Page 61 - Pakistan Oilfield Limited - Annual Report 2022
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Annual Report 2022
Directors’ Report
Risks & Opportunities
The Board remains Following are some material 3. Drilling risk: Oil and gas
committed to risks being faced by the drilling by its very nature
Company along with mitigation
is a high risk activity. The
the philosophy of measures: Company is exposed to
effective business 1. Oil price volatility: The a number of hazards
risk management as pricing for the Company’s during drilling of wells
including well blow out,
a core managerial oil and gas production fishing, fire hazards
competency. The is benchmarked with and personal injury. In
international prices
Board has established of crude oil and addition, the risk of not
discovering oil and/or
a structured related products. Any gas as expected, would
approach to risk unfavorable variance in have an adverse effect on
the international prices
management through adversely affects the earnings. The Company
is mitigating these risks
the formulation of Company’s profitability. by selecting efficient
a risk management 2. Exploration risk: and professional teams
and also by having strict
policy and system. Exploration activity criterion for selecting rig
is prone to the
The Company is in a risk of not finding and other allied services/
continuous process to commercial quantities of equipment. Further, the
Company also obtains
implement, monitor hydrocarbons due to a well insurance cover for
number of factors such
and improve its risk as incorrect selection of all drilling wells.
management policy. exploration acreage, poor 4. Underperformance of
Risks are identified, quality of seismic data, major oil and gas fields:
error in processing or
prioritized and interpretation of seismic The Company’s future
earnings and profitability
incorporated into data, incorrect selection is dependent upon the
a risk management of drilling site. The production and reserves
Company is mitigating
response to exploration risks by of its oil and gas fields.
The actual production
effectively address using latest technologies from fields may differ
and hiring experienced
risks. professionals. The materially from estimates
due to possible under
Company is in continuous performance of the oil
process to explore and gas reservoirs or
new opportunities and other production related
increasing the chances factors.
of success by joining
hands with other E&P 5. Procurement planning
companies by way of related risk: Vulnerability
farm-in and farm-out to the procurement
agreements. process is a possible
threat to the Company’s
profitability.
