national borders and together with its

subsidiaries, has interests in exploration blocks located in Iraq and Yemen.

Additionally, the Company operates six producing fields across the country at Sui (Pakistan‟s largest gas field),

Adhi, Kandhkot, Chachar, Mazarani and Hala and holds working interest in 10 partner-operated producing fields,

including Qadirpur, the country‟s second largest gas field. Through these assets, the Company strives to play its

role in meeting energy requirements of a large number of domestic, industrial and other consumers. The

Company is focusing on enhancing production of operated and partner operated fields by deploying latest

technology including Stress Field Detection survey, under balance drilling, hydraulic fracturing and seismic

attribute analysis. Furthermore, Sui Mining Lease is expiring on May, 31, 2015. An application for its renewal

has been filed with the Director General Petroleum Concessions.

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PPL, being the pioneer natural gas producer in the country, has been playing a crucial role, since its

incorporation, in augmentation of indigenous hydrocarbon reserves. Until last year, PPL‟s share in the country‟s

total natural gas production stands at around 22%. PPL continues to strive for enhancing its hydrocarbon reserves

and optimizing production in order to maintain its position as the premier exploration and production Company

of the country. PPL has been on the forefront of adopting latest available technology to enhance mapping

accuracy and operational efficiency. In the recent past, major capital projects were initiated and completed in the

operated and partner operated areas to improve production efficiency like acquisition of Sui Purification Plant,

completion of Phase-II and Phase-III of Sui Gas Compression Project and Qadirpur capacity enhancement

project. The existing SML Compressors installed at Sui Field Gas Compression Station (SFGCS) are also being

revamped. In addition, installation of a 30MMSFCD LPG/ NGL plant at Company operated Adhi field located in

Punjab, is in progress.

Growth remains the prime focus of the Company‟s Corporate Strategy with the objective of replacing reserves

and enhancing production through organic growth as well as through acquisitions. Concerted efforts are being

continued to maintain and improve Company‟s position as a leading exploration and production company in

Pakistan.

Furthermore, the Company has been on the forefront of assessing potential for exploration of unconventional

hydrocarbons, particularly shale and tight gas. Shale and Tight gas are unconventional resources of hydrocarbons,

the extraction of which cannot be exploited through conventional means and therefore requires improved

technology and higher costs. An important milestone was achieved when the first tight gas production of the

Country commenced from partner operated Kirthar Block in 2013.

5.4. EXPLORATION AND DEVELOPMENT

PPL has devised a dynamic exploration and development strategy with a close focus on enhancing its reserve

replenishment ratio, improving drilling to discovery ratio and introducing production efficiencies through use of

modern production techniques. The Company‟s business focuses on upstream petroleum activities consisting of

exploration activities as well as production & development activities which consist of its operations in the fields

and deposits that are either currently producing or in the development stage.

PPL‟s long history of exploration has witnessed several episodes of activities with varying vigor. The major

breakthrough came in the form of the discovery of Sui Gas Field in 1952, which still is the Country‟s second-

highest gas producing field.

This was followed by gas discoveries at Zin, Uch, Kandhkot, Khairpur and Mazarani and an oil discovery at

Karsal. During 1950 to 1960, PPL drilled 19 exploration wells, made six discoveries and added 16.5 Tcf gas.

PPL‟s exploration activities came to a low key due to the lack of big gas market at that time.

PPL re-started its exploration campaign in mid-seventies in five areas in joint venture with AMOCO, which

resulted in the discovery of Adhi Gas / Oil Field in East Potwar Exploration License. PPL formed a Consortium

of Companies in 1988, for exploration in five areas. The Qadirpur gas discovery (4.5 Tcf) was made as a result of

this exploration campaign. Subsequently, during 1989 when the first ever bidding round in the country was

announced by the Government, PPL acquired working interest in seven new exploration joint ventures (as

operator in three areas). This campaign resulted in gas discoveries at Miano and Sawan and gas/condensate at

Savi Ragha. After transferring of BOC assets in PPL to Government of Pakistan in 1997, exploration efforts were

accelerated by the Company. Since 2000, there have been 2 licensing rounds in Pakistan in 2009 and 2013,

wherein, PPL acquired working interest in 25 exploration blocks (14 in 2009 and 11 in 2013 bid round). Due to

the concerted efforts, the Company‟s portfolio has grown to 47 exploration licenses (27 PPL operated) in 2014.

Moreover, during last ten years, 46 exploratory wells were drilled in PPL‟s operated and partner-operated areas,

wherein, 16 discoveries have been made.

During 2013, the Company‟s exploration efforts resulted in two consecutive discoveries in the Company operated

Gambat South block in Sindh. Preparations for Extended Well Testing of these discoveries are in progress.

Furthermore, a third discovery was made in Partner operated Sukhpur block in Sindh. In 2014, during testing in

Company operated Naushahro Firoz Block, exploratory well flowed good quality gas at variable rates indicating

a tight gas discovery. Recently, an oil discovery has also been made in the partner operated Ghauri block.

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The Company‟s exploration portfolio has the right mix of mainly low and medium risk blocks with some high

risk blocks in frontier unexplored basins showing Company's commitment to open new avenues for future oil and

gas production. Following is the list of Company and its subsidiaries‟ exploration assets:

PPL Operated

S.No. Blocks

Working

Interest

(%)

Province

1 Barkhan 85 Baluchistan

2 Bela West 100 Baluchistan

3 Dhok Sultan 75 Punjab

4 Gambat South 65 Sindh

5 Hab 100 Baluchistan

6 Hala 65 Sindh

7 Hisal 100 Punjab

8 Jungshahi 100 Sindh

9 Kalat 35 Baluchistan

10 Karsal 100 Punjab

11 Kharan 100 Baluchistan

12 Kharan East 100 Baluchistan

13 Kharan West 100 Baluchistan

14 Khipro East 100 Sindh

15 Khuzdar 65 Baluchistan

16 Kotri 100 Sindh

17 Kotri North 90 Sindh

18 Malir 100 Sindh

19 Margand 50 Baluchistan

20 Naushahro Firoz 90 Sindh

21 Nausherwani 100 Baluchistan

22 Sadiqabad 100 Punjab

23 Shah Bandar 100 Sindh

24 Sirani 75 Sindh

25 Zamzama South 100 Sindh

26 Zindan 35 KPK

27 Block-8 (Iraq) 100 -

Partner Operated

S.No. Blocks Province Working

Interest (%) Operator

1 Baska Baluchistan 49 ZhenHua

2 Digri Sindh 25 UEPL

3 Gambat Sindh 30 OMV

4 Ghauri Punjab 35 MPCL

5 Harnai Baluchistan 40 MPCL

6 Jati Sindh 25 KPBV

7 Jherruck Sindh 30 NHEPL

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8 Kirthar Sindh 30 POGC

9 Kuhan Baluchistan 50 OMV

10 Latif Sindh 33.3 OMV

11 Nashpa KPK 30 OGDCL

12 S. W. Miano-II Sindh 33.3 OMV

13 Sukhpur Sindh 30 Eni

14 Tal KPK 30 MOL

15 Ziarat Baluchistan 40 MPCL

16 Offshore Indus 'C‟ Sindh 40 Eni

17 Offshore Indus 'N‟ Sindh 30 Eni

18 Offshore Indus „G‟ Sindh 25 Eni

19 Block-29 (Yemen) - 43.75 OMV

20 Block-03 (Yemen) - 20 TOTAL

5.5. OIL & GAS RESERVES

The following table sets forth PPL‟s total proven reserves estimates as of June 30, 2013:

Natural Gas

(MMSCF)

Oil / NGL /

Condensate

(Thousand

Barrels)

LPG

(Tonnes)

PPL Operated Fields 1,994,485 8,374 311,705

Partner Operated Fields 500,000 30,859 98,152

Total 2,494,485 39,233 409,857

5.6. DEVELOPMENT & PRODUCTION ACTIVITIES

PPL‟s portfolio of developed and producing fields consists of 6 operated and 10 partner operated fields. The 5

years production from PPL's 100% owned fields and its share from all operated and partner operated joint

ventures is given below:

2012-13 2011-12 2010 - 11 2009-10 2008-09

Natural Gas

(Million cubic

feet)

331,510 364,948 360,733 356,682 356,195

Crude Oil

(Thousand

Barrels)

2,949 2,249 1,665 950 953

NGL

(Thousand

Barrels)

686 862 988 804 478

Condensate

(Thousand

Barrels)

51 58 64 72 76

LPG (Tonnes)

17,136 20,869 27,125 23,047 19,959

The production during 2012-13, including share from joint ventures, averaged at 908 MMscfd of gas, 8,079 bpd

of oil, 2,019 bpd of NGL / condensate and 47 tonnes of LPG per day.

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5.7. OPERATED/ PARTNER OPERATED PRODUCING FIELDS

The details of PPL‟s share in producing (operated / partner operated) fields of PPL are as follows:

S.No. FIELDS* Province

PPL

Working

Interest

(%)

Operator

Field wise Annual Production during 2012-13

(PPL’s share)

GAS

(MMSCF)

OIL /

CONDENSATE

/ NLG

(thousand

barrels)

LPG

(TONNES)

1 Sui Baluchistan 100 PPL 181,355 15 -

2 Kandhkot Sindh 100 PPL 60,088 6 -

3 Adhi Punjab 39 PPL 4,712 911 16,260

4 Mazarani Sindh 87.5 PPL 2,163 7 -

5 Chachar Sindh 75 PPL 1,155 - -

6 Hala Sindh 65 PPL 489 21 876

7 Qadirpur Sindh 7 OGDCL 13,014 21 -

8 Block-22* Sindh 35.53 PEL 1,014 - -

9 Miano Sindh 15.16 OMV 4,022 2 -

10 Sawan Sindh 26.18 OMV 21,276 - -

11 Tal Block** KPK 27.76 MOL 27,655 1,069 -

12 Nashpa*** KPK ****28.55 OGDCL 6,176 1,634 -

13 Latif Sindh 33.3 OMV 5,507 - -

14 Gambat Sindh 23.68 OMV 2,866 - -

15 Kirthar Sindh 30 POGC 18 - -

16 Sukhpur***** Sindh 30 ENI - - -

TOTAL 331,510 3,686 17,136

* Block-22 includes Hasan, Sadiq and Khanpur

** Tal Block includes Manzalai, Makori, Mamikhel, Makori East, Maramzai and Tolanj fields

*** Nashpa also includes Mela field

**** GHPL has assigned its 2.5% share to PPL subsequent to June 30, 2013. Previously the share was 26.05%

***** Production from Sukhpur field commenced after June 30, 2013.

Apart from the above, the Company has made two recent discoveries in PPL operated Gambat South, one in

Naushahro Firoz and one oil discovery in partner operated Ghauri block.

5.8. FUTURE PLANS

Given the large number of exploration licenses including recently added international exploration and production

assets, the Company is fully geared to achieve its reserves addition and reserves replacement targets, primarily

through organic growth. Leveraging upon its large E&P database built over five decades, PPL is well-placed to

continue its rigorous exploration campaign.

As part of its strategy to replace production and add reserves and thus contribute to country‟s energy security,

PPL has recently been able to further expand its international exploration and production portfolio. Evaluation of

emerging plays and basins internationally and farm-in and M&A opportunities continue. Exploration acreage

covering the early mature and emerging plays will be the prime focus as the potential of making large discoveries

is high in such acreage.

5.9. PARTNERING COMPANIES

PPL has a very close working relationship with some of the well-known companies, providing the Company an

opportunity to excel in E&P operations. Some of the key partnering companies are:

Company Country of Origin

Eni Pakistan Limited Italy

Government Holdings (Private) Limited Pakistan

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Kuwait Energy Company Kuwait

Kuwait Foreign Petroleum Exploration Company Kuwait

Mari Petroleum Company Limited Pakistan

MOL, Pakistan Oil and Gas Company B.V. Hungary

New Horizon Exploration and Production Limited Pakistan

Oil and Gas Development Company Limited Pakistan

OMV (Pakistan) Exploration GmbH Austria

Petroleum Exploration (Private) Limited Pakistan

Pakistan Oilfields Limited Pakistan

Polish Oil and Gas Company Poland

Pyramid Energy International Incorporated Canada

Saita Pakistan (Private) Limited Pakistan

United Energy Pakistan Limited Hongkong

Yemen General Corporation For Oil and Gas Yemen

China ZhenHua Oil Company Limited China

Asia Resource Oil Limited Canada

5.10. AWARDS & ACKNOWLEDGMENTS

PPL has maintained its position among Karachi Stock Exchange's Top 25 companies for 2012 and featured on the

list for the seventh consecutive year since 2006. The Company bagged the prestigious Management Association

of Pakistan‟s Award for four consecutive years from 2006 to 2009 besides receiving Large Tax Payers Unit

Excellence Award for 2006 and 2008, South Asian Federation of Accountants Award for 2009 and 2010, Best

Corporate Report Award for 2005, 2007, 2008, 2009, 2010 and 2011 by ICAP and ICMAP, Corporate

Philanthropy Award for nine consecutive years from 2004 to 2012 and Environment Excellence Award for 2006,

2007, 2009 and 2010.

5.11. QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE)

QHSE Function being an integral part of business operations is pursuing initiatives focused on fostering QHSE

culture, enhancing asset integrity through Process Safety Management and regulatory compliance in new

exploration blocks. Risk Based Inspections, Reliability Centered Maintenance and QHSE Automation are some

of the key initiatives progressing under management‟s guidance and support.

QHSE Management System and associated processes are successfully harmonised in a manner to facilitate

operating fields to capitalise on operational synergies and optimise resource utilisation. PPL Fields and technical

Departments are certified for ISO 9001, 14001 & 18001 Management Systems which provides necessary

framework for continual improvement in QHSE compliance in a systematic manner.

QHSE objectives and targets are monitored and compliance analysed to achieve desired results through employee

participation and support. Environmental approvals are obtained for ongoing seismic and drilling operations in

both protected and non-protected areas in local and international projects in close coordination with internal and

external stakeholders.

5.12. REGULATORY AUTHORITY

Directorate General of Petroleum Concessions is one of the Directorates of the Ministry of Petroleum & Natural

Resources functioning as the Regulatory authority for all Upstream Exploration & Production activities in

Pakistan. The functions of the Directorate include:

Regulation of Upstream activities;

Grant of petroleum rights i.e. reconnaissance permits, exploration licenses and Development &

Production leases;

Facilitation to Exploration & Production and Services Companies;

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Analysis of various fiscal regimes and recommend adequate policy incentives for E&P companies in the

light of international prices;

Promotion of petroleum exploration and negotiations with foreign and local petroleum exploration

companies to conclude petroleum concessions/production sharing agreements under the Petroleum Policy

and Pakistan Petroleum (Exploration & Production) Rules;

Management of all exploration, development and production operations in accordance with the good

international oil field practices, the applicable rules and Petroleum Concession Agreements;

Collection of the Government receipts (royalty, rents, applications, fee, etc.) and compilation of

investment data;

Management of all technical data.

5.13. E&P SECTOR

In Pakistan, consumption of natural gas has grown rapidly in all sectors of the economy (residential, commercial,

industrial, transport and power), driven by growing availability of gas and a low, government-controlled gas price

as compared with alternate fuel prices. This has led to acute shortages and resulting in strict gas load management

(CNG, fertilizers and industrial sectors) and frequent power shortages throughout the country.

Primary energy supplies in Pakistan have grown by almost 50% over the past 10 years, from 320 MMBOE (43

million TOE) in 2000-01 to 484 MMBOE (65 million TOE) in 2011-12. However, there exists a major gap

between the demand and supply. During the same period, share of indigenous production has grown from 57% to

69% (25 million TOE to 45 million TOE) while imports have declined from 43% to 31% (18 million TOE to 20

million TOE) of the primary energy supplies.

Indigenous natural gas is the largest source of energy supply in Pakistan contributing 32.0 million TOEs (49.5%)

in 2011-12, followed by oil products, mainly imports, at 19.9 million TOEs (30.8%), hydel power at 6.8 million

TOEs (10.5%), coal, mainly imports, at 4.3 million TOEs (6.6%) and nuclear power at 1.3 million TOEs (1.9%).

Current and expected future demand of Pakistan is as follows:

Million TOEs FY12 FY17 FY21 FY25 FY28

Total Demand 65 90 108 129 148

Total Indigenous Supply 45 44 37 36 37

Gas 32 26 15 10 6

Oil 3 4 2 1 1

Coal 2 2 2 2 2

Hydro Electricity 7 11 16 21 25

Nuclear / Renewable/LPG 1 1 2 2 3

Deficit as a %age of Total Demand 31% 51% 66% 72% 75%

Source: Pakistan Energy Outlook (2012-13 to 2027-28) by Petroleum Institute of Pakistan

5.14. RISK FACTORS

The Company operates in a challenging environment with a degree of uncertainty inherent in the E&P business

which may adversely affect its operations and profitability. The Company has tailored its business strategies

accordingly to effectively address the risks and has developed a well integrated mechanism which identifies

potential risks, evaluates and prioritizes them and prompts timely and appropriate actions to keep risk level within

tolerable limits. PPL has further initiated steps towards adoption of internationally recognized Enterprise Risk

Management practices in the Company.

A Board Risk Management Committee has been setup to advise the Board on Company‟s overall risk appetite,

tolerance and strategy, taking account of the current and prospective macroeconomic and financial environment

drawing on financial stability assessments that may be relevant for the Company‟s risk policies.

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The management of the Company wishes to highlight the key business risks faced by PPL together with the

factors mitigating such risks:

RISKS

MITIGANTS

Oil Price Volatility – Prices of the Company‟s oil and

gas production are regulated by relevant petroleum

policies issued by and agreements entered into with the

Ministry of Petroleum & Natural Resources. Under the

afore-mentioned guidance, product prices are largely

linked to prices in the international markets, which

have demonstrated large volatility especially given the

global economic circumstances. Significant decline in

international oil prices may thus adversely affect

the Company’s profitability.

Decline in prices of crude oil have an adverse impact

on the Company‟s revenue as the base prices for gas

and crude oil sales are linked to a basket of Middle

East crude oils according to specified formulae. While

the price risk is largely beyond Company‟s control,

however, prices of Company‟s major product i.e.

natural gas are less prone to this risk since the gas

prices are subject to sliding scale / zonal discounts

which reduce the impact of variability of crude oil

prices on the gas prices. In addition gas prices of

certain fields including Adhi, Manzalai, Makori,

Block-22, Nashpa etc. are capped at fixed crude oil /

HSFO prices and are affected only in case the

international crude oil price falls below the capped

price.

Underperformance of Major Oil and Gas Fields –

Oil and gas reserves as disclosed in this OFSD are

based on the performance of these fields along with

certain assumptions and development actions. The

change in performance of these fields or/ and

change in these assumptions and development

actions over time may result in downward revision

of the reserves associated to these fields.

The Company‟s investment in the development of any

oil and gas discovery is preceded by extensive

technical studies and evaluation of the underlying

reservoir. The reserves estimates for each of PPL‟s

fields are certified and audited by reputable

international petroleum consultants and updated as

required.

Exploration Risk - Exploration activities require

substantial investment which may not be recovered if

the Company encounters non-producing or dry wells.

The Company uses advanced technology and

undertakes rigorous research prior to engaging in

exploration activities including conducting of basin and

other technical studies by professionals to minimize

exploration risk. The Country‟s first ever Stress Field

Detection (SFD) survey was carried out by PPL in

Kharan block for enhanced accuracy in assessing

prospectivity and identifying potential leads. In

addition, the Company employs state of the art seismic

acquisition, process and interpretation techniques

followed by modern drilling methods. However, given

the inherent nature of exploration risk, it can only be

minimized and not completely eliminated.

Security Risk – Security conditions at locations

disrupting operations and exploration efforts

Field exploration and production activities carried out

under strict security cover arranged in collaboration

with law enforcement agencies and security personnel.

The Company has well-defined Emergency Response

Procedures in place at all field locations. A crisis

management and business continuity plan is

operational in the Company to avoid business

disruptions in all possible crisis scenarios.

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RISKS

MITIGANTS

Liquidity Risk - Exploration and development

requires substantial investment which may result in

cashflow constraints for the Company.

The cash inflows and outflows are projected on a

regular basis and rigorously monitored to ensure

sufficient availability of funds. Historically, the

Company has been able to meet its CAPEX and other

operational requirements via internal financing without

recourse to external sources. However, the Company

has substantial borrowing capacity to meet its higher

future cash requirements.

The Company also follows a risk averse investment

policy for placement of its surplus funds to ensure that

the investment portfolio of the Company is secured and

well diversified. A rigorous vigilance system is in

place whereby the Company‟s existing investment

portfolio and new proposals for funds placement are

extensively reviewed by the Investment Committee

comprising of Senior Management Staff.

As of March 31, 2014 the Company had a liquid fund

position of PKR 61 billion.

Regular Servicing of Receivables – there may be a

delay in payment of PPL receivables in case of state-

owned entities face cash flow constraints.

Rigorous follow-ups are maintained on defaulting

customers to recover Company dues. All possible

recovery measures are adopted to ensure that overdue

bills are settled by the customers without delay.

Intervention of Government authorities are sought

wherever considered necessary.

From time to time the GOP has taken a number of

initiatives to resolve the issue of Inter Corporate

Circular Debt relating to E&P sector. In June 2013,

GOP issued PIBs to convert trade receivables of the

Company amounting to PKR 23 billion.

Economic and Political Instability – Adverse

conditions arising from economic and political

instability may affect Company‟s operations

unfavourably.

Economic and financial market conditions and political

climate of the countries where the Company operates

are regularly monitored. Based on thorough review an

appropriate strategy based on a consultative process is

developed as deemed appropriate in the given

circumstances to reduce the impact of risks arising out

of any unfavourable situation.

Environmental Regulations – The Company is

exposed to various laws relating to compliance of

safety, health and environment regulations.

Statutory Compliance has always been an area of prime

importance to PPL. PPL Fields are registered under

Self-Monitoring & Reporting Tool (SMART) Program.

Environmental discharges are regularly monitored

through external laboratory and electronically reported

to concerned Environmental Protection Agencies

(EPAs).

Initial Environment Examination (IEE) / Environment

Impact Assessment (EIA) studies are consistently

undertaken for all development projects including

seismic operations, drilling activities and field

development projects in pursuance of Pakistan

Environmental Protection Act, 1997. IEE / EIA studies

of projects are conducted through reputed consultants

and submitted to respective provincial EPAs followed

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RISKS

MITIGANTS

by regular monitoring through independent

environmental consultant against the IEE / EIA

Environmental Management Plan and company QHSE

requirements.

QHSE Internal and external audits of all PPL

departments / fields are conducted at set frequency to

evaluate compliance against Company‟s policies,

procedures together with international standards

requirements.

Increased Competition – In case of increased

exploration activity in the future, PPL may be exposed

to greater competition.

The Company follows a multi-pronged strategy

including capturing the opportunities for joint biddings,

farm-ins/ farm-outs and swap arrangements with other

E&P companies to reduce its exposure to increased

competition and to maintain a balanced exploration

portfolio.

Technological Risk – The Company may not be able

to keep up with technological advancement in the

industry which may have adverse impact on operations

going forward.

PPL has been on the forefront of adopting latest

available technology to enhance mapping accuracy and

operational efficiency. The Company has been among

the first to deploy Stress Field Detection,

Electromagnetic Measurement While Drilling, Down-

hole Deployment Valve along with real time Gamma

Ray and use of digital geophones for seismic

acquisition.

Capital market risk - Prices of shares depend on

behavior of stock markets and the performance of the

Company. Hence prices of shares may

increase/decrease based on market movement

The increase / decrease in prices is mainly governed by

market forces, however, from a fundamental point of

view, the investment sentiment is mainly driven by

financial performance.

Regulatory risk - There is a risk that unanticipated

changes in regulations could have an adverse impact on

the Company

Since the company is operating in a sector which is

well-developed and regulated it is unlikely that any

material adverse changes may happen in the regulatory

environment

Interest rate risk - The risk that the fair value or

future cash flows of the financial instruments will

fluctuate because of the changes in market interest

rates.

The Company manages its interest rate risk by having

significant investment in fixed interest bearing

financial assets.

NOTE: IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED AND

THAT NOTHING HAS BEEN INTENTIONALLY CONCEALED IN THIS RESPECT.HOWEVER,

THERE MAY BE ADDITIONAL RISK FACTORS, WHICH ARE NOT DISCLOSED HEREIN, THAT

ARE NOT PRESENTLY KNOWN TO US THAT WE CURRENTLY DEEM TO BE LESS

SIGNIFICANT, WHICH MAY MATERIALLY AND ADVERSELY AFFECT PPL’S BUSINESS,

FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTUS.

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PART 6

6 FINANCIAL INFORMATION

6.1. AUDITORS’ REPORT UNDER SECTION 53(I) READ WITH CLAUSE 28 OF SECTION 2 OF

PART I OF THE SECOND SCHEDULE TO THE ORDINANCE, FOR THE PURPOSE OF

INCLUSION IN THE OFFER FOR SALE DOCUMENT – UNCONSOLIDATED FINANCIALS

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6.2. AUDITORS’ REPORT UNDER SECTION 53(I) READ WITH CLAUSE 28 OF SECTION 2 OF

PART I OF THE SECOND SCHEDULE TO THE ORDINANCE, FOR THE PURPOSE OF

INCLUSION IN THE OFFER FOR SALE DOCUMENT – CONSOLIDATED FINANCIALS

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6.3. SHARE BREAK-UP VALUE CERTIFICATE

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6.4. AUDITORS’ CERTIFICATE ON ISSUED, SUBSCRIBED, AND PAID – UP – CAPITAL OF

THE COMPANY AS AT 30 JUNE 2013

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6.5. AUDITORS’ CERTIFICATE ON ISSUED, SUBSCRIBED, AND PAID – UP – CAPITAL OF

THE COMPANY AS AT 31 DECEMBER 2013

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6.6. MANAGEMENT ACCOUNTS AS AT 31ST

MARCH, 2014 (UNAUDITED ACCOUNTS)

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6.7. SUMMARY FINANCIAL HIGHLIGHTS

Amount in PKR Million

9 Months (July

2013 – March

2014)

(Unaudited)

2012-13 2011-12 2010-11 2009-10 2008-09

INCOME STATEMENT

Sales - Gross

(including Govt. levies) 106,411 123,938 119,646 98,613 77,211 77,798

Sales - Net (excluding

Govt. levies) 88,867 102,357 96,222 78,252 59,962 61,580

Field expenditure 23,327 30,603 26,982 21,364 18,273 13,161

Operating Profit 54,875 59,461 57,769 47,655 34,612 40,956

Profit before Tax 56,386 62,628 64,555 48,365 34,528 41,908

Profit after Tax 38,088 41,951 40,926 31,446 23,321 27,703

EBITDA 63,142 70,720 71,632 53,525 38,185 44,367

BALANCE SHEET Share Capital 19,717 16,431 13,145 11,950 9,958 8,299

Reserves 148,829 132,923 111,816 81,299 69,948 54,760

Long-term / Deferred

Liabilities

32,741 26,875 22,433

9,783 8,047 5,203

Current Assets 73,701 84,159 92,240 60,942 63,057 45,439

Current Liabilities 23,200 36,672 22,760 20,745 19,623 14,648

Property, Plant &

Equipment

79,168 70,079 56,327 45,924 41,695 34,763

Fixed Assets 79,462 70,481 56,761 46,412 42,070 34,971

Long Term

Investments

69,936 55,707 20,361 15,748 1,804 1,854

Stores and Spares 3,402 2,835 2,454 1,767 2,069 1,872

Trade Debts 50,123 40,337 50,159 32,096 30,811 27,780

Short term investments 11,240 28,339 35,265 20,851 27,296 13,242

Cash and bank balances 1,498 6,184 1,675 1,503 1,874 1,384

FINANCIAL RATIOS

Operating Margin 62% 58% 60% 61% 58% 67%

EBITDA Margin to

sales

71% 69% 74% 68% 64% 72%

Pre-tax Margin 63% 61% 67% 62% 58% 68%

Net profit to sales 43% 41% 43% 40% 39% 45%

Return on Equity 23%**** 28% 33% 34% 29% 44%

Breakup value per

share (PKR)*

85.48 90.90 95.06 78.03 80.24 75.99

Basic & Diluted

Earnings Per Share

(PKR) – Restated** 19.32**** 21.28 20.76 15.95 11.83 14.05

Price Earnings (P/E)

ratio***

9.5 8.3 6.0 7.9 7.9 5.7

Return on Assets 17%**** 20% 24% 25% 22% 33%

* Break-up value per share is based on the number of shares outstanding as at respective period ends.

** Earnings Per Share includes the effect of the bonus shares issued subsequent to June 30, 2013.

*** P/E ratio is based on the Share Price prevailing at period end and the preceding 12 months earnings. i.e. July to June for

financial years and April to March for the nine months period ended March 31, 2014.

**** These ratios are not annualized and are based on 9 months data.

NOTE: A relaxation from applicability as per clause 17 of Appendix 1 of the Listing Regulations of the Exchanges,

has been given by the Exchanges.

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PART 7

7 MANAGEMENT OF THE COMPANY

7.1. BOARD OF DIRECTORS AND COMPANY SECRETARY OF THE COMPANY

Name Address Designation Directorship in other

Companies Profession

Mr. Asim

Murtaza Khan

c/o PPL

PIDC House

Dr. Ziauddin

Ahmed Rd.

P.O. Box 3942

Karachi -

75530

Chief

Executive

Officer/

Managing

Director

PPL Asia E&P B.V.

(Netherlands)

PPL Europe E&P

Limited (United

Kingdom)

Pakistan Institute of

Corporate Governance

Business

Executive

Mr. Sajid Zahid -do- Director Habib Bank Limited

Joint Senior

Partner Orr,

Dignam & Co.

Mr. Saquib H.

Shirazi -do- Director

Atlas Honda Ltd.

Atlas Power Ltd.

Shirazi Investments

(Pvt.) Ltd.

Shirazi Trading (Pvt.)

Ltd.

Shirazi Capital (Pvt.)

Ltd.

Cherat Cement Ltd.

Pakistan Cables Ltd.

Industrialist

Mr. Mohsin Aziz -do- Director

Aziz Group of

Industries.

A.J. Textile Mills

Limited.

Mohsin Match Factory.

(Pvt.) Ltd.

Mohsin Enterprises

(Pvt.) Ltd.

Premier Formica

Industries Ltd.

Premier Chip Board

Industries Ltd.

A.J. Match (Pvt.) Ltd.

Industrialist

Mr. Arshad

Mirza -do- Director

Government Holdings

(Private) Limited.

Inter-State Gas Systems

(Private) Limited.

Sui Southern Gas

Company Limited

Additional

Secretary (Admn),

Ministry of

Petroleum and

Natural Resources

Mr. Saeedullah

Shah -do- Director None

Director General

Petroleum

Concessions,

Ministry of

Petroleum and

Natural

Resources

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Mr. Zain ul

Abidin Magsi -do- Director None IT Professional

Mr. Javed Masud -do- Director Lahore Transport Company Business

Executive

Mr. Javed Akbar -do- Director

Engro Fertilizers Limited

Engro Powergen Limited

Engro Vopak Terminal

Limited

Dawood Hercules

Corporation Limited

DH Fertilizers Limited

Engro Powergen

Qadirpur Ltd.

Javed Akbar Associates

Business

Executive

Mr. M.

Mubbasshar

Siddique

-do- Company

Secretary None

Business

Executive

7.2. OVERDUE LOANS

There are no overdue loans (local or foreign currency) of the Company.

7.3. PAYOUT BY PAKISTAN PETROLEUM LIMITED

DISTRIBUTION 2008-09 2009-10 2010-11 2011-12 2012-13

9 Months

(July 2013 –

March

2014)

(Unaudited)

Cash Dividend per ordinary share (PKR) 13.00 9.00 12.00 11.50 10.50 5.00*

Cash Dividend Payout Ratio 38.95% 38.43% 45.61% 36.94% 41.13% 25.88%

Bonus Issue 20% 20% 10% 25% 20% Nil

Cash Dividend per preference share (PKR) 3.00 3.00 3.00 3.00 3.00 3.00 * Interim cash dividend declared in the Board of Directors‟ meeting held in January 2014.

7.4. DIVIDEND PAYOUT BY LISTED COMPANIES IN WHICH DIRECTORS ARE HOLDING

DIRECTORSHIPS

Name of the Company 2013 2012 2011 2010 2009 2008

Habib Bank Limited 80%

10%B

75%

10%B

70%

10%B

65%

10%B

60%

10%B

55%

20%B

Atlas Honda Ltd. 75%

25%B

65%

15%B

65%

15%B

50%

15%B

30%

15%B

65%

Cherat Cement Ltd. 25% 20% Nil Nil Nil Nil

Pakistan Cables Ltd. 40% 32.50% 20% 15% 22.50% 10%B

Sui Southern Gas Company Limited Nil 22.50% 25%

5%B

15%

25%B

Nil 12.50%

Dawood Hercules Corporation

Limited 10% 10% 10% 50%

300%B

40%

10%B

25%

10%B

Note: the above table shows only post-listing payouts

B=Bonus

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7.5. PROFILE OF BOARD OF DIRECTORS

Mr. Asim Murtaza Khan

Managing Director & Chief Executive Officer

Mr. Asim Murtaza Khan was appointed Managing Director (MD) and Chief Executive Officer (CEO) by the

Government of Pakistan on May 12, 2011. He is also a Member of the Board Operations and Finance, Human

Resource, Nomination, Risk Management and Procurement Committees. Before his appointment as MD & CEO,

Mr. Khan was Deputy Managing Director of the Company.

Mr. Khan earned his Bachelor‟s in Mechanical Engineering from NED University of Engineering and

Technology, Karachi followed by a Master‟s in Mechanical Engineering from the University of Manchester

Institute of Science and Technology, UK.

Mr. Khan joined PPL in 1982 and has since served on key senior positions, including General Manager

Production, General Manager Projects for Mazarani Field Development, Manager Sui Gas Field, Senior Manager

Field Operations, Manager Materials and Purchasing, Chief Drilling and Production, Production Engineer In-

charge Adhi Field, Senior Design Engineer for Adhi Field Development, Design Engineer for Kandhkot Field

Development Project, Construction and Planning and Progress Engineer for Sui Development and Production

Engineer.

He is on the boards of various organizations, including Petroleum Institute of Pakistan, Pakistan Petroleum

Exploration and Production Companies Association and Community Development Board, Planning and

Development Department, Government of Sindh. He is also Member of Managing Committee of OICCI.

He has also attended several advanced technical and management training programmes and is an alumnus of the

Kellogg School of Management, Northwestern University, USA.

Mr. Khan also serves as a director on the boards of PPL Asia E&P B.V., Pakistan Institute of Corporate

Governance and PPL Europe E&P Limited.

Mr. Sajid Zahid

Director

Mr. Sajid Zahid is the Joint Senior Partner of Orr, Dignam and Company and has been on PPL‟s Board of

Directors since March 2000. He is also member of the Board Risk Management Committee.

Mr. Zahid is a Barrister-at-Law from Lincoln‟s Inn, London with over 40 years of experience in corporate and

commercial law. He has acted as Counsel in national and international arbitrations on behalf of leading local and

foreign organizations, including oil and gas sector companies. Besides, Mr. Zahid has also contributed articles in

prominent journals and presented papers at international conferences.

Mr. Zahid is a director of Habib Bank Limited. He has also served as director, Sui Southern Gas Company

Limited, Chairman, First MicroFinance Bank Limited and member, Banking Laws Review Commission of

Pakistan.

Mr. Saquib H. Shirazi

Director

Mr. Saquib H. Shirazi joined the PPL Board in July 2010 and is Chairman of the Board Nomination Committee

and a member of Board Human Resource Committee.

Mr. Shirazi earned his Bachelor‟s in Economics from Wharton School, University of Pennsylvania, and went on

to complete his Master‟s in Business Administration from Harvard Business School, USA.

He has considerable experience in commercial and investment banking through his association with the Bank of

Tokyo-Mitsubishi, New York. Currently, he is the Chief Executive Officer of Atlas Honda Limited and a member

of the Group Executive Committee of the Atlas Group.

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Mr. Shirazi also serves as director on the boards of Shirazi Investments (Private) Limited, Shirazi Capital

(Private) Limited, Atlas Power Limited, Cherat Cement Limited and Pakistan Cables Limited.

Mr. Mohsin Aziz

Director

Mr. Aziz joined PPL‟s Board of Directors in March 2013 and is the Chairman of the Board Operations and

Finance and Human Resource Committees.

An industrialist by profession, he is Chairman of Aziz Group of Industries with interests in Textile Spinning and

Match, Chipboard and Formica production units as well as interest in agriculture farming.

Mr. Aziz has held various prestigious offices during his career. He was a member of the Central Board of

Directors, State Bank of Pakistan for two terms and was also on the boards of Pakistan Railways and Pakistan

Industrial Development Corporation. Besides, he served as director of Habib Bank Limited and Peshawar Electric

Supply Company as well as president of Sarhad Chamber of Commerce and Industry, Peshawar, two-time

Chairman of All Pakistan Textile Mills Association and as Provincial Minister for Industries, Commerce, Labour,

Mineral Development, Technical Education and Manpower in the Government of Khyber Pakhtunkhwa.

Presently, Mr. Aziz is member of the Board of Investment, Government of Pakistan as well as chairman of

Pakistan Match Manufactures Association. He is also a life member of the Federation of Pakistan Chamber of

Commerce and Industry. He is also chairman of Aziz Group of Industries, A.J. Textile Mills Limited Mohsin

Match Factory (Private) Limited, Mohsin Enterprises (Private) Limited, Premier Formica Industries Limited,

Premier Chip Board Industries Limited and Chief Executive of A.J. Match (Pvt.) Limited.

Mr. Arshad Mirza

Director

Mr. Arshad Mirza was co-opted as member of Pakistan Petroleum Limited‟s Board of Directors on December 19,

2013. He serves as a member of the Board Audit, Nomination and Risk Management Committees.

Mr. Mirza joined civil service in the District Management Group in 1983, after completing a Master‟s in Public

Administration from Quaid-e-Azam University, Islamabad. He later enrolled in National Defence University for

higher training and obtained another Master‟s degree in Defence and Strategic Studies in 2009.

Mr. Mirza has served as Assistant Commissioner, Chakwal and Murree, Additional Deputy Commissioner,

Jhelum, Gujranwala and Rawalpindi and Deputy Commissioner Jhelum. Mr. Mirza also holds a vast experience

in public administration and policy besides having served as the Director Local Government, Administrator

Municipal Corporation and Project Director, Barani Area Development, Rawalpindi.

Additionally, he has also served in various capacities with the Government of Khyber-Pakhtunkhwa, including

Secretary in the Works and Services and Health departments as well as Additional Secretary, Finance and

Planning and Development departments.

Mr. Mirza was then transferred to the Federal Government as Joint Secretary, Ministry of Finance and Revenue

(PMSP Wing) in May 2005, followed by postings in the Prime Minister‟s Secretariat, Earthquake Reconstruction

and Rehabilitation Authority (ERRA) and Environment Division and also worked as Additional Secretary in the

Finance and Water and Power divisions.

He joined the Ministry of Petroleum and Natural Resources on July 22, 2013 as Additional Secretary, the post he

currently holds. He is also the managing director of Government Holdings (Private) Limited, ex-officio board

member, Inter-State Gas Systems (Private) Limited and director, Sui Southern Gas Company Limited.

Mr. Saeedullah Shah

Director

Mr. Saeedullah Shah joined PPL Board in August 2013. He is also a member of the Board Operations and

Finance, Human Resource and Procurement Committees.

http://www.ppl.com.pk/category/departments/corporate-profile

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Mr. Shah holds Master‟s Degree in Petroleum Geology and brings with him rich experience of Petroleum

Industry.

Mr. Shah has been working in various capacities in the Ministry of Petroleum & Natural Resources for last 30

years and has held the positions of Director General (Gas and Admin / Special Projects). Presently, he is the

Director General Petroleum Concessions in the Ministry of Petroleum and Natural Resources since July, 2013.

Mr. Zain-ul-Abidin Magsi

Director

Mr. Zain Magsi joined Pakistan Petroleum Limited‟s Board in July 2010. He also serves as a Member of the

Board Audit Committee.

Mr. Magsi graduated in 1997 from the University of Charleston, USA, and is an Information Technology (IT)

professional with over 14 years of experience.

He has been associated with various reputable organizations, including Ericsson, Proxicom, Legg Mason,

COMTek, Nine Yards Media, Sprint Communications and National Geographics. Between 2007 and 2009, Mr.

Magsi also served as Director Interactive Media and Public Relations in Captus Communications.

Mr. Javed Masud

Director

Mr. Masud joined PPL‟s Board of Directors in February 2013. He is the Chairman of Board Risk Management

Committee and also a member of the Board Operations and Finance, Human Resource, Audit, Nomination and

Procurement Committees.

A Master‟s in Economics from Boston University, USA, Masud has several national and international

publications to his credit.

He served as the founding Chief Executive Officer of Pakistan Credit Rating Agency Limited (PACRA), the first

organization of its kind in the country, for 13 years from 1994 until 2007. In recognition of his contribution for

founding PACRA, he was awarded Sitara-e-Imtiaz by the Government of Pakistan in 2009.

Prior to that, Mr. Masud served as a civil servant for 25 years in various federal ministries, including Ministry of

Planning, Finance and Production.

Besides, Mr. Masud was Pakistan‟s Consul General in South Korea and has served on deputation as Senior

Executive Vice President and Regional Head, Bankers Equity Limited, Lahore. He was also member of

Corporate Law Authority, now known as Securities and Exchange Commission of Pakistan. Mr. Masud has also

worked as a financial and management consultant for the World Bank, IFC and the U.N.

Mr. Masud is a member of the board of Lahore Transport Company.

Mr. Javed Akbar

Director

Mr. Javed Akbar joined the PPL Board in September, 2010. He is the Chairman of Board Audit and Procurement

Committees and also a member of Board Operations and Finance and Risk Management Committees.

Mr. Akbar holds a Master‟s Degree in Chemical Engineering from the United Kingdom and has 39 years of

experience in fertilizer and chemical business with Exxon, Engro and Vopak.

Between 1973 and 2000, he managed the Exxon and Engro fertilizer plants and their expansion in Pakistan,

worked in Exxon‟s Chemical Technology divisions in USA and Canada besides serving as human resources

manager in Exxon, Pakistan.

In 2000, Mr. Akbar was appointed Chief Executive Officer of Engro Vopak Terminal Limited, a joint venture

between Engro and Royal Vopak of Holland. He was also part of the buyout team in 1991 when Exxon divested

its stake in Engro.

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After his retirement, he established a consulting company in 2006, specializing in strategic analyses and

forecasting of petroleum, petrochemical and energy industry trends.

Mr. Akbar serves on the Board of Directors of Engro Fertilizer, Engro Powergen, Engro Vopak Terminal,

Dawood Hercules Corporation, DH Fertilizers, Engro Powergen Qadirpur Ltd and Javed Akbar Associates and is

on the panel of environmental experts of Sindh Environmental Protection Agency.

7.6. MANAGEMENT PROFILE

Mr. Asim Murtaza Khan

Managing Director & Chief Executive Officer

(Please refer paragraph 7.5)

Mr. Moin Raza Khan

Chief Operating Officer / Deputy Managing Director

Mr. Moin Khan‟s association with Pakistan Petroleum Limited (PPL) dates back to 1983, when he was selected

for PPL‟s highly competitive merit-based Foreign Scholarship Scheme for a Master‟s in Geosciences at the

University of Tulsa, USA. On his return home in 1985, he joined PPL as a Geologist.

After nearly a decade, Mr. Khan left the Company when he was Deputy Chief Geologist and rejoined in 2004 as

Senior Manager Exploration with the overall charge of new ventures and international exploration.

During the time he was away from PPL, Mr. Khan worked with Union Texas Pakistan, Lasmo Oil Pakistan,

Lasmo PLC, London and Eni Pakistan Limited, gaining experience with international Exploration and Production

companies operating in Pakistan, Bangladesh, Arabian Peninsula, Indonesia, Ireland and the North Sea.

Mr. Khan took over as General Manager Exploration in 2009, becoming the youngest member of PPL‟s

management team. His tenure saw rapid growth in the Company‟s exploration portfolio and activities.

On February 1, 2012, Mr. Khan was appointed Deputy Managing Director (Operations). Later, on March 5, 2013,

he was redesignated as Chief Operating Officer / Deputy Managing Director of the Company with overall

responsibility for Exploration, Sub Surface Engineering, Production, Projects and International Operations.

Mr. Kamran Wahab Khan

General Manager Finance & Chief Financial Officer

A member of the Institute of Chartered Accountants in England and Wales since 1984, Mr. Kamran Wahab Khan

has over 35 years of professional experience in management positions in the manufacturing and oil and gas

sectors in Pakistan and abroad.

He joined PPL‟s finance function in November 1994 as Chief Corporate Accountant and has since held various

key posts, including Senior Manager Finance. In this capacity, Mr. Khan oversaw the Company‟s budget,

financial results and financial projections as well as joint venture finance. As Project Manager, Mr. Khan was

responsible for the successful implementation of SAP in PPL. He was appointed General Manager Finance in

January 2009.

Mr. Khan has attended various trainings and seminars, including International Oil & Gas Accounting & Financial

Management Course of Professional Development Institute, University of North Texas and the Executive

Development Programme of Kellogg School of Management, Northwestern University, USA.

Mr. Masroor Ahmad

General Manager Human Resources

Mr. Masroor Ahmad has a Master‟s degree from the Institute of Business Administration, Karachi and over 34

years of multifaceted experience with prime focus in human resources management.

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His areas of expertise include HR policy and procedural development, recruitment, employee capacity building

and succession planning, Hay job evaluations, remuneration restructuring / simplification, development and

implementation of reward and recognition systems, union negotiations and industrial relations. In his current

assignment, he is also responsible for employee medical services throughout the Company. He was appointed

General Manager Human Resources in January 2009.

Before joining PPL in July 1999, Mr. Ahmad worked in various multinational companies, handling human

resources, employee development and industrial relations assignments.

Mr. Hayat Ahmad

General Manager Exploration

Mr. Hayat Ahmad joined PPL in 1988 as Geologist. After completing his Master‟s in Geology from University of

Karachi in 1983, Mr. Hayat proceeded to University of Tulsa, Oklahoma, USA in 1984 for Master‟s in

Geosciences, specializing in Petroleum Geochemistry and advanced Carbonate Petrology.

Prior to joining PPL he worked for AnaDrill International for a short period. He is an integral part of the

Company‟s exploration management team and has extensive field experience and theoretical knowledge of

2D/3D seismic survey and prospect evaluation. On November 1, 2012, Mr. Hayat was promoted as General

Manager Exploration with overall responsibility for Company‟s expanding exploration portfolio and activities of

exploration blocks in Pakistan.

Syed Kaleem Akhtar

General Manager Production

A Mechanical engineer from NED University of Engineering and Technology, Karachi, Syed Kaleem Akhtar

started his career with PPL in 1982 as Assistant Drilling Engineer. During his tenure with the Company, spanning

over more than 31 years, he held various technical positions including Senior Manager Drilling Operations.

He was promoted as General Manager Production on March 1, 2013 with overall responsibility of managing

production operations including PPL operated and non-operated joint venture assets.

Mr. Sultan Maqsood

General Manager Corporate Services

Mr. Sultan Maqsood graduated from Edwards College, Peshawar and joined Pakistan Petroleum Limited in 1978.

He has served the Company for over 36 years in various capacities starting with Administration and Personnel at

the head office as well as at field locations including Sui Field. He has been managing the Islamabad office of

PPL for around 20 years. He was appointed General Manager Corporate Services in January 2012.

Mr. Mirza Anwar Hussain

General Manager Information Technology

Mr. Mirza Anwar Hussain holds a Master‟s degree in Business Administration in MIS from Institute of Business

Administration (IBA), Karachi. Besides the above, he also holds B. Tech qualification in Electrical Technology

from University of Engineering & Technology, Lahore.

He joined PPL in 2002 and has a rich experience of over 30 years in airline industry, banking sector, capital

market and oil & gas sector. He has managed the IT function of PPL for the last 12 years as Senior Manager

Information Technology and was appointed General Manager Information Technology in January 2012.

Mr. Javed Siddiqui

General Manager Commercial and Supply Chain

A fellow member of Institute of Cost and Management Accountants of Pakistan (ICMA), Mr. Javed Siddiqui has

an overall experience of over 39 years including about 30 years with PPL. Prior to joining PPL, Mr. Siddiqui

remained associated with Pakistan Mineral Development Corporation and Sui Gas Transmission Company Ltd

from 1975 to 1984.

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He joined Pakistan Petroleum Limited in 1984 as an Assistant Accountant and moved to higher echelons of his

profession and held various key positions at head office and field locations. He was appointed as General

Manager Commercial and Supply Chain on May 2, 2013 with a diversified challenge of managing Material and

Contracts and Commercial / legal affairs.

Mr. Mohammed Ibrahim

Head of Internal Audit

Mr. Mohammed Ibrahim joined Pakistan Petroleum Limited in 1983 as Assistant Accountant, successively

climbing the career ladder and assuming increasing responsibilities, he became the Head of Internal Audit on

May 2, 2013.

A fellow member of the Institute of Chartered Accountants of Pakistan (ICAP) and Institute of Cost &

Management Accountants of Pakistan (ICMA) Mr. Ibrahim also holds a bachelor degree of law. He has more

than 38 years of professional experience.

Prior to joining PPL in 1983, he had been associated with Textile Industry for some time.

Mr. M. Mubbasshar Siddique

Company Secretary

Mr. Mubbasshar Siddique qualified as a Chartered Accountant from the Institute of Chartered Accountants of

Pakistan (ICAP) in 1999. He also qualified the examination of the Chartered Institute of Management

Accountants (CIMA) in 2002. He joined PPL in 2001 as Accountant and successively rose to the position of

Chief Accountant in 2008. In July 2006, he became Assistant Company Secretary and was confirmed as

Company Secretary in January 2011. He has around 15 years post qualification experience.

7.7. QUALIFICATION OF DIRECTORS

The qualification of a Director shall be the holding of at least 500 Ordinary Shares of the value of Rs 5,000 in the

share capital of the Company in his own name relaxable in the case of Directors representing interest holding

Ordinary Shares of the requisite value.

7.8. REMUNERATION OF THE DIRECTORS

Each Director, other than the Chief Executive and any full-time working Director of the Company, shall be

entitled to receive such fee as remuneration for attending every meeting of the Directors or any committee of the

Directors plus such additional amount covering all travelling, hotel and incidental expenses in relation to

attending and returning from meetings of the Directors or any committee of the Directors or general meetings of

the Company or in connection with the business of the Company, as decided from time to time by the Board of

Directors of the Company. The remuneration of the Directors for performing extra services including the holding

of the office of Chairman shall be determined by the Board of Directors of the Company.

7.9. REMUNERATION OF THE CHIEF EXECUTIVE

The remuneration of the Chief Executive shall, subject to Article 58, from time to time be fixed by the Directors

or, if authorised by them, the Chairman, and may be by way of salary or commission or participation in profits or

by any or all of those modes.

7.10. NUMBER OF DIRECTORS

Pursuant to Section 174 of the Ordinance and Article 53 of the Articles of Association of the Company, the

number of directors of the Company shall not be less than Seven (7). Presently, nine (9) Directors are on the

Board as detailed in paragraph 7.1 above and one casual vacancy exists due to resignation of one director.

7.11. APPOINTMENT/ ELECTION OF DIRECTORS

The present Board of Directors has completed their term on 27 September, 2013. Pending nominations of new

candidates for the new term from the majority shareholder, the existing directors are continuing to perform their

functions until appointment of their successors. On receipt of nomination from the majority shareholder, the date

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for fresh election of directors will be announced and the Company shall comply with the provisions of Sections

174 to 178, 180, and 184 of the Ordinance and with the provisions of Articles 53 to 56 of the Articles of

Association of the Company, relating to the election of Directors and matters ancillary thereto.

7.12. INTEREST OF DIRECTORS IN THE COMPANY

The directors may be deemed to be interested to the extent of fees payable to them for attending Board and

Committee meetings. The directors performing whole time service to the Company may also be deemed

interested in the remuneration payable to them from the Company. The directors may also be deemed to be

interested, to the extent of any shares held by them in the Company and the dividends to be declared on their

shareholding in the Company.

7.13. INTEREST OF DIRECTORS IN PROPERTY ACQUIRED BY THE COMPANY

None of the Directors of the Company had or have any interest in any property acquired by the Company within

the last two years or now proposed to be acquired by the Company.

7.14. BENEFITS OF PROMOTERS AND OFFICERS DURING THE LAST TWO YEARS

No amount or benefit has been paid or given within the last two years or is intended to be given to any promoter/

or officer of the Company otherwise than as remuneration for services rendered as whole time executives of the

Company or the dividend/bonus shares paid/issued on the shareholding, if any, of the promoter/officers in the

Company.

7.15. VOTING RIGHTS

The rights and privileges, including voting rights, attached to the ordinary shares of the Company are equal. The

holders of the convertible preference shareholders have no right at any time to vote in respect of any election or

removal of directors.

7.16. BOARD AUDIT COMMITTEE AND ITS COMPOSITION

The Board Audit Committee is composed of the following non-executive Directors:

Mr. Javed Akbar, Independent, Non-Executive Director (Chairman)

Mr. Arshad Mirza, Non-Executive Director (Member)

Mr. Javed Masud, Independent, Non-Executive Director (Member)

Mr. Zain Magsi, Independent, Non-Executive Director (Member)

The Board Audit Committee meetings are held every quarter as per the provisions of the Code of Corporate

Governance issued by SECP (Code). The Committee has its terms of reference which were determined by the

Board of Directors in accordance with the guidelines provided in the Code.

7.17. INTERNAL AUDIT

The Board has setup an effective Internal Audit function managed by qualified and experienced personnel who

are conversant with the Laws and Regulations and policies and procedures of the Company and are involved in

the Internal Audit function on a full time basis.

7.18. POWERS OF DIRECTORS

The business of the Company shall be managed by the Directors who may exercise all such powers of the

Company as are not by the Ordinance or by any statutory modification thereof from time being in force, or by

the Articles of Association, required to be exercised by the Company in General Meeting, subject to the

regulations of the Articles of Association, the Ordinance and any regulations prescribed by the Company in

General Meeting, but no regulation made by the Company in General Meeting shall invalidate any prior act of the

Directors which would have been valid if that regulation had not been made.

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7.19. BORROWING POWERS OF DIRECTORS

Subject to section 196(2) of the ordinance, the directors may from time to time at their discretion borrow and

secure the payment of any sum or sums of money for the purposes of the Company. The directors may secure the

repayment of such moneys in such manner and upon such terms and conditions in all respects as they think fit

and in particular by the issue of debenture or debenture stock of the Company charged upon all or any part of the

property of the company (both present and future).

7.20. INDEMNITY

As given in Article 99 of the Company‟s Articles of Association, every Director or other officer or auditor of the

Company shall be indemnified out of the assets of the Company against any liability incurred by him in

defending any proceedings, whether civil or criminal, in which judgment is given in his favour, or in which he is

acquitted, or in connection with any application in which relief is granted to him by the court from liability for

negligence, default, breach of duty or breach of trust in relation to the affairs of the Company.

7.21. INVESTMENT IN SUBSIDIARIES AND ASSOCIATED COMPANIES

The Company has made investment in the following subsidiary companies whose details, as at March 31, 2014,

are given hereunder:

Name Percentage of

Holding

Investment

(Rupees in

thousand)

The Pakistan Petroleum Provident Fund Trust Co. (Pvt.) Ltd. 100 1

PPL Europe E&P Limited 100 15,664,177

PPL Asia E&P B.V. 100 7,870,946

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PART 8

8 MISCELLANEOUS INFORMATION

8.

8.1. REGISTERED OFFICE


PIDC House, Dr. Ziauddin Ahmed Road

P.O. Box 3942

Karachi, Pakistan

UAN: 111-568-568

Fax: 021-35680005 / 35682125

Website: www.ppl.com.pk

8.2. BANKERS TO OFFER 1. Habib Bank Limited

2. Bank Alfalah Limited

8.3. BANKERS TO THE COMPANY

Allied Bank Limited

Askari Bank Limited

Bank Al-Falah Limited

Bank Al Habib Limited

Barclays Bank Plc.

Citibank N.A.

Deutsche Bank A.G

Faysal Bank Limited

Habib Bank Limited

Habib Metropolitan Bank Limited

MCB Bank Limited

National Bank of Pakistan

NIB Bank Limited

Standard Chartered Bank (Pakistan) Limited

United Bank Limited

8.4. AUDITORS

Ernst & Young Ford Rhodes Sidat Hyder & Co.

Chartered Accountants

Progressive Plaza

Beaumont Road

P.O. Box 15541

Karachi 75530

Pakistan

Phone: (92-21) 3565 0007

Fax: (92-21) 3568 1965

8.5. LEGAL ADVISOR TO THE COMPANY

M/s Surridge & Beecheno

3rd Floor, Finlay House

I.I. Chundrigar Road

Karachi.

8.6. LEGAL ADVISOR TO THE OFFER

Orr, Dignam & Co.

3rd

Floor, State Life Building No. 1-B

I.I. Chundrigar Road

Karachi-74000

8.7. SHARES REGISTRAR

FAMCO Associates (Pvt.) Ltd.

8-F, Next to Hotel Faran, Nursery,

Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi.

Ph: 021- 34380101-05

Fax: 021-34380106

8.8. JOINT LEAD MANAGERS Habib Bank Limited

01-HBL Plaza,

http://www.ppl.com.pk/

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I.I. Chundrigar Road, Karachi

Ph: 021-32418000 Ext. 2741

Fax: 021 32435914

Email: [email protected]

Website: www.hbl.com

Bank Alfalah Limited

B.A. Building

I.I.Chundrigar Road,

Karachi.

Ph: 021 3241 0551

Fax: 021 3242 3617

Email:[email protected]

Website: www.bankalfalah.com

Arif Habib Limited

Arif Habib Centre

23, M.T. Khan Road

Karachi.

Ph: 021 3243 3542

Fax: 021 3246 8117

Email: [email protected] Website: http://www.arifhabibltd.com

Foundation Securities (Pvt.) Limited

Ground Floor, Bahria Complex 2

M.T. Khan Road

Karachi.

Ph: +92 3561 2290-94 Fax: +92 21 3561 2580 Email: [email protected] Website: http://www.fs.com.pk

BMA Capital Management Limited

Unitower, Level 8 , I.I. Chundrigar Road,

Karachi.

Ph: 021 3246 1068

Fax: 021 3243 0748


Website: http://www.bmacapital.com

8.9. JOINT BOOK RUNNERS

Arif Habib Limited

Arif Habib Centre

23, M.T. Khan Road

Karachi.

Ph: 021 3243 3542

Fax: 021 3246 8117

Email: [email protected] Website: http://www.arifhabibltd.com

Foundation Securities (Pvt.) Limited

Ground Floor, Bahria Complex 2

M.T. Khan Road

Karachi.

Ph: +92 3561 2290-94 Fax: +92 21 3561 2580 Email: [email protected] Website: http://www.fs.com.pk


http://www.hbl.com/


http://www.bankalfalah.com/










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8.10. MATERIAL CONTRACTS / DOCUMENTS

The Company has no material contracts executed or outstanding with respect to the Offer.

8.11. INSPECTION OF DOCUMENTS AND CONTRACTS

Copies of the Memorandum and Articles of Association, the audited financial statements, the Auditor‟s

Certificates, referred to in this OFSD may be inspected during usual business hours on any working day at the

registered office of the Company from the date of publication of this OFSD until the closing of the

subscription list.

8.12. LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings other than cases incidental to its operations

and/or those that have been disclosed in Part 6.1 of this OFSD.

8.13. MEMORANDUM OF ASSOCIATION

The Memorandum of Association, inter alia, contains the objects for which the Company was incorporated

and the business which the Company is authorized to undertake. A copy of the Memorandum of Association

is annexed to this OFSD and is being published with all issues of OFSD thereof except those released as

newspapers advertisements.

8.14. FINANCIAL YEAR OF THE COMPANY

The financial year of the Company commences on July 1st

and ends on June 30th

each year.

8.15. REVALUATION OF FIXED ASSETS

The Company has not revalued any of its fixed assets and no such change has been made in the accounts.

8.16. CAPITALIZATION

The Company has capitalized a sum of PKR 12,858,918,120 out of profits till the date of publication.

BMA Capital Management Limited

Unitower, Level 8 , I.I. Chundrigar Road,

Karachi.

Ph: 021 3246 1068

Fax: 021 3243 0748


Website: http://www.bmacapital.com


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PART 9

9 BIDDING FORM OF PAKISTAN PETROLEUM LIMITED

(This space has been left intentionally blank)

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PART 10

10 SIGNATORIES TO THE OFFER FOR SALE DOCUMENT

Signed, as required by section 57(3) read with Section 62(3) of the Companies Ordinance, 1984 by:

For and on behalf of the Offeror,

-sd-

Sardar Ahmad Nawaz Sukhera



Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation


-sd-

Malik Muhammad Akram Khan

Director General (MNR&P)


Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation


Signed by the above in presence of witnesses:

Witness 1 Witness 2

-sd- -sd-

__________________________ __________________

Khurram Bhatti Rascim Khan Khattak Privatisation Commission Privatisation Commission

Ministry of Finance, Revenue, Economic Affairs, Ministry of Finance, Revenue, Economic Affairs,

Statistics and Privatisation Statistics and Privatisation

Government of Pakistan Government of Pakistan

CNIC # 61101-1890010-5 CNIC # 17301-8418521-7

Dated: June 17th

, 2014

Place: Islamabad

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PART 11

11 MEMORANDUM OF ASSOCIATION