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Contents

Corporate
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30 9^gZXidghGZedgi
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55 GZk^ZlGZedgiidi]ZBZbWZgh

Financials
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60 EgdiVcYAdhh6XXdjci
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Company Information

Registered Ofce
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2

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Working for the

Nations Progress

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Notice of Annual General Meeting

Special Business
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Assad Rabbani
Company Secretary

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Statement under Section 160 (1) (b) of the

Companies Ordinance, 1984
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No single department
is the key to delivering
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energy to the
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5

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Vision Statement

Our Vision
Be the leader in the gas market in Pakistan by expanding and developing the gas value chain
including exploration, production, transmission, extraction, processing, distribution and marketing
of gas and gas related processes, products and services in order to bridge the increasing demand
for gas with a view to meeting the needs of the existing and potential customers.
Exploit any hydrocarbon-based sources, when the opportunities present themselves in order to
move beyond the existing gas business with a view to providing superior value to the customers
and others through expansion and synthesis of products and services

BVg^<Vh8dbeVcnA^b^iZY

Mission Statement

Our Mission
Mari Gas Company Limited will be customer-focused and competitive with a view to continue
contributing meaningfully to the national economy, while ensuring viability of the company and
protable dividends to the stakeholders

Our Commitment






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Managing Directors Outlook

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I am pleased to state that Mari Gas Company Limited has completed

yet another year of serving the country by successfully exploiting new
hydrocarbon opportunities and enhancing the value of its shares. This
Report is a clear manifestation that we have maintained our outstanding
performance in all spheres of exploration and production activities. Our
mission for the search of hydrocarbon and its delivery to the national
energy network is being pursued with the utmost professionalism and
innovation. Towards this end, the Company has also, for the rst time
in its history, embarked upon a research & development initiative
to provide the much needed impetus to our dwindling hydrocarbon
resources.
We are also proud of our contributions towards the health and education
of the people in our concession areas. MGCLs CSR methodology
is based on the idea that corporate success and social welfare are
interdependent. Recently, MGCL quickly responded to the immediate
need of rescue in the rain and ood affected areas of Badin, and relief/
rehabilitation operations in Mari Lease areas. Food, medical services,
drinking water and all other civic facilities are still being provided
regularly for about 1500 persons registered in tent villages at Mari
Lease area. MGCL employees have taken an active interest in these
and many other CSR activities and as a consequence, we have seen an
upsurge in the employees morale and commitment.
We are looking forward to a great year ahead by maintaining our
traditions of performance and growth through sound business
strategies, and by harnessing the innovation and commitment of our
employees. We assure you that MGCLs ethos are driven by our desire
to promote the National and Companys interests. We are excited about
the new challenges and opportunities in the E&P sector, and hope that
through the expertise, diligence and dedication of our employees,
MGCL shall usher in a new era of prosperity for our nation and its
shareholders.
BVn6aaV]\gVcijhi]Z[dgi^ijYZidVX]^ZkZVaai]Vi6bZZc

Lt Gen (R) Raza Muhammad Khan

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9

6ccjVaGZedgi'%&&

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Board of Directors

Lt Gen Hamid Rab Nawaz (Retd)

Managing Director Fauji Foundation /
Chairman MGCL Board

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO
Mari Gas Company Ltd

Mr. Qaiser Javed

Director Finance, Fauji Foundation

Dr. Nadeem Inayat

Director Investment, Fauji Foundation

Maj Gen Zahid Parvez (Retd)

Director Welfare (Education),
Fauji Foundation

10

Brig Dr. Gulfam Alam (Retd)

Director P & D, Fauji Foundation

Mr. Sher Muhammad Khan

Director General Petroleum Concessions,
Ministry of P & NR

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Mr. Pervaiz Akhtar

Financial Advisor, Ministry of P & NR

Mr. Basharat A Mirza

Managing Director, OGDCL

Mr. Muhammad Riaz Khan

Executive Director Production, OGDCL

Mr. Liaqat Ali

Director, MGCL Board

Mr. Manzoor Ahmed

Chief Operating Ofcer / SEVP - NIT

Mr. Assad Rabbani

Company Secretary

11

6ccjVaGZedgi'%&&

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Key Management

Sitting Left to Right:

Mr. Muhammad Asif (General Manager Finance), Lt Gen (R) Raza Muhammad Khan (Managing Director / CEO),
Brig (R) Syed Agha Haider Naqvi (General Manager Human Resource)
Standing Left to Right:
Brig (R) Muhammad Aslam Khan(General Manager Admin & Security), Mr. Shahid Salim Khan (General Manager Operations),
Mr. Muhammad Khurshid Akhtar (General Manager Exploration), Mr. Assad Rabbani (Company Secretary),
Brig (R) Abdul Rehman Dogar (General Manager Procurement)
Not in Picture:
Brig (R) SaleemMahmood Khan (Resident General Manager, Quetta)

12

BVg^<Vh8dbeVcnA^b^iZY

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Management

Muhammad Ali Mughal

Asif Ali Rangoonwala

Muhammad Liaquat Ali Khan

Muhammad Aqib Anwar

Javed Iqbal Jadoon

Manager Drilling & Allied Services

Manager Business Development

Incharge Koonj

Manager Finance

Mari Field Manager

Shahid Hussain

Muhammad Saleem Siddique

Ali Ejaz Rasool Mirza

Mahboob Habibi

Tufail Ahmed Khoso

Manager Finance Joint Venture

Manager Reservoir

Manager Accounts

Head Internal Audit

Manager Exploration-I

Major (R) M. Iftikhar-ul-Haq

Gp Capt (R) Shamim Ahmad

Lt Col (R) Shah Rukh

Muhammad Shifaat Alam

Col (R) Shaukat Hassan

Resident Manager Quetta

Manager Procurement

Manager Projects

Manager Exploration-II

Manager Administration, Daharki

Lt Col (R) Ikram Ur Rahim

Muhammad Asim Butt

Saeed Ahmed Qureshi

Sheikh Naveed Ahmed

Manager Project, Daharki

Manager HSE

Manager Production

Acting Manager HR

Lt Col (R) Altaf Hussain

Muhammad Ijaz

Acting Manager Administration

Acting Manager Planning & Engg.

13

6ccjVaGZedgi'%&&

History of the Company

Exploration Business and its Future Vision

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BVg^<Vh8dbeVcnA^b^iZY

MGCL Concessions and Working Interests

15

6ccjVaGZedgi'%&&

MGCL Operated Blocks & Development

and Production Leases
Ziarat Block

Sukkur Block

Karak Block

41.2%

40%

40%

60%

60%
58.8%

MGCL

MND

MGCL

Sujawal Block

PEL

MGCL

Hanna Block

MOL

Harnai Block

20%

20%
40%

40%

40%

40%

100%
MGCL

MGCL

Ghauri Block

MND

OMV

MGCL

Zarghun South D&P

65%

7.20%
40.00%

MGCL

16

PPL

MGCL

PKP

100%
SPUD

OMV

Mari D&P

32.80%

20.00%

35%

MND

GHPL

MGCL

BVg^<Vh8dbeVcnA^b^iZY

MGCL Non-operated Blocks

Hala Block

Kohlu Block
30%

35%

Kalchas Block
30%

30%

20%

65%

50%
40%

PPL (Operator)

MGCL

OGDCL (Operator)

OGDCL (Operator)

Tullow

Tullow

Kohat Block

Bannu West Block

10%

10%

20%

MGCL

MGCL

Oman 43B (Overseas Block)

10%
25%

30%

40%
OGDCL (Operator)
Tullow

MGCL

40%

40%

75%

Tullow (Operator)
Saif Energy

OGDCL

MGCL

Saif Energy

MOL (Operator)

MGCL

Zindan Block
5%
25%

35%
35%
PPL (Operator)
MGCL

GHPL

SAITA

17

6ccjVaGZedgi'%&&

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Integrated Management System Policy

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ISO 9001 : 2008

OHSAS 18001 : 2007

18

ISO 14001 : 2004

ISO/IEC 27001 : 2005

BVg^<Vh8dbeVcnA^b^iZY

Core Values
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The core values MGCL subscribes to are:

Teamwork
Trust &
Respect

Integrity

Research &
Development

Professional
fe
Excellence
c

MGCL
Human
Capital

Winning
Culture

Innovation

H.S.E

19

6ccjVaGZedgi'%&&

Code of Ethics

We view our core personnel

today as more valuable than ever ...
Financial Disclosure
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Time Management
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Insider Trading
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21

6ccjVaGZedgi'%&&

Social Events

MGCL Celebrates
Pakistan Day Celebration

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23

6ccjVaGZedgi'%&&

Financial Highlights

Year 2010-11

24

Year 2009-10

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BVg^<Vh8dbeVcnA^b^iZY

We have always invested in the

ability of our people to apply
imagination and search for
innovations. We will continually
equip them with the resources
they need to succeed
25

6ccjVaGZedgi'%&&

Financial Highlights

20,000

22,648

21,944

28,979

26,864

20,024

17,993

15,000

(Rupees in million)

25,000

21,853

20,000

Gross Revenue

35,000

30,000

24,144

26,323

25,000

(Rupees in million)

32,178

Government Levies

30,000

15,000
10,000
10,000

5,000

2010

2009

2008

2007

Gas Volume

200

171

170

180

188

(BSCF)

2011

2010

2009

2008

2007

Market Share Price Trend

300

Price Per Share (Rupees)

269.5

2011

172

5,000

250

150

129.4

100

107.4

150

148.8

100

175.0

200

50
50

26

2011

2010

2009

2008

2007

2011

2010

2009

2008

2007

BVg^<Vh8dbeVcnA^b^iZY

Application of Revenue Earned

Application of Revenue Earned

For The Year 2010-11

For The Year 2009-10

Development Surcharge
61%

Development Surcharge
67%

Finance
cost
2%
Exploration &
Prospecting
Expenditure
1%
Operating
Expenses
10%
Workers
Funds
1%
Taxation
2%

General Sales Tax

15%
Excise Duty
4%
Royalty
3%

Windfall levy
1%

Finance
cost
2%
Exploration &
Prospecting
Expenditure
2.5% Operating
Expenses
9%

Workers
Funds
0.4%

Royalty
2%

Windfall levy
0.1%

Taxation
1%

Fixed assets
47%

Assets

Equities & Liabilities

2010-11

2010-11

Long term
loans & advances
0.01%

Long term depoists

&
prepayments
0.04%

Deferred taxation
6.43%

Current liatbilities
41%

Deferred liabilities
0.3%

Cash & cash

equivalents
14%

Trade debts
29%

Short term prepayments

0.2%

Loans and advances

1%

Issued, subscribed &

paid up capital
3%
Undistributed
percentage
return reserve
2%

Exploration and
evaluation
reserve
15%

Stores & spares

2%

Interest accrued
0.02%

General Sales Tax

14%
Excise Duty
2%

Provision for
decommissioning cost
13%

Prot and
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FUTURE PROSPECTS, PLANS

AND STRATEGY
Commencement of Goru-B Gas
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EXPLORATION ACTIVITIES
OPERATED BLOCKS
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35

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36

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>c^i^Vaan!lZaaB^VcB^gd"&lVh
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adXVi^dcd[i]ZlZaa^h[Vaa^c\
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37

6ccjVaGZedgi'%&&

Directors Report to the Members

H]Z^`]VcM"&^hdcegdYjXi^dc
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NON OPERATED BLOCKS
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Bannu West block

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Oman 43B block (Overseas

block)
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Zindan block
Kohat block
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New Areas
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RISK MANAGEMENT AND OUTLOOK
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39

6ccjVaGZedgi'%&&

Directors Report to the Members

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40

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Vaadli]Z8dbeVcnidYZkZade
jcXdckZci^dcVaVhhZih^cVbdgZ
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HEALTH, SAFETY AND
ENVIRONMENT (HSE)
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Xdbea^VcXZ#

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]^hidgnd[B<8A!Yg^aa^c\[dg
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^hVhigViZ\^XiVh`#6iVh`
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41

6ccjVaGZedgi'%&&

Directors Report to the Members

^ckZhi^c\^c]jbVcXVe^iVaid
\gddbi]ZbVhV8dbeVcnVhhZi#
6adc\l^i]i]ZhZegdXZhhZh!=G9
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dg\Vc^oVi^dcVa\dVah#
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i.


42

Recruitment:
8dbeVcnbV`ZhXdcXZgiZY
Z[[dgih[dgi]ZgZXgj^ibZcid[

iVaZciZYbVcedlZgl]^X]^h
`cdlaZY\ZVWaZ!Zci]jh^Vhi^X
VcYlZaabdi^kViZY[dgi]Z
Vhh^\cZYiVh`#

XdjghZhVcYiVh`gdiVi^dc
]Zaei]ZbidXdeZl^i]h]dgi
iZgbVhlZaaVhadc\iZgb
dg\Vc^oVi^dcVaX]VaaZc\Zh#
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bZcidg^c\egdXZhhd[
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]jbVc^ciZaaZXiVcYdkZgVaa
eZghdcVa^ind[i]ZZbeadnZZh
l]^X]Vj\bZcih^cVX]^Zk^c\
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ii. Utilizing Human Capital to

its Max:

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YZkZadebZciZbeadnZZhl^i]
\ddY`cdlaZY\ZVcYh`^aah
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iii. Training & Development:
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d[Vcdg\Vc^oVi^dc#


>cXgZVh^c\i]Z_dW`cdlaZY\Z
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iv. Job Satisfaction and

Motivation:

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v.


Succession Planning:
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vi. Employee Retention:


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vii. Fresh Talent Hunt:

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[jijgZhkVajVWaZVhhZih#
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^cB<8AWjiVahdbdc^idgZYViVaa
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ZbeadnZZhVhlZaaVhXdbeVcnh
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INFORMATION TECHNOLOGY
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8dbeVcnhWjh^cZhhdW_ZXi^kZh#
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43

6ccjVaGZedgi'%&&

Directors Report to the Members

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INDUSTRIAL RELATIONS
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44

CORPORATE SOCIAL
RESPONSIBILITY (CSR)
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MARI D & P LEASE AREA
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We build upon
our strengths,
and weaknesses
gradually take care
of themselves
45

6ccjVaGZedgi'%&&

Directors Report to the Members

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49

6ccjVaGZedgi'%&&

Directors Report to the Members

Major Gen Zahid Parvez (Retd) 
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Mr. Liaqat Ali
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Dr. Nadeem Inayat
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Mr. Basharat A. Mirza
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Mr. Sher Muhammad Khan
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Dr Nadeem Inayat

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dWiV^c Vc jcYZghiVcY^c\ d[ i]Z

55

6ccjVaGZedgi'%&&

56

 Mari Gas Company Limited

Financial Statements of
Mari Gas Company Limited
for the year ended June 30, 2011

57

Annual Report 2011

Balance Sheet
as at June 30, 2011

Note

2011
2010
(Rupees in thousand)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES
Authorized capital
250,000,000 ordinary shares of Rs. 10 each
Issued, subscribed and paid up capital
Undistributed percentage return reserve
Exploration and evaluation reserve
Prot and loss account

2,500,000

2,500,000

735,000
490,220
4,057,194
5,388,001

735,000
364,205
2,800,268
5,291,353

10,670,415

9,190,826

8
9

1,300,000
3,528,410

1,720,000
2,460,885

10

88,791

76,196

4,917,201

4,257,081

9,871,460
420,000
498,409

7,787,846
380,000
296,661

10,789,869

8,464,507

26,377,485

21,912,414

4
5
6
7

NONCURRENT LIABILITIES
Long term nancing secured
Provision for decommissioning cost
Deferred liabilities
Employee benets unfunded

CURRENT LIABILITIES
Accrued and other liabilities
Current maturity of long term nancing secured
Provision for taxation

CONTINGENCIES AND COMMITMENTS

11
8
12

13

The annexed notes from 1 to 40 form an integral part of these nancial statements.

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO
58

 Mari Gas Company Limited

Note

2011
2010
(Rupees in thousand)

ASSETS
NONCURRENT ASSETS
Property, plant and equipment
Intangible
Development and production assets
Exploration and evaluation assets

Long term loans and advances

Long term deposits and prepayments
Deferred taxation

14

4,787,239

4,540,056

15
16

3,392,447
4,057,194

3,075,836
2,800,268

7,449,641

5,876,104

2,341
11,015
1,692,398

2,850
10,878
1,072,873

13,942,634

11,502,761

484,906
7,706,622
334,773
48,474
6,581
73,508
3,779,987

290,262
6,099,654
336,388
27,450
44,634
3,960
3,607,305

12,434,851

10,409,653

26,377,485

21,912,414

17
18
19

CURRENT ASSETS
Stores and spares
Trade debts
Loans and advances
Short term prepayments
Interest accrued
Other receivables
Cash and cash equivalents

20
21
22
23
24
25

Qaiser Javed
Director
59

Annual Report 2011

Profit and Loss Account

for the year ended June 30, 2011

Note

Gross sales to customers

26

Gas development surcharge

General sales tax
Excise duty
Wind fall levy
Surplus payable to the President of Pakistan
as per the Agreement
Sales net
Royalty

Operating expenses
Exploration and prospecting expenditure

27
28

Operating prot
Finance cost
Workers fund

29
30

2011
2010
(Rupees in thousand)
31,402,132

28,490,653

17,719,495
4,440,084
1,361,913
266,165

17,710,340
3,889,878
671,554
31,947

804,789

946,817

24,592,446

23,250,536

6,809,686

5,240,117

847,579

660,553

5,962,107

4,579,564

2,996,889
378,828

2,409,175
744,677

3,375,717

3,153,852

2,586,390

1,425,712

715,756
204,160

465,539
97,804

919,916

563,343

1,666,474

862,369

Other income

31

775,686

488,719

Prot before taxation

Taxation

32

2,442,160
716,860

1,351,088
165,134

1,725,300

1,185,954

380,325
1,256,926
88,049

336,960
848,994

1,725,300

1,185,954

33

5.17

4.58

33

23.47

16.14

Prot for the year

Prot for the year represents the following:
Distributable prots
Exploration and evaluation reserve
Prot and loss account undistributable balance

6
7.1

Earnings per share basic and dilutive

Earnings per share on the basis of
distributable prots (Rupees)
Earnings per share on the basis of
prot and loss account (Rupees)

The annexed notes from 1 to 40 form an integral part of these nancial statements.

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO
60

Qaiser
Javed
Q i
J d
Director

 Mari Gas Company Limited

Statement of Comprehensive Income

for the year ended June 30, 2011

2011
2010
(Rupees in thousand)
Prot after taxation

1,725,300

1,185,954

1,725,300

1,185,954

Other comprehensive income

Total comprehensive income for the year

The annexed notes from 1 to 40 form an integral part of these nancial statements.

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO

Qaiser Javed
Director
61

Annual Report 2011

Cash Flow Statement

for the year ended June 30, 2011

Note

2011
2010
(Rupees in thousand)

Cash ows from operating activities

Cash generated from operations
Increase / (decrease) in long term loans and advances
Increase in long term deposits and prepayments
Employee benets paid unfunded
Taxes paid

34

Net cash from operating activities

3,664,484
509
(137)
(3,102)
(1,134,637)

3,019,112
(1)
(577)
(6,377)
(710,122)

2,527,117

2,302,035

Cash ows from investing activities

Purchase of property, plant and equipment
Development and production assets
Exploration and evaluation assets
Proceeds from disposal of property, plant and equipment
Interest received

(710,587)
(69,174)
(1,256,926)
8,942
500,094

(70,104)
(360,323)
(848,994)
7,178
400,476

Net cash used in investing activities

(1,527,651)

(871,767)

(Repayment)/receipt of Long term nancing secured

Finance cost paid
Dividends paid

(380,000)
(259,737)
(187,047)

900,000
(169,754)
(247,847)

Net cash (used) / from nancing activities

(826,784)

482,399

Cash ows from nancing activities

Increase in cash and cash equivalents

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

25

172,682

1,912,667

3,607,305

1,694,638

3,779,987

3,607,305

The annexed notes from 1 to 40 form an integral part of these nancial statements.

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO
62

Qaiser Javed
Director

 Mari Gas Company Limited

Statement of Changes in Equity

for the year ended June 30, 2011

Share
capital

Undistributed
percentage
return reserve

Genneral
reserve

Exploration
and evaluation
reserve

Prot
and loss
account

Total

(Rupees in thousand)

367,500

2,046

638,410

1,951,274

5,273,492

8,232,722

Prot for the year

1,185,954

1,185,954

Other Comprehensive income

Total comprehensive income for the year

1,185,954

1,185,954

Dividends

(227,850)

Undistributed percentage return reserve

91,249

(91,249)

Exploration and evaluation reserve

848,994

(848,994)

Bonus shares issued during the year

367,500

(2,046)

(365,454)

Balance as at June 30, 2010

735,000

364,205

2,800,268

5,291,353

9,190,826

Prot for the year

1,725,300

1,725,300

Other Comprehensive income

Total comprehensive income for the year

Dividends

(245,711)

Undistributed percentage return reserve

126,015

(126,015)

Exploration and evaluation reserve

1,256,926

(1,256,926)

735,000

490,220

4,057,194

5,388,001

10,670,415

Balance as at July 01,2009

Balance as at June 30, 2011

(227,850)

1,725,300

1,725,300
(245,711)

The annexed notes from 1 to 40 form an integral part of these nancial statements.

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO

Qaiser Javed
Director
63

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

1.

LEGAL STATUS AND OPERATIONS

Mari Gas Company Limited (the Company) is a public limited company incorporated in Pakistan on
December 04, 1984 under the Companies Ordinance, 1984. The shares of the Company are listed on
the Karachi, Lahore and Islamabad stock exchanges in Pakistan. The Company is principally engaged
in drilling, exploration, production and sale of hydrocarbons. The gas price mechanism is governed
by Mari Gas Well Head Price Agreement (the Agreement) dated December 22, 1985 between the
President of Islamic Republic of Pakistan and the Company. The registered ofce of the Company is
situated at 21 Mauve Area, 3rd Road, G10/4, Islamabad.

2.

STATEMENT OF COMPLIANCE AND SIGNIFICANT ESTIMATES

2.1

STATEMENT OF COMPLIANCE
These nancial statements have been prepared in accordance with approved accounting
standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984
and directives issued by the Securities and Exchange Commission of Pakistan. Approved
accounting standards comprise of such International Accounting Standards (IASs) and
International Financial Reporting Standards (IFRSs) issued by the International Accounting
Standards Board (IASB) as are notied under the provisions of the Companies Ordinance,
1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by
the Securities and Exchange Commission of Pakistan differ with the requirements of these
standards, the requirements of the Companies Ordinance, 1984 or that of the said directives
take precedence.

2.2

SIGNIFICANT ESTIMATES
The preparation of nancial statements in conformity with IASs / IFRSs requires management
to make judgments, estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and other factors that are believed
to be reasonable under the circumstances, the results of which form the basis of making
judgement about carrying amounts of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which estimates are revised if the
revision affects only that period, or in the period of revision and future periods if the revision
affects both current and future periods.
Judgements made by the management in the application of IASs / IFRSs that have signicant
effect on the nancial statements and estimates with a signicant risk of material adjustment
in the next year are discussed in ensuing paragraphs:
a) Estimation of natural gas reserves
Gas reserves are an important element in impairment testing for development and
production assets of the Company. Estimates of these reserves are inherently imprecise,

64

 Mari Gas Company Limited

require the application of judgement and are subject to future revision. Proved reserves are
estimated by reference to available reservoir and well information, including production
and pressure trends for producing reservoirs and, in some cases, subject to denitional
limits, to similar data from other producing reservoirs. All proved reserve estimates are
subject to revision, either upward or downward, based on new information, such as from
development drilling and production activities or from changes in economic factors,
including contract terms or development plans. Changes to the Companys estimates
of proved reserves, particularly proved developed reserves, also affect the amount of
depreciation, depletion and amortization recorded in the nancial statements for xed
assets related to hydrocarbon production activities.
b) Provision for decommissioning cost
Provision is recognized for the future decommissioning and restoration of oil and gas
wells, production facilities and pipelines at the end of their economic lives. The timing
of recognition requires the application of judgement to existing facts and circumstances,
which can be subject to changes. Estimates of the amounts of provision are based
on current legal and constructive requirements, technology and price levels. Because
actual outows can differ from estimates due to changes in laws, regulations, public
expectations, technology, prices and conditions, and can take place many years in the
future, the carrying amount of provision is regularly reviewed and adjusted to take
account of such changes.
c) Employee benets
Certain actuarial assumptions have been adopted as disclosed in note 35 to the
nancial statements for determination of present value of dened benet obligations
and fair value of plan assets. Any changes in these assumptions in future years might
affect the unrecognized gains and losses in those years.
d) Income taxes
In making the estimates of income taxes currently payable by the Company, the
management takes into account the income tax law applicable to the Company and the
decisions of appellate authorities on certain issues in the past. This involves judgement
on the future tax treatment of certain transactions. Deferred tax is recognized based on
the expectation of the tax treatment of these transactions.
e) Property, plant and equipment
The Company reviews the useful lives of property, plant and equipment on regular
basis. Any change in the estimates in future years might affect the carrying amounts of
respective items of property, plant and equipment with a corresponding effect on the
depreciation charge and impairment, if any.

65

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

2.3

NEW ACCOUNTING STANDARDS, AMENDMENTS AND IFRIC ITERPRETATIONS THAT ARE

NOT YET EFFECTIVE
The following standards, amendments and interpretations of approved accounting standards,
effective for accounting periods beginning as mentioned there against are either not relevant
to the companys current operations or are not expected to have signicant impact on the
companys nancial statements other than certain additional disclosures:
- Amendments to IFRIC 14 The Limit on a Dened Benet Asset,
Minimum Funding requirements and their Interaction.
- IFRS 12 Disclosure of Interests In other Entities
- IFRS 13 Fair value measurement
- Amendments to IAS 1 Presentation of Financial Statement
- IAS 12 (amendments) - Deferred Tax: Recovery of underlying assets
- IFRIC 14 (IAS 19 - The Limit on a Dened Benet Asset,
Minimum Funding Requirements and their Interaction)
- IAS 24 (revised denition of related parties) - Related Party Disclosures
- IAS 34 - (amendments ) - Interim Financial Reporting
- IFRS 11 Joint Arrangements
- Amendments to IFRIC 13 Customers Loyalty Programmes
- Reissued as IAS 27 Consolidated and Separated Financial Statements
- Amendments to IFRS 5 Non- Currents Assets Held for Sale and
Discontinued Operations
- IFRS 10 Consolidated Financial Statements
- Amendments to IFRS 7 Financial Instrument Disclosures
- Reissued as IAS 28 Investment in Associates
- IFRS 9 Financial Instruments - Classication and Measurement

2.4

Ist January 2011

Ist January 2013
Ist January 2013
Ist January 2011
Ist January 2012
Ist January 2011
Ist January 2011
Ist January 2011
Ist January 2013
Ist January 2011
Ist January 2013
Ist January 2010
Ist January 2013
Ist January 2011
Ist January 2013
Ist January 2013

NEW ACCOUNTING STANDARDS, AMENDMENTS AND IFRIC INTERPRETATIONS THAT ARE

EFFECTIVE BUT NOT RELEVANT TO THE COMPANYS OPERATIONS
Effective beginning or after
- Amendments to IFRS 5 Non - Current Assets Held for Sale
and Discontinued Operations
- Amendments to IFRS 8 Operating Segments
- Amendments to IAS 36 Impairment of Assets
- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

3.

Ist January 2010

Ist January 2010
Ist January 2010
Ist July 2010

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1

Accounting convention
These nancial statements have been prepared under the historical cost convention except
that the obligation under certain employee benets and the provision for decommissioning
cost have been measured at present value.

3.2

Gas price mechanism

In terms of the Mari Gas Well Head Price Agreement, well head gas price for each ensuing
year is determined in accordance with the principles of gas price formula set out in Article
II of the Agreement. The Agreement states that the gas price will be at the minimum level
to ensure that total revenues generated from sale of gas and other income are sufcient to

66

 Mari Gas Company Limited

provide a minimum return of 30%, net of all taxes, on Shareholders Funds (as dened in the
Agreement) after meeting specied ratios and deductibles. The return to shareholders is to
be escalated in the event of increase in the Companys gas production beyond the level of
425 MMSCFD at the rate of 1%, net of all taxes, on Shareholders Funds for each additional
20 MMSCFD of gas or oil produced, prorated for part thereof on annual basis, subject to a
maximum of 45%. The minimum return to shareholders for the year was 34.60% (2010 :
33.43%).
Effective July 01, 2001, the Government has authorized the Company to incur expenditure
not exceeding Rupee equivalent of US$ 20,000,000 per annum or 30% of the Companys
annual gross sales revenue as disclosed in the last audited nancial statements, whichever
is less, in connection with exploration and development in any concession area other than
Mari Field, provided that if such exploration and development results in additional gas or
oil production, the revenues generated from such additional gas or oil production shall be
credited to and treated as revenue under the Agreement.
3.3

Taxation
Provision for current taxation is based on taxable income at the applicable tax rates. The
Company accounts for deferred taxation on all timing differences, using the liability method
in respect of all major temporary differences between carrying amounts of assets and liabilities
in the nancial statements and the corresponding tax bases used in the computation of the
taxable prot. Deferred tax liabilities are recognized for all taxable temporary differences and
deferred tax assets are recognized to the extent, it is probable that taxable prots will be
available against which deductible temporary differences, unused tax losses and tax credits
can be utilized. Deferred taxation has been calculated at the estimated effective tax rate of
35% after taking into account the availability of depletion allowance.

3.4

Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as
a result of past events and, it is probable that an outow of resources embodying economic
benets will be required to settle the obligation and a reliable estimate can be made of the
amount of obligation.

3.5

Decommissioning cost
Estimated decommissioning and restoration costs, which are primarily in respect of
abandonment and removal of wells and production facilities at Mari Field and the Companys
proportionate share in joint venture elds, are based on current requirements, technology
and price levels and are stated at present value, and the associated asset retirement costs are
capitalized as part of property, plant and equipment and development and production assets
and amortized on unit of production basis over the total proved reserves of the relevant eld.
The liability is recognized once an obligation (whether legal or constructive) crystallizes in
the period when a reasonable estimate of the fair value can be made; and a corresponding
amount is recognized in property, plant and equipment and development and production
assets.
The present value is calculated using amounts discounted over the useful economic life
of the reserves. Any change in the present value of the estimated expenditure is dealt
with prospectively and reected as an adjustment to the provision and a corresponding
adjustments to property, plant and equipment and development and production assets. The
unwinding of discount on decommissioning provision is recognized as nance cost.
67

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

3.6

Employee benets
The Company operates:
i)

Dened benet funded gratuity plans for its management and nonmanagement
employees. Contributions are made to these plans on the basis of actuarial
recommendations. Actuarial valuations are conducted periodically using the Projected
Unit Credit Method and the latest valuation was carried out as at June 30, 2011. The
results of the valuation are summarized in note 35 to these nancial statements.
Actuarial gains and losses in excess of corridor limit (10 percent of the higher of fair
value of plan assets and present value of obligations) are recognized over the expected
remaining working lives of the employees. The latest valuation was carried out as at June
30, 2011 using discount rate of 14.50% per annum and salary increase rate of 14.50%
per annum.

ii) Dened benet unfunded pension plan for its nonmanagement employees. Liability
related to accumulated period of service of eligible employees is recognized based on
actuarial valuation. The latest valuation was carried out as at June 30, 2011 using
discount rate of 14.50% per annum and pension increase rate of 9.5% per annum.
iii) Dened contribution provident fund for its permanent employees for which contributions
are charged to prot and loss account for the year. The contributions to the fund are
made by the Company at the rate of 10% per annum of the basic salary.
iv) The Company has accrued post retirement medical benets for management employees
eligible under this scheme, based on actuarial valuation as at June 30, 2011 using
discount rate of 14.50% per annum and an increase in cost of medical benets of 9.75%
per annum.
v) The Company has accrued post retirement leave benets of its management employees
based on actuarial valuation carried out as at June 30, 2011 using discount rate of
14.50% per annum and salary increase rate of 14.50% per annum.
3.7

Property, plant and equipment

Property, plant and equipment except freehold land are stated at cost less accumulated
depreciation and impairment loss, if any. Freehold land is stated at cost. Cost in relation to
property, plant and equipment comprises acquisition and other directly attributable costs
and decommissioning cost as referred in note 3.5 to these nancial statements.
Depreciation on property, plant and equipment is charged to income using the straight line
method at rates specied in note 14 to these nancial statements so as to write off the
cost of property, plant and equipment over their estimated useful lives without taking into
account any residual value.
Depreciation on additions to property, plant and equipment is charged from the month in
which an asset is available for use while no depreciation is charged for the month in which
the asset is disposed off.
Subsequent costs are included in the assets carrying amounts when it is probable that future
economic benets associated with the item will ow to the Company and the cost of the
item can be measured reliably. Carrying amount of parts so replaced, if any is derecognized.

68

 Mari Gas Company Limited

All other repairs and maintenance are charged to income as and when incurred. Gains and
losses on disposals are credited or charged to income in the year of disposal.
Capital work in progress is stated at cost less impairment loss, if any, and transferred to
respective item of property, plant and equipment when available for intended use.
The carrying amounts of the Companys assets are reviewed at each balance sheet date to
determine whether there is any indication of impairment loss. If any such indication exists,
the recoverable amount of such assets is estimated and impairment losses are recognized in
the prot and loss account. Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised recoverable amount but limited to the
extent of the carrying amount that would have been determined (net of amortization or
depreciation) had no impairment loss been recognized for the asset in prior years. A reversal
of the impairment loss is recognized as income in the prot and loss account.
3.8

Exploration and evaluation assets

The Company applies the successful efforts method of accounting for Exploration and
Evaluation (E&E) expenditures. Under this method of accounting, exploratory/evaluation
drilling expenditures are initially capitalized as intangible E&E assets in cost centers by
well, eld or exploration area, as appropriate, till such time that technical feasibility and
commercial viability of extracting gas and oil are demonstrated.
Major costs capitalized include material, chemical, fuel, well services, rig costs and any other
cost directly attributable to a particular well. All other exploration costs including cost of
technical studies, seismic acquisition and processing, geological and geophysical activities
are charged currently against income as exploration and prospecting expenditure. Costs
incurred prior to having obtained the legal rights to explore an area are charged directly to
the prot and loss account as and when incurred.
Tangible assets used in E&E activities other than stores held, include the Companys vehicles,
drilling rigs and other property, plant and equipment used by the Companys exploration
function and are classied as property, plant and equipment. However, to the extent that
such a tangible asset is consumed in developing an intangible E & E asset, the amount
reecting that consumption is recorded as part of the cost of the intangible E&E asset.
Such intangible costs include directly attributable overheads, including the depreciation of
property, plant and equipment utilized in E&E activities, together with the cost of other
materials consumed during the exploration and evaluation phases.
Intangible E&E assets relating to each exploration license/eld are carried forward, until
the existence or otherwise of commercial reserves have been determined subject to certain
limitations including review for indications of impairment. If commercial reserves have been
discovered, the carrying value after any impairment loss of the relevant E&E assets is then
reclassied as development and production assets and if commercial reserves have not been
found, the capitalized costs are written off as dry hole costs.
Intangible E&E assets are not amortized prior to the conclusion of appraisal activities.
Intangible E&E assets are assessed for impairment when facts and circumstances indicate
that carrying amounts may exceed the recoverable amounts of these assets. Such indicators
69

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

include, the point at which a determination is made as to whether or not commercial reserves
exist, the period for which the Company has right to explore has either expired or will expire
in the near future and is not expected to be renewed, substantive expenditure on further
exploration and evaluation activities is not planned or budgeted and any other event, that
may give rise to indication that such assets are impaired.
3.9

Development and production assets

Development and production assets are accumulated generally on a eld by eld basis
and represent the cost of developing the discovered commercial reserves and bringing
them into production, together with the capitalized E&E expenditures incurred in nding
commercial reserves transferred from intangible E&E assets as outlined in note 3.8 above.
The cost of development and production assets also includes the cost of acquisitions of such
assets, directly attributable overheads, and the cost of recognizing provisions for future site
restoration and decommissioning. Development and production assets are amortized from
the commencement of production on a unit of production basis, which is the ratio of oil and
gas production in the year to the estimated quantities of commercial reserves at the end of
the year plus the production during the year.
Changes in the estimates of commercial reserves or future eld development costs are dealt
with prospectively. However amortization of drilling expenditure related to wholly owned
Mari Field is charged to income over a period of 10 years in line with the requirements of the
Agreement. Acquisition cost of leases, where commercial reserves have been discovered, are
capitalized and amortized on unit of production basis.
Impairment test of development and production assets is also performed whenever events
and circumstances arising during the development and production phase indicate that
carrying amounts of the development and production assets may exceed their recoverable
amount. Such circumstances depend on the interaction of a number of variables, such as
the recoverable quantities of hydrocarbons, the production prole of the hydrocarbons, the
cost of the development of the infrastructure necessary to recover the hydrocarbons, the
production costs, the contractual duration of the production concession and the net selling
price of the hydrocarbons produced.
The carrying amounts are compared against expected recoverable amounts of the oil and gas
assets, generally by reference to the present value of the future net cash ows expected to
be derived from such assets. The cash generating unit applied for impairment test purpose is
generally on eldbyeldbasis, except that a number of elds may be grouped as a single
cash generating unit where the cash ows of each eld are inter dependant.

3.10

Stores and spares

These are valued at the lower of cost and net realizable value less allowance for obsolete and
slow moving items. Material in transit is valued at cost. Cost is determined on the moving
average basis and comprises cost of purchases and other costs incurred in bringing the items
to their present location and condition. Net realizable value signies the estimated selling
price in the ordinary course of business less costs necessarily to be incurred in order to make
a sale.

70

 Mari Gas Company Limited

3.11

Foreign currencies
Pakistan rupee is the functional as well as reporting currency of the Company. Transactions
in foreign currencies are recorded at the rate of exchange prevailing on the date of the
transaction. All monetary assets and liabilities in foreign currencies are translated into Pak.
rupee at the rate of exchange prevailing at the balance sheet date. All exchange differences
are taken to the prot and loss account.

3.12

Revenue recognition
Revenue from sale of gas, oil and LPG is recognized on delivery of the same to customers.
Income from bank deposits is recognized proportionately with reference to the principal
outstanding and the applicable rate of return.

3.13

Borrowing cost
Borrowing costs which are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalised as part of the cost of that asset. All other borrowing costs
are charged to prot or loss.

3.14

Joint venture operations

The Company has certain contractual arrangements with other participants to engage in
joint activities where all signicant matters of operating and nancial policies are determined
by the participants in such a way that the operation itself has no signicant independence to
pursue its commercial strategy. These arrangements do not constitute a joint venture entity
due to the fact that nancial and operational policies of such joint ventures are those of the
participants. The nancial statements of the Company include its share of assets, liabilities
and expenses in such joint ventures which is pro rata to the Companys interest in the joint
venture operations.
The Companys share of assets, liabilities and expenses in joint venture operations is
recognized on the basis of latest available audited nancial statements of the joint ventures
and where applicable, the cost statements received from the operator of the joint venture,
for the intervening period up to the balance sheet date.

3.15

Financial instruments
Financial assets and liabilities are recognized when the Company becomes a party to the
contractual provisions of the instrument and assets and liabilities are stated at fair value. The
Company derecognizes the nancial assets and liabilities when it ceases to be a party to such
contractual provisions of the instrument. The Company recognizes the regular way purchase
or sale of nancial assets using settlement date accounting.
Financial assets mainly comprise loans, advances, deposits, trade debts, interest accrued and
cash and cash equivalents. Financial liabilities are classied according to the substance of
the contractual arrangements entered into. Signicant liabilities are long term nancing and
accrued and other liabilities.
All nancial assets and liabilities are initially measured at cost which is the fair value of
the consideration given and received respectively. These nancial assets and liabilities are
subsequently measured at fair value or cost, as the case may be.
71

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

3.16

Offsetting
Financial assets and liabilities and tax assets and liabilities are offset in the balance sheet,
only when the Company has a legally enforceable right to set off the recognized amounts
and intends either to settle on a net basis or to realize the assets and settle the liabilities
simultaneously.

3.17

Trade debts and other receivables

Trade debts and other receivables are due on normal trade terms. These are carried at
original invoiced amount less provision for doubtful debts, if any. Balances considered bad
and irrecoverable are written off when identied.

3.18

Cash and cash equivalents

Cash and cash equivalents for the purposes of cash ow statement comprise cash in hand
and at bank and include short term highly liquid investments that are readily convertible to
the known amounts of cash and are subject to an insignicant risk of change in value. Cash
and cash equivalents are carried in balance sheet at cost except for foreign currency deposits
which are carried at fair value.

3.19

Trade and other payables

Liabilities for trade and other payables are carried at cost which is the fair value of the
consideration to be paid in future for goods and services received.

3.20

Dividend
Dividend is recognized as a liability in the period in which it is declared.

3.21

Transactions with related parties

Transactions involving related parties arising in the normal course of business are conducted
at an arms length on the same terms and conditions as are applicable to third party
transactions.

3.22

Operating leases
Rentals payable for vehicles under operating leases are charged to prot and loss account
over the term of the relevant lease.

72

 Mari Gas Company Limited

Note
4.

2011
2010
(Rupees in thousand)

ISSUED, SUBSCRIBED AND PAID UP CAPITAL

24,850,007 (2010 : 24,850,007) ordinary shares of
Rs. 10 each issued for cash

248,500

248,500

11,899,993 (2010 : 11,899,993) ordinary shares of

Rs. 10 each issued for consideration other than cash

119,000

119,000

36,750,000 (2010: 36,750,000) ordinary shares of

Rs. 10 each issued as Bonus Shares

367,500

367,500

735,000

735,000

40.00%
20.00%
18.20%

40.00%
20.00%
18.20%

Major shareholding of the Company is as follows;

Fauji Foundation
Oil and Gas Development Company Limited
Government of Pakistan

4.1

4.1

Government of Pakistan share holding has been reduced with effect from March 12, 2010
due to transfer of shares to MGCL Employees Empowerment Trust (MGCL EET) created for
implementation of Benazir Employees Stock Option Scheme.

4.2

Application of IFRS 2 Share Based Payment

On August 14, 2009, the Government of Pakistan (GoP) launched Benazir Employees Stock
Option Scheme (the Scheme) for employees of certain State Owned Enterprises (SOEs)
and nonState Owned Enterprises where GoP holds signicant investments (nonSOEs). The
Scheme is applicable to permanent and contractual employees who were in employment of
these entities on the date of launch of the Scheme, subject to completion of ve years vesting
period by all contractual employees and by permanent employees in certain instances.
The Scheme provides a cash payment to employees on retirement or termination based on
the price of shares of respective entities. To administer this Scheme, GoP shall transfer 12%
of its investment in such SOEs and nonSOEs to a Trust Fund to be created for the purpose
by each of such entities. The eligible employees would be allotted units by each Trust Fund
in proportion to their respective length of service and on retirement or termination such
employees would be entitled to receive such amounts from Trust Funds in exchange for
the surrendered units as would be determined based on market price of listed entities or
breakup value for nonlisted entities. The shares relating to the surrendered units would be
transferred back to GoP.
The Scheme also provides that 50% of dividend related to shares transferred to the respective
Trust Fund would be distributed amongst the unitholder employees. The balance 50%
dividend would be transferred by the respective Trust Fund to the Central Revolving Fund
managed by the Privatization Commission of Pakistan for the payment to employees against
surrendered units. The decit, if any, in Trust Funds to meet the repurchase commitment
would be met by GoP.

73

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

The Scheme, developed in compliance with the stated GoP policy of empowerment of
employees of the State Owned Enterprises need to be accounted for by the covered entities,
including the Company, under the provisions of the amended International Financial Reporting
Standard to share based payment (IFRS 2). However, keeping in view the difculties that may
be faced by the entities covered under the Scheme, the Securities and Exchange Commission
of Pakistan on receiving representation from some of the entities covered under the scheme
and after having consulted the Institute of Chartered Accountants of Pakistan vide their letter
number CAIDTS/PS& TAC/20112036 dated 02 February 2011 has granted exemption to
such entities from the application of IFRS2 to the Scheme vide SRO 587 (I)/2011 dated 07
June 2011.
Had the exemption not been granted the staff costs of the Company for the year would
have been higher by Rs. 20.662 million (2010: Rs. 20.950 million), prot after taxation
and unappropriated prot would have been lower by Rs. 10.331 million (2010: Rs. 10.475
million), earnings per share would have been lower by Rs. 0.14 (2010: Rs. 0.14) per share
and reserves would have been higher by Rs. 20.806 million (2010: Rs. 10.475 million).
However, since the Company is operating under cost plus formula as explained in note 3.2
above, any variance on account of above do not effect the protability of the Company and
the guaranteed rate of return to the shareholders.
Note
5.

2011
2010
(Rupees in thousand)

UNDISTRIBUTED PERCENTAGE RETURN RESERVE

Undistributed percentage return reserve
Transferred from prot and loss account
Bonus shares issued

General reserve
Bonus shares issued

5.1

5.2
5.1

364,205
126,015

638,410
91,249

490,220

729,659
(365,454)

490,220

364,205

5.3

74

490,220

2,046
(2,046)

364,205

5.1

The Board of Directors in its meeting held on September 28, 2009 proposed the issuance of
100% bonus shares. The bonus shares were subsequently issued after approval of shareholders
in the Annual General Meeting held on October 30, 2009.

5.2

The amount of general reserve represents unappropriated prot for the period from
December 04, 1984 to December 31, 1985. The entire amount of general reserve had been
applied towards the issuance of bonus shares during the previous year.

5.3

The amount held in this reserve represents the balance of the percentage return reserve on
Shareholders Funds as dened in the Agreement.

 Mari Gas Company Limited

2011
2010
(Rupees in thousand)
6.

EXPLORATION AND EVALUATION RESERVE

Balance at the beginning of year
Additions

2,800,268
1,256,926

1,951,274
1,257,962

Cost of dry and abandoned wells

4,057,194

3,209,236
(408,968)

Balance at the end of year

4,057,194

2,800,268

6.1

7.

The Company has created this reserve pursuant to adoption of disclosure requirements of
IFRS 6 which are applicable to the Companys nancial statements with effect from July
1, 2007. The reserve consists of exploration and evaluation expenditure net of cost of dry
and abandoned wells. The corresponding effect of the reserve has been incorporated as
exploration and evaluation assets.

PROFIT AND LOSS ACCOUNT

The amount of Rs. 5,388.001 million (2010: Rs. 5,291.353 million) represents the following:
7.1

Undistributable balance
The amount of Rs 5,354.192 million (2010: Rs 5,266.143 million), which is not
distributable, has been provided through the operation of Article II of the Agreement to meet
the obligations and to the extent indicated for the followings:

Generated
upto
June 30,
2010

Generated
during the
year ended
June 30,
2011

Total

(Rupees in thousand)
a)

b)
c)

Rupee element of capital expenditure

(net of depreciation/ amortization) and
repayment of borrowings
Maintenance of debt service ratio
Maintenance of current ratio

2010

5,001,372
90,234
174,537

88,049

5,089,421
90,234
174,537

5,266,143

88,049

5,354,192

5,266,143

5,266,143

2011
2010
(Rupees in thousand)
7.2

Distributable balance
Undistributed guaranteed return

33,809

25,210

This represents the additional 4.60% (2010: 3.43%) guaranteed return to shareholders on
account of increase in gas production during the year in accordance with the Agreement as
referred in note 3.2 to these nancial statements.
75

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

7.3

Gas Development Surcharge related to Pakistan Electric Power Company (PEPCO) will be paid
to the Government as and when related amounts are received from PEPCO. Accordingly, Rs
4,379 million (June 2010: 4,052 million) receivable from PEPCO on this account and the
amount of Rs 4,372 million (June 2010: Rs 3,888 million) payable to the Government have
not been taken into account for the purpose of calculation of current ratio and consequential
adjustment under provisions of clause 2.1 (c) of the Agreement.
Note

8.

LONG TERM FINANCING SECURED

Loan for Mari Deep Development
Less: Current Maturity

Loan for Zarghun Gas Development

Less: Current Maturity

76

2011
2010
(Rupees in thousand)

8.1

8.2

1,520,000
380,000

1,900,000
380,000

1,140,000

1,520,000

200,000
40,000

200,000

160,000

200,000

1,300,000

1,720,000

8.1

The Company has obtained loan amounting to Rs 1.9 billion till June 30, 2011 against
Syndicated Term Finance Loan facility of Rs 3.5 billion from a consortium of banks led by
Bank Alfalah Limited for nancing of drilling of three wells in Mari Deep, Goru B reservoirs.
The markup is payable semiannually in arrears on the outstanding facility amount at
six months KIBOR +1.50% per annum. The markup rate has been revised downward to
six months KIBOR + 1.35% effective from September 15, 2010. The effective markup rate
per annum was 14.39% (2010: 14.02%). The loan is repayable in ten equal semiannual
installments after a grace period of 24 months from date of rst disbursement. The rst and
second installments due on September 15, 2010 and March 15, 2011 have been paid.

8.2

In order to nance Zarghun Gas Field, the Company has arranged another Term Finance Loan
of Rs. 1,112 million from Habib Bank Limited. Out of loan amount, a sum of Rs. 200 million
has been disbursed uptil June, 2011. The markup is payable semiannually in arrears on
the outstanding facility amount at the average of the six months KIBOR + 1.35% per annum.
The effective markup rate per annum was 14.45% (2010: 13.90%). The loan is repayable
in ten equal semiannual installments after a grace period of 24 months from date of rst
disbursement. The rst installment is due on August 26, 2011.

 Mari Gas Company Limited

Note
9.

2011
2010
(Rupees in thousand)

PROVISION FOR DECOMMISSIONING COST

Balance at beginning of the year
Provision made during the year

2,460,885
601,971

1,838,210
364,282

3,062,856
465,554

2,202,492
258,393

Balance at end of the year

3,528,410

2,460,885

The above provision is analyzed as follows:

Wells
Gathering lines

2,182,828
137,602

1,611,564
106,895

2,320,430

1,718,459

1,137,367
70,613

714,023
28,403

1,207,980

742,426

3,528,410

2,460,885

Unwinding of decommissioning cost

29

Unwinding of decommissioning cost:

Wells
Gathering lines

Signicant assumptions used in computation of the provision are as follows:

Note
2011
Discount rate (Credit adjusted risk free rate)
Ination rate
Market risk premium

2010
(Per annum)

15.20%
14.00%
13.20%

10.50%
8.51%

2011
2010
(Rupees in thousand)
10.

EMPLOYEE BENEFITS UNFUNDED

Post retirement medical benets
Post retirement leave benets
Pension plan for nonmanagement employees

35.2
35.2
35.2

20,435
47,700
20,656

20,185
38,681
17,330

88,791

76,196

77

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

Note
11.

ACCRUED AND OTHER LIABILITIES

Gas development surcharge
General sales tax
Excise duty
Markup on long term nancing secured
Workers Welfare Fund
Workers Prot Participation Fund
Employee benets funded
Retention and earnest money deposits
Payable to joint venture partners
Other accrued liabilities
Unclaimed dividend
Unpaid dividend
Payable to the President of Pakistan

11.1

11.2
35.1

6,803,817
394,542
118,477
78,217
420,152
132,316
211,967
14,869
209,109
602,863
5,773
74,569
804,789

6,038,280
341,118
56,875
87,752
348,308
72,445
119,172
22,040
223,586
209,775
5,041
16,637
246,817

9,871,460

7,787,846

11.1

As advised by Ministry of Petroleum and Natural Resources vide letters DGO (AC)5 (50)/94
IA and DGO (AC)5 (50)/95 dated March 30, 1995 and October 01, 1996 respectively,
interest on delayed payment of Gas Development Surcharge amounting to Rs. 1,344.872
million (2010: Rs. 896.480 million) will be accounted for / paid by the Company after actual
receipt of interest on delayed payments from PEPCO (Note 21). However, it does not affect
the current year or future years prot after taxation which includes the return available to
shareholders under the Agreement.
2011
2010
(Rupees in thousand)

11.2

Workers Prot Participation Fund

Balance at beginning of the year

72,445

127,865

132,316

72,445

5,921

10,257

138,237

82,702

Amount paid to the Fund

210,682
(78,366)

210,567
(138,122)

Balance at end of the year

132,316

72,445

Allocation for the year

Interest on delayed payments @ 25.07%
(2010 : 24%) per annum.

78

2011
2010
(Rupees in thousand)

 Mari Gas Company Limited

Note
12.

PROVISION FOR TAXATION

Balance at beginning of the year
Provision for the year
Income tax paid during the year
Balance at end of the year

13.

2011
2010
(Rupees in thousand)

32

296,661
1,336,385
(1,134,637)

715,762
291,021
(710,122)

498,409

296,661

14,192

32,462

434,626
328,382

3,437,323
271,812

763,008

3,709,135

13,514
22,413

19,644
31,502

35,927

51,146

798,935

3,760,281

CONTINGENCIES AND COMMITMENTS

13.1

Contingencies
Indemnity bonds given to Collector of Customs
against duty concessions on import of equipment
and materials.

13.2

Commitments
(i) Capital expenditure:
Share in joint ventures
Others
(ii) Operating lease rentals due:
Less than one year
More than one year but less than ve years

79

80

51,362

675,732

675,732

75,094

Balance as at June 30, 2010

Balance as at July 01, 2010

Additions during the year

7,913

Depreciation for the year

On disposals

Balance as at June 30, 2010

Balance as at July 01, 2010

Depreciation for the year

On disposals

Balance as at June 30, 2011

44,353

13%

749,922

Carrying amounts 2011

Rates of depreciation

44,440

675,732

Carrying amounts 2010

991

6,922

6,922

959

Balance as at July 01, 2009

Depreciation

5,963

52,266

749,922

Balance as at June 30, 2011

904

(904)

Transfers

Disposals

51,362

Transfers

51,362

23,900

Leasehold
land

Disposals

651,832

Freehold
land

Additions during the year

DESCRIPTION

PROPERTY, PLANT AND EQUIPMENT

Balance as at July 01, 2009

Cost

14.

5%

303,038

301,529

235,764

(132)

20,711

215,185

215,185

23,016

192,169

538,802

(15,928)

(141)

38,157

516,714

516,714

65,738

450,976

Buildings on
freehold
land

5%

26,317

13,525

37,291

5,297

31,994

31,994

2,620

29,374

63,608

15,928

2,161

45,519

45,519

45,519

10%

21,033

30,270

81,478

9,237

72,241

72,241

4,646

67,595

102,511

102,511

102,511

102,511

Buildings on
leasehold
Roads and
land
bridges

1033.33%

621,286

781,489

531,216

167,990

363,226

363,226

182,727

180,499

1,152,502

(326)

8,113

1,144,715

1,144,715

1,193

1,143,522

Drilling rig
tools and
equipment

Computers
and allied
equipment

10%

412,654

409,973

371,574

(8,213)

59,807

319,980

319,980

(3,884)

46,724

277,140

784,228

326

(8,809)

62,758

729,953

729,953

(3,993)

314,618

419,328

25%

19,626

19,740

70,727

(1,295)

9,708

62,314

62,314

(4,208)

8,847

57,675

90,353

(1,330)

9,629

82,054

82,054

(4,208)

12,637

73,625

(Rupees in thousand)

Equipment
and general
plant

10%

979,358

1,109,365

847,770

130,007

717,763

717,763

77,655

640,108

1,827,128

1,827,128

1,827,128

1,025,121

802,007

Gathering
lines

10%

12,775

15,039

36,878

(1,161)

2,870

35,169

35,169

(306)

3,106

32,369

49,653

(1,174)

619

50,208

50,208

(362)

2,582

47,988

Furniture
and xtures

30%

87,144

103,405

230,531

(4,504)

11,307

223,728

223,728

53,920

169,808

317,675

(48,563)

(4,504)

43,609

327,133

327,133

95,272

231,861

Vehicles
heavy

20%

41,803

62,690

153,698

(6,295)

70,034

89,959

89,959

(4,000)

18,177

75,782

195,501

48,563

(7,581)

1,870

152,649

152,649

(6,640)

29,122

130,167

Note 3.5

112,353

85,859

25,250

4,213

21,037

21,037

3,453

17,584

137,603

30,707

106,896

106,896

18,659

88,237

1,355,577

887,000

1,355,577

(288,412)

756,989

887,000

887,000

(1,798,576)

298,497

2,387,079

Decommissioning
Capital
Vehicles CostMari eld
work in
light and Joint Ventures progress
Gathering Lines (note 14.1)

4,787,239

4,540,056

2,630,090

(21,600)

492,172

2,159,518

2,159,518

(12,398)

425,850

1,746,066

7,417,329

(288,412)

(23,539)

1,029,706

6,699,574

6,699,574

(1,798,576)

(15,203)

1,887,339

6,626,014

Total

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

 Mari Gas Company Limited

2011
2010
(Rupees in thousand)
14.1

CAPITAL WORKS IN PROGRESS

MARI FIELD
Phase VI project Habib Rahi
SML 1
Materials and equipment
SML appraisal well
Land
Materials and equipment
Pirkoh well
Buildings, roads and bridges
Materials and equipment
Mari Deep 12
Materials and equipment
3 Up front wells and production facilities
Land
Buildings, roads and bridges
Materials and equipment

JOINT VENTURES OTHER THAN MARI FIELD

2,341

2,356
2,548

19
67

31
27,080

86

27,111

3,878

3,531
9,241

3,878

12,772

333

348

15,636
6,734
399,235

8,469
5,055
365,290

421,605

378,814

428,243

423,949

285,401

184,159
457,774

162,004
301,047

641,933

463,051

1,355,577

887,000

SUPPORT OF PRODUCTION
Buildings, roads and bridges
Plant, machinery and others

81

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

14.2

Detail of property, plant and equipment disposed off during the year
Cost
DESCRIPTION

Accumulated
depreciation

Book
value

Sale
proceeds

Mode of
disposal

Particulars of
purchaser

(Rupees in thousand)

Computers and allied equipment

701

701

19

Through auction

M/s Muhammad Sharif

Computers and allied equipment

130

95

35

25

As per Company policy

Lt Gen Mushtaq Hussain

Computers and allied equipment

498

498

50

As per Company policy

Various Employees

Equipment and general plant

900

899

125

Through auction

M/s Combined Technolgy

(Retd) Ex MD

International
Equipment and general plant

948

939

30

Through auction

M/s Khalil Ahmed

Equipment and general plant

527

476

51

110

Through auction

M/s Lutaf Ali Gadani

Equipment and general plant

1,932

1,925

631

Through auction

M/s Malik M. Arshad

M/s Maqbool Ahmed

Equipment and general plant

311

289

22

61

Through auction

Equipment and general plant

1,036

1,036

312

Through auction

M/s Muhammad Azam

Equipment and general plant

675

666

79

Through auction

M/s Muhammad Habib

Equipment and general plant

1,677

1,675

595

Through auction

M/s Muhammad Sharif

Equipment and general plant

1,232

1,203

29

200

Through auction

M/s Tauqeer Ahmed

Equipment and general plant

603

156

447

121

As per Company policy

Lt Gen Mushtaq Hussain

Equipment and general plant

42

23

19

As per Company policy

Various Employees

(Retd) Ex MD

Furniture & xture

Through auction

M/s Khalil Ahmed

Furniture & xture

297

295

22

Through auction

M/s Lutaf Ali Gadani

Furniture & xture

238

238

24

Through auction

M/s Muhammad Ali Meerani

Furniture & xture

481

481

174

Through auction

M/s Muhammad Hussain

Furniture & xture

320

299

21

18

Through auction

M/s Muhammad Sharif

Vehicle

1,374

1,374

922

Insurance Claim

M/s Abdul Basit

Vehicle

2,032

2,032

1,480

Insurance Claim

M/s Abdul Ghafoor

Vehicle

936

936

527

Insurance Claim

M/s Abdullah

Vehicle

1,925

1,925

1,080

Insurance Claim

M/s Muhammad Maqsood

Vehicle

1,644

1,644

935

Insurance Claim

M/s Muhammad Nazir

Vehicle

1,194

1,194

672

Insurance Claim

M/s Muhammad Raque

Vehicle

1,881

596

1,285

718

As per Company policy

Lt Gen Mushtaq Hussain

(Retd) Ex MD

23,539

82

21,600

1,939

8,942

 Mari Gas Company Limited

15.

DEVELOPMENT AND PRODUCTION ASSETS

Producing elds
Description

Shutinelds

Wholly

Joint

Wholly

owned

ventures

owned

Joint

Wells in
progress

Sub total

Decommissioning
cost

3,849,659

1,265,939

5,115,598

954,728

345,623

1,300,351

Total

ventures

(Rupees in thousand)
Cost
Balance as at July 01, 2009

3,061,782

193,473

594,404

Additions

954,728

Transfers

(594,404)

(594,404)

(594,404)

Balance as at June 30, 2010

4,016,510

193,473

4,209,983

1,611,562

5,821,545

Balance as at July 01, 2010

4,016,510

193,473

4,209,983

1,611,562

5,821,545

Additions

69,174

69,174

571,264

640,438

Transfers

4,016,510

262,647

4,279,157

2,182,826

6,461,983

2,190,605

2,190,605

273,608

2,464,213

234,190

234,190

47,306

281,496

Balance as at June 30, 2010

2,424,795

2,424,795

320,914

2,745,709

Balance as at July 01, 2010

2,424,795

2,424,795

320,914

2,745,709

256,722

256,722

67,105

323,827

Balance as at June 30, 2011

2,681,517

2,681,517

388,019

3,069,536

Carrying amount 2010

1,591,715

193,473

1,785,188

1,290,648

3,075,836

Carrying amount 2011

1,334,993

262,647

1,597,640

1,794,807

3,392,447

Balance as at June 30, 2011

Amortization
Balance as at July 01, 2009
Charge for the year

Charge for the year

83

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

2011
2010
(Rupees in thousand)
16.

EXPLORATION & EVALUATION ASSETS

Balance at the beginning of year
Additions

2,800,268
1,256,926

1,951,274
1,257,962

Cost of dry and abandoned wells

4,057,194

3,209,236
(408,968)

Balance at the end of year

4,057,194

2,800,268

16.1

Details of liabilities, other assets and expenditures incurred in respect of exploration and
evaluation activities are as follows:
Note

Current liabilities related to exploration and evaluation

503,342

223,586

Current assets related to exploration and evaluation

767,356

159,028

378,828

744,677

4,978
4,949

4,993
6,108

9,927

11,101

4,573
3,013

4,878
3,373

7,586

8,251

2,341

2,850

Exploration and prospecting expenditure

17.

2011
2010
(Rupees in thousand)

28

LONG TERM LOANS AND ADVANCES

Considered good secured
Executives
Other employees
17.1
22

Less: current portion

Executives
Other employees

17.1

Reconciliation of carrying amount of loans to executives and other employees is as follows:

Balance as at
July 01, 2010

Disbursements
during the year

Repayments
during the year

Balance as at
June 30, 2011

(Rupees in thousand)
Executives
Other employees

2010

84

4,993
6,108

10,685
5,621

10,700
6,780

4,978
4,949

11,101

16,306

17,480

9,927

10,288

16,285

15,472

11,101

17.2

The maximum amount due from executives at the end of any month during the year was
Rs. 5.626 million (2010: Rs. 5.257 million).

17.3

The loans and advances given to executives and employees represent interest free transport
loans and other advances repayable in 36 to 60 equal monthly installments. These loans and
advances have been measured at cost which equals their fair value.

 Mari Gas Company Limited

Note
18.

LONG TERM DEPOSITS AND PREPAYMENTS

Deposits
Prepayments

19.

2011
2010
(Rupees in thousand)

10,724
291

10,498
380

11,015

10,878

DEFERRED TAXATION
The balance of deferred tax is in respect of
following temporary differences:
Provision for employee benets unfunded
Exploration expenditure
Unwinding of decommissioning cost
Accelerated tax depreciation
Deferred tax asset
19.1

19.1

31,077
2,386,948

(725,627)

26,669
1,689,047
259,849
(902,692)

1,692,398

1,072,873

The Company has recognized deferred tax asset since the Company believes that the taxable
prots will be available against which deductible temporary differences will be utilized.
2011
2010
(Rupees in thousand)

20.

STORES AND SPARES

Stores
Spares

21.

371,586
113,320

227,029
63,233

484,906

290,262

4,379,263
1,504,323
503,172
79,872
5,691
77,105

4,052,435
303,623
536,090
72,829
14,432
60,597

6,549,426

5,040,006

206,328
149,746
634,192
166,457
473

208,158
540,944
310,546

7,706,622

6,099,654

TRADE DEBTS
Associated undertakings considered good
Pakistan Electric Power Company
Foundation Power Company Daharki Limited
Fauji Fertilizer Company Limited
Sui Southern Gas Company Limited
Sui Northern Gas Pipelines Limited
Foundation Gas
Others considered good
Engro Fertilizer Limited
Fatima Fertlizer Company Limited
Byco Petroleum Pakistan Limited
National Renery Limited
Attock Renery Limited

85

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

21.1

As advised by Ministry of Petroleum and Natural Resources vide letters DGO(AC)5 (50)/94
IA and DGO (AC)5(50)/95 dated March 30,1995 and October 01,1996 respectively, interest
income on delayed payments from PEPCO amounting to Rs.2,908.283 million (June 2010:
Rs. 2,038.201 million) will be accounted for by the Company after it is actually received.
However, it does not affect the current year or future years prot after taxation which
includes the return available to shareholders under the Agreement.

21.2

The maximum aggregate amount outstanding at the end of any month during the year from
associated undertakings was Rs. 4,564.860 million (June 2010: Rs. 6,296.742 million).
Note

22.

LOANS AND ADVANCES

Current portion of long term loans and
advances considered good
Executives
Other employees

17

Advances to staff
Advances to suppliers and others
Advances to joint venture partners
Royalty paid in advance

23.

7,586
7,977
43,760
183,587
91,863

8,251
6,015
19,032
207,571
95,519

334,773

336,388

36,608
3,631
3,559
4,676

3,006
3,631
69
20,744

48,474

27,450

69,069
4,439

3,960

73,508

3,960

459

228

3,772,463
7,065

3,585,309
21,768

3,779,528

3,607,077

3,779,987

3,607,305

CASH AND CASH EQUIVALENTS

Cash in hand
Balances with banks on:
Deposit accounts
Current accounts

25.1

86

4,878
3,373

OTHER RECEIVABLES
Rig rentals
Others

25.

4,573
3,013

SHORT TERM PREPAYMENTS

LC margin
Mining lease
Prepaid insurance
Others

24.

2011
2010
(Rupees in thousand)

25.1

These include foreign currency accounts amounting to US$ 2.215 million (2010: US$ 0.05
million). The effective markup rate for the period ended June 30, 2011 ranges from 1% to 13%
(2010: 1% to 12.75%) per annum.

 Mari Gas Company Limited

Note
26.

2011
2010
(Rupees in thousand)

GROSS SALES TO CUSTOMERS

Sale of:
Gas

26.1

Crude Oil
Less: Transportation charges

26.2

Condensate
Less: Transportation charges

LPG
Own Consumption

26.1

26.3

26.4

28,096,759

11,104
1,606

9,498

957,820
13,134

307,224
8,528

944,686

298,696

406,961
10,642

77,605
8,095

31,402,132

28,490,653

29,515,978
3,079
470,551
50,235

27,922,843
14,443
159,473

30,039,843

28,096,759

This represents sale of gas as per detail below:

Mari Field
Sukkur block
Hala block
Kohat block

26.2

30,039,843

This represents sale of Crude oil from Ziarat block in the comparative period.
2011
2010
(Rupees in thousand)

26.3

This represents sale of condensate as per detail below:

Mari Field
Hala block
Sujawal block
Kohat block

26.4

21,708
916,894
9,251
9,967

307,224

957,820

307,224

This represents sale of LPG from Hala block.

87

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

Note
27.

OPERATING EXPENSES
Salaries, wages and benets
Employee benets
Rent, rates and taxes
Legal and professional services
Fuel, light, power and water
Maintenance and repairs
Insurance
Depreciation
Amortization
Employees medical and welfare
Field and other services
Travelling
Communications
Printing and stationery
Ofce supplies
Technical software
Auditors remuneration
Mobile dispensary and social welfare
Training
Reservoir study and production logging
Compression study
Advertisement
Books and periodicals
Public relations and social activities
Directors fee and expenses
Freight and transportation
Subscriptions
Rig Operating expenses
Sukkur block Operating expenses
Hala block Operating expenses
Kohat block Operating expenses
Miscellaneous
Less: Recoveries from joint ventures

27.1

88

2011
2010
(Rupees in thousand)

27.1

27.2
14
15

27.3

39

27.4

876,534
129,944
7,005
5,620
81,650
130,463
39,202
492,172
323,827
110,535
309,850
12,708
10,632
8,318
6,968
28,506
1,663
93,388
58,027

617
558
3,597
3,679
1,161
1,423
213,278
2,257
288,449
26,264
4,579

678,803
70,062
6,105
5,973
60,090
141,353
40,516
425,850
281,496
100,627
260,143
17,026
8,069
7,441
10,705
36,160
1,862
50,713
46,317
14,071
66,550
1,786
356
4,688
3,389
1,198
472
96,412
1,334
240,495

489

3,272,874
275,985

2,680,551
271,376

2,996,889

2,409,175

These include Rs. 17.33 million (2010: Rs. 17.09 million) on account of dened contribution
plan.

 Mari Gas Company Limited

2011
2010
(Rupees in thousand)
27.2

These include:
Maintenance and repairs Plant & equipment
Others

Stores and spares Plant & equipment

Others

27.3

48,537
39,399

85,052

87,936

40,672
4,739

33,120
20,297

45,411

53,417

130,463

141,353

1,000
261
184
118
100

1,000
261
184
317
100

1,663

1,862

201,174
65,877
8,934

205,303
58,707
7,366

275,985

271,376

Auditors remuneration
Audit fee
Half year review
Special reports
Other certications
Out of pocket expenses

27.4

44,353
40,699

Recoveries from joint ventures

Time write cost
Overheads
Computer & equipment support cost

89

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

28.

EXPLORATION AND PROSPECTING EXPENDITURE

2011
2010
Working interest (%)

2011
2010
(Rupees in thousand)

35.00
60.00
60.00
100.00
40.00
40.00
100.00
58.82
100.00

14,508
44,095
58,978

8,104
7,721
44,232
14,035
45,981

5,550
34,206
23,313
410
122,258
13,847
78,812
29,727
7,163

237,654

315,286

OPERATED BLOCKS
Zarghun South Field
Ziarat Block
Karak Block
Noor Block
Hanna Block
Harnai Block
Sujawal Block
Sukkur Block
Ghauri Block

35.00
60.00
60.00
100.00
40.00
40.00
100.00
58.82
100.00

NON OPERATED BLOCKS

Dhadar Block
Hala Block
Pasni Block
Kohat Block
Bannu West Block
Kohlu Block
Kalchas Block
Zindan Block
Oman Block

28.1

27.67
35.00
25.00
20.00
10.00
30.00
20.00
35.00
25.00

27.67
35.00
25.00
20.00
10.00
30.00
20.00

25.00

429,391

378,828

744,677

2011
2010
(Rupees in thousand)

378,828

408,968
335,709

378,828

744,677

244,029
465,554
5,921
252

196,509
258,393
10,257
380

715,756

465,539

FINANCE COST
Markup on long term nancing secured
Unwinding of decommissioning cost
Interest on Workers Prot Participation Fund
Bank charges

90

141,174

Exploration and prospecting expenditure

comprises of:
Cost of dry and abandoned wells
Prospecting expenditure

29.

357,203
21,812
(424)
8,582
1,210
3,817
6,068

31,123

Exploration and prospecting expenditure represents cost other than drilling expenditure directly
charged to prot and loss account as referred in note 3.8 to these nancial statements.
Note

28.2

(463)
21,735

10,334
1,007
4,722
8,635
8,292
86,912

9
11.2

 Mari Gas Company Limited

30.

2011
2010
(Rupees in thousand)

11.2

132,316
71,844

72,445
25,359

204,160

97,804

462,041
(3,109)

430,073
31,944

458,932

462,017

7,003
187,287
85,409
37,055

4,373

22,329

316,754

26,702

775,686

488,719

1,336,385
(619,525)

291,021
(125,887)

716,860

165,134

WORKERS FUND
Workers Prots Participation Fund
Workers Welfare Fund

31.

Note

OTHER INCOME
Income from nancial assets
Income on bank deposits
Exchange gain / (loss)
Income from non nancial assets
Gain / (loss) on sale of property, plant and equipment
Interest income on delayed payment by customers
Rig rental income
Miscellaneous

32.

TAXATION
Current taxation
Deferred taxation

12

2011
%
32.1

2010
%

RECONCILIATION OF EFFECTIVE TAX RATE

Applicable tax rate
Effect of:
Amounts not deductible for tax purposes
Origination and reversal of temporary differences
Depletion allowance
Aggregate effective tax rate charged to income

50.00

50.00

26.01
(28.35)
(18.31)

44.60
(56.78)
(25.60)

29.35

12.22

91

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

2011
2010
(Rupees in thousand)
33.

EARNINGS PER SHARE BASIC AND DILUTIVE

Prot for the year

1,725,300

1,185,954

Reserve for exploration & evaluation assets note 6

Undistributable prot as explained note 7

1,256,926
88,049

848,994

1,344,975

848,994

380,325

336,960

73,500

73,500

5.17

4.58

23.47

16.14

Balance distributable prot after tax

Number of shares outstanding (in thousand)
Earnings per share on the basis of distributable prots (in Rupees)
Earnings per share on the basis of prot and loss account (in Rupees)

There is no dilutive effect on the basic earnings per share of the Company.
Note
34.

2011
2010
(Rupees in thousand)

CASH GENERATED FROM OPERATIONS

Prot before taxation
Adjustments for:
Depreciation of property, plant and equipment
Amortization of development and production assets
Gain on disposal of property, plant and equipment
Employee benets unfunded
Interest income
Finance cost
Working capital changes
34.1

34.1

2,442,160
492,172
323,827
(7,003)
15,697
(462,041)
715,756
143,916

425,850
281,496
(4,373)
12,316
(430,073)
465,539
917,268

3,664,484

3,019,112

(Increase)/decrease in current assets

Stores and spares
Trade debts
Loans and advances
Short term prepayments
Other receivables

(194,644)
(1,606,968)
1,615
(21,024)
(69,548)

(84,552)
1,088,947
529,829
1,052
6,094

Increase / (decrease) in accrued and other liabilities

(1,890,569)
2,034,485

1,541,370
(624,101)

Working capital changes

143,916

92

1,351,088

917,268

 Mari Gas Company Limited

35.

EMPLOYEE BENEFITS

35.1

Funded benets
The results of the actuarial valuation carried out as at June 30, 2011 and June 30, 2010 are as
follows:
2011
Manage
ment
Pension

Manage
ment
Gratuity

2010
Non
Manage
ment
Gratuity

Manage
ment
Gratuity

Non
Manage
ment
Gratuity

(36,769)

484,148
(174,798)
(180,939)

157,689
(84,861)
(45,298)

Manage
ment
Pension

(Rupees in thousand)
Reconciliation of payable to dened benet plan
Present value of dened benet obligations
Fair value of plan assets
Net actuarial gains/(losses) not recognized

593,353
186,994
(237,114) (104,716)
(182,695)
(43,855)

Liability recognized in balance sheet

173,544

38,423

(36,769)

128,411

27,530

Balance as at beginning of year

Add: Cost for the year

(36,769)
224

128,411
92,782

27,530
20,860

(19,764)
(30,915)

88,773
65,943

18,244
11,270

Less: Contribution to fund during the year

(36,545)
36,545

221,193
(47,649)

48,390
(9,967)

(50,679)
13,910

154,716
(26,305)

29,514
(1,984)

173,544

38,423

(36,769)

128,411

27,530

Balance as at beginning of year

Contributions during the year
Expected return on plan assets
Actuarial gain/(loss) on plan assets
Benets paid

174,798
47,649
23,319
(1,446)
(7,206)

84,861
9,967
11,032
705
(1,849)

53,331

5,819
355
(22,736)

160,955
26,305
17,154
(11,492)
(18,124)

84,517
1,984
9,000
(2,507)
(8,133)

Balance as at end of year

237,114

104,716

36,769

174,798

84,861

237,114

104,716

36,769

174,798

84,861

237,114

104,716

36,769

174,798

84,861

Current service cost

Interest cost
Expected return on plan assets

40,222
62,627
(23,319)

9,238
20,193
(11,032)

281
(5,819)

30,612
42,419
(17,154)

6,733
13,125
(9,000)

Amortization of actuarial loss

Immediate recognition of curtailment gain

224

13,252

2,461

(821)
(24,556)

10,066

412

Total cost

224

92,782

20,860

(30,915)

65,943

11,270

Actual return on plan assets

108,468

30,197

5,007

66,349

12,552

Movement in payable to dened benet plan

Balance as at end of year

Movement in fair value of plan assets

Plan assets comprise of:

Defence Saving Certicates
Deposit with banks

Costs for the year

93

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

35.2

Unfunded benets
2011
Management
Post
retirement
Leaves

2010
Non
Management

Post
retirement
Medical

Pension

Management
Post
retirement
Leaves

Non
Management

Post
retirement
Medical

Pension

(Rupees in thousand)
Reconciliation of payable to dened benet plan
Present value of dened benet obligations
Net actuarial (losses)/gains not recognized

47,700

25,783
(5,348)

14,604
6,052

38,681

22,065
(1,880)

12,988
4,342

Liability recognized in balance sheet

47,700

20,435

20,656

38,681

20,185

17,330

Balance at beginning of the year

Add: Cost for the year

38,681
9,723

20,185
2,648

17,330
3,326

35,235
7,562

20,328
2,118

14,694
2,636

Less: Payments during the year

48,404
(704)

22,833
(2,398)

20,656

42,797
(4,116)

22,446
(2,261)

17,330

Balance at end of the year

47,700

20,435

20,656

38,681

20,185

17,330

Movement in payable to dened benet plan

Costs for the year

Current service cost

2,545

1,810

2,318

1,558

Interest cost
Immediate recognition of curtailment loss/(gain)

5,273
1,905

2,648

1,770
(254)

4,493
751

2,118

1,295
(217)

Total cost

9,723

2,648

3,326

7,562

2,118

2,636

35.3

The principal actuarial assumptions used in the actuarial valuation of the dened benet
plans are as follows:
2011
Discount rate
Expected rate of return on plan assets
Expected rate of salary increase
Expected rate of pension increase

35.4

2010
(Per annum)

14.50%
14.50%
14.50%
9.50%

12.75%
11.75%
12.75%
7.75%

One percent change in medical cost trend rate would have the following effect:
2011
(Rupees in thousand)

Present value of medical obligations

Current service cost and interest cost

94

1% increase

1% decrease

3,158
564

(1,448)
(301)

 Mari Gas Company Limited

35.5

Comparison of present value of dened benet obligation, fair value of plan assets and surplus or
decit of pension and gratuity for ve years is as follows:
2011

2010
2009
(Rupees in thousand)

2008

2007

Management pension
Present value of dened benet obligations
Fair value of plan assets

(36,769)

6,568
(53,331)

11,169
11,441
(53,494) (162,016)

(Surplus) / decit

(36,769)

(46,763)

(42,325) (150,575)

Experience adjustments on obligations

(1,977)

4,947

386

298

Experience adjustments on plan assets

1,585

17,021

6,287

355

Gratuity (Management and nonmanagement)

Present value of dened benet obligations
Fair value of plan assets

36.

780,347
(342,147)

641,837
(259,659)

508,997 359,036
(245,473) (221,619)

(Surplus) / decit

438,200

382,178

263,524

137,417

Experience adjustments on obligations

(15,285)

(66,209)

(110,268)

(10,419)

(3,667)

Experience adjustments on plan assets

(740)

(13,999)

9,441

(12,580)

9,460

312,886
(73,709)
239,177

FINANCIAL RISK MANAGEMENT

The Company has exposure to the following risks from its use of nancial instruments:
Credit risk
Liquidity risk
Market risk
This note presents information about the Companys exposure to each of the risks stated above; the
Companys objectives, policies and processes for measuring and managing risk, and the management
of Companys capital. Further quantitative disclosures are included throughout these nancial
statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Companys
risk management framework. The Board is responsible for developing and monitoring the Companys
risk management policies.
The Companys risk management policies are established to identify and analyse the risks faced by
the Company, to set appropriate risk limits and controls and, to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reect changes in market conditions
and the Companys activities. The Company, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all employees
understand their roles and obligations.
The Companys Audit Committee oversees how the management monitors compliance with the
Companys risk management policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Company. The Audit Committee is assisted in its
oversight role by Internal Audit function. Internal Audit function undertakes both regular and adhoc
reviews of risk management controls and procedures, the results of which are reported to the Audit
Committee.
95

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

36.1

Credit risk
Credit risk is the risk of nancial loss to the Company if a customer or counterparty to
a nancial instrument fails to meet its contractual obligations. To manage credit risk the
Company maintains procedures covering the function for credit approvals, granting and
renewal of counterparty limits and monitoring of exposures against these limits. As part
of these processes the nancial viability of all counterparties is regularly monitored and
assessed.
The Companys credit risk exposures are categorised under the following headings:

36.1.1 Counterparties
The Company conducts transactions with the following major types of counterparties:
Trade Debts
Trade debts are essentially due from fertilizer companies and power generation company and
the Company does not expect these companies to fail to meet their obligations. The sales to
the Companys customers are made under gas purchase and sale agreements signed between
the Company and its customers with the prior approval of Oil and Gas Regulatory Authority
(OGRA), Government of Pakistan.
Sale of natural gas to related parties is at price notied by OGRA.
The Company establishes an allowance for impairment that represents its estimate of incurred
losses in respect of trade debts. This allowance is based on the managements assessment of
a specic loss component that relates to individually signicant exposures.
Cash and investments
The Company limits its exposure to credit risk by investing in liquid securities and maintaining
bank accounts only with counterparties that have a credit rating of at least A1 and A. Given
these high credit ratings, management does not expect any counterparty to fail to meet its
obligations.
36.1.2 Exposure to credit risk
The carrying amount of nancial assets represents the maximum limit of credit risk exposure.
The maximum limit of exposure to credit risk at the reporting date was:
2011
2010
(Rupees in thousand)
Long term loan and advances
Long Term Deposits
Trade debts
Loans and advances
Interest accrued
Cash and cash equivalents

96

2,341
10,724
7,706,622
7,586
6,581
3,779,987

2,850
10,498
6,099,654
8,251
44,634
3,607,305

11,513,841

9,773,192

 Mari Gas Company Limited

The maximum exposure to credit risk for trade debts at the reporting date by type of
customer was:
2011
2010
(Rupees in thousand)
Fertilizer companies
Power generation company
Others

859,246
5,883,586
963,790

1,285,192
4,356,058
458,404

7,706,622

6,099,654

The Companys most signicant customer, a power generation company, accounts for Rs.
5,883.586 million of the trade debts carrying amount at June 30, 2011 (2010: Rs. 4,356.058
million).
The maximum exposure to credit risk for trade debts at the reporting date by type of product
was:
2011
2010
(Rupees in thousand)
Natural gas
Oil
LPG

6,828,395
801,122
77,105

5,728,511
310,546
60,597

7,706,622

6,099,654

36.1.3 Impairment losses

The aging of trade debts at the reporting date was:
2011

2010
(Rupees in thousand)

Gross
Not past due
Past due 030 days
Past due 3060 days
Past due 6090 days
Over 90 days

36.2

Impairment

Gross

Impairment

2,231,451
626,045
642,787
586,930
3,619,409

1,793,530
799,684
594,302
519,635
2,392,503

7,706,622

6,099,654

Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its nancial obligations
as they fall due. Prudent liquidity risk management implies maintaining sufcient balances
of cash and marketable securities, the availability of funding to an adequate amount of
committed credit facilities and the ability to close out market positions due to dynamic
nature of the business. The Companys approach to managing liquidity is to ensure, as
far as possible, that it will always have sufcient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Companys reputation.
97

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

The maturity prole of the Companys nancial liabilities based on the contractual amounts
is as follows:
2011
2010
(Rupees in thousand)
Carrying
amount

Contractual
cash ows

Carrying
amount

Contractual
cash ows

420,000
420,000
420,000
420,000
40,000

420,000
420,000
420,000
420,000
40,000

380,000
420,000
420,000
420,000
420,000
40,000

380,000
420,000
420,000
420,000
420,000
40,000

Long term nancing

Maturity upto one year
Maturity after one year and upto two years
Maturity after two years and upto three years
Maturity after three years and upto four years
Maturity after four years and upto ve years
Maturity after ve years

1,720,000

1,720,000 2,100,000 2,100,000

1,405,400
420,000
420,000
420,000
40,000

1,405,400
420,000
420,000
420,000
40,000

2,705,400

2,705,400 2,664,831 2,664,831

Trade and other payables

Maturity upto one year
Maturity after one year and upto two years
Maturity after two years and upto three years
Maturity after three years and upto four years
Maturity after four years and upto ve years
Maturity after ve years

36.3

944,831
420,000
420,000
420,000
420,000
40,000

944,831
420,000
420,000
420,000
420,000
40,000

Market risk
Market risk is the risk that changes in market prices will affect the Companys income or the
value of its holdings of nancial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimizing
the return on nancial instruments.

36.3.1 Currency risk

Currency risk is the risk that changes in foreign exchange rates will affect the Companys
income or the value of its holdings of nancial instruments. The objective of currency risk
management is to manage and control currency risk exposures within acceptable parameters,
while optimizing the return on nancial instruments. The company is currently not holding
any nancial instruments which are exposed to currency risk.
Exposure to foreign currency risk
The Companys exposure to currency risk is as follows :
2011

2010

2011

(Rupees in thousand)
Cash and cash equivalents

2010

(US$ in thousand)

186,915

4,209

2,215

50

186,915

4,209

2,215

50

The following signicant exchange rates applied during the year:

Average rate
2011

Closing rate

2010

2011

2010

86.05

85.60

(Rupees)
US $ 1
98

85.85

84.17

 Mari Gas Company Limited

Foreign currency sensitivity analysis

A 10 percent variation of the Pak Rupee against the US $ at June 30 ,would have effected
equity and prot or loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant.
Change in foreign

Effect on prot

Effect on equity

exchange rates
(Rupees in thousand)
2011
US$

+10%

18,692

18,692

10%

(18,692)

(18,692)

+10%

421

421

10%

(421)

(421)

2010
US$

36.3.2 Interest rate risk

The markup rate risk is the risk that the fair value or future cash ow of a nancial instrument
will uctuate due to changes in the market markup rates. Sensitivity to markup rate risk
arises from mismatches of nancial assets and liabilities that mature in a given period.
The Companys exposure to the risk of changes in market markup rates relates primarily to
Companys long term debt obligations with oating markup rates.
The Company analyzes its markup rate exposure on a dynamic basis. Various scenarios are
simulated taking into consideration renancing, renewal of existing positions and alternative
nancing. Based on these scenarios, the Company calculates the impact on prot and loss of
a dened markup rate shift. For each simulation, the same markup rate shift is used for all
currencies. The scenarios are run only for liabilities that represent the major markupbearing
positions.
The Company adopts a policy to ensure that markup rate risk is minimized by investing in
xed rate investments like TDRs.
Prole
At the reporting date the interest rate prole of the Companys interestbearing nancial
instruments was:
2011
2010
(Rupees in thousand)
Financial assets
Cash and cash equivalents

3,779,987

3,607,305

3,779,987

3,607,305

1,520,000
200,000

1,900,000
200,000

1,720,000

2,100,000

Financial liabilities
Long Term Financing Bank Alfalah Limited
Long Term Financing Habib Bank Limited

The effective markup rates for the nancial assets and liabilities are mentioned in respective
notes to the nancial statements.
99

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

Markup rate sensitivity analysis

If markup rates had been 50 basis points higher/lower and all other variables were held
constant, the Companys prot for the year ended June 30, 2011 would decrease/increase by
Rs.8,466,713 (2010: decrease/increase by Rs. 7,852,931). This is mainly attributable to the
Companys exposure to markup rates on its variable rate borrowings.
36.4

Fair value of nancial instruments

All nancial assets and nancial liabilities are initially recognised at the fair value of
consideration paid or received, net of transactions cost as appropriate, and subsequently
carried at fair value or amortised cost, as indicated in the table below.
The nancial assets and liabilities are presented in the table below at their carrying values,
which generally approximate to the fair values.
2011

2010
(Rupees in thousand)

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Financial Assets
Long term loans and advances
Long Term Deposits
Trade debts
Loans and advances
Interest accrued
Cash and cash equivalents

2,341
10,724
7,706,622
7,586
6,581
3,779,987

2,341
10,724
7,706,622
7,586
6,581
3,779,987

2,850
10,498
6,099,654
8,251
44,634
3,607,305

2,850
10,498
6,099,654
8,251
44,634
3,607,305

11,513,841

11,513,841

9,773,192

9,773,192

1,720,000
2,705,400

1,720,000
2,705,400

2,100,000
2,664,831

2,100,000
2,664,831

4,425,400

4,425,400

4,764,831

4,764,831

Financial Liabilities
Long term nancing
Trade and other payables

Interest rates used for determining fair value

The interest rates used to discount estimated cash ows, when applicable, are based on the
government yield curve at the reporting date plus adequate credit spread. Since the majority
of the nancial assets are xed rate instruments, there is no signicant difference in market
rate and the rate of instrument, fair value signicantly approximates to carrying value.
Fair value hierarchy
The below analysis nancial instruments carried at fair value, by valuation method. The
different levels have been dened as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The fair value hierarchy has not been presented in these nancial statements, as the Company
does not hold any such nancial instruments in their portfolio. The investments held by the
Company are only the TDRs with xed or determinable payments and xed maturity.
100

 Mari Gas Company Limited

36.4.1 Determination of fair values

A number of Companys accounting policies and disclosures require the determination of
fair values, for both nancial and nonnancial assets and liabilities. Fair values have been
determined for measurement and /or disclosure purposes based on the following methods:
Nonderivative nancial assets
The fair value of nonderivative nancial assets is estimated as the present value of future
cash ows, discounted at the market rate of interest at the reporting date. This fair value is
determined for disclosure purposes.
Nonderivative nancial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present
value of future principal and interest cash ows, discounted at the market rate of interest at
the reporting date.
36.5

Capital management
The Companys objectives when managing capital are to safeguard the Companys ability
to continue as a going concern so that it can continue to provide returns for shareholders
and benets for other stakeholders, and to maintain a strong capital base to support the
sustained development of its business. In order to maintain or adjust the capital structure,
the Company may adjust the amount of dividend to ordinary shareholders. There were
no changes to the Companys approach to capital management during the year and the
Company is not subject to externally imposed capital requirements.

36.5.1 Debttoadjusted capital ratio

The Company monitors capital on the basis of the debttoadjusted capital ratio. This ratio
is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt
(as shown in the balance sheet) less cash and cash equivalents. Adjusted capital comprises
all components of equity (i.e. share capital, share premium, and unappropriated prot) and
includes some forms of subordinated debt. The debttoadjusted capital ratios as at June 30
were as follows:
Note
Total debt
Less: Cash and cash equivalents
Net debt
Total equity
Adjusted capital
Debttoadjusted capital ratio

36.3.2

2011
2010
(Rupees in thousand)
1,720,000
3,779,987

2,100,000
3,607,305

(2,059,987)
10,670,415

(1,507,305)
9,190,826

8,610,428

7,683,521

(0.24)

(0.20)

The increase in the debttoadjusted capital ratio during the current year resulted primarily
from the increase in net debt.

101

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

37.

REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES

The aggregate amount charged in these nancial statements as remuneration and allowances,
including all benets, to chief executive, director and executives of the Company was as follows:
2011
Chief
Executive

2010

Executives

Chief
Executive

Executives

(Rupees in thousand)
Managerial remuneration
Companys contribution to provident fund
Housing and utilities
Other allowances and benets
Bonuses

Number of persons including those who

worked part of the year

3,161
2,763
4,250
3,297
4,166

176,673
14,033
180,614
136,420
111,396

2,406
241
2,448
1,008
1,348

145,994
14,656
117,998
138,057

17,637

619,136

7,451

416,705

121

109

The above were also provided with medical facilities, gratuity and post retirement leave benets.
The chief executive and certain executives were provided with free use of the Company maintained
cars, residential telephones and use of club facilities. Executives based at plant site, Daharki, are also
provided with schooling and subsidized club facilities.
38.

TRANSACTIONS WITH RELATED PARTIES

Fauji Foundation holds 40% shares of the Company, therefore all subsidiaries and associated
undertakings of Fauji Foundation are related parties of the Company. Other related parties comprise
of associated companies, directors, major shareholders, key management personnel and employees
retirement benet funds and exclude relationship with the Government being a shareholder in the
Company. Transactions with related parties other than remuneration and benets to directors and
key management personnel are as follows:
2011
2010
(Rupees in thousand)
Sale of gas and LPG to related parties is as follows:
Fauji Fertilizer Company Limited
Pakistan Electric Power Company
Foundation Power Company Daharki Limited
Sui Southern Gas Company Limited
Sui Northern Gas Pipelines Limited
Foundation Gas
Contribution to employee benet funds

102

12,307,583
7,502,690
1,300,700
483,965
53,313
406,961

12,267,755
8,494,589
312,204
171,001
14,443
77,605

129,792

63,389

 Mari Gas Company Limited

2011
2010
(Rupees in thousand)
Receivable balances with related parties are as follows:
Fauji Fertilizers Company Limited
Pakistan Electric Power Company
Foundation Power Company Daharki Limited
Sui Southern Gas Company Limited
Sui Northern Gas Pipelines Limited
Foundation Gas

503,172
4,379,263
1,504,323
79,872
5,691
77,105

536,090
4,052,435
303,623
72,829
14,432
60,597

Transactions with related parties are based on the normal commercial practices as between
independent businesses.
39.

FIGURES
Corresponding gures, wherever necessary, have been rearranged and reclassied to reect more
appropriate presentation of events and transactions. Signicant reclassication is as follow:
These gures have been reclassied from operating expenses to rig operating expenses.
2011
2010
(Rupees in thousand)
Salaries, wages and benets
Employee benets
Rent, rates and taxes
Legal and professional services
Fuel, light, power and water
Maintenance and repairs
Employees medical and welfare
Field and other services
Travelling
Communications
Ofce supplies
Printing and stationery
Freight and transportation
Miscellaneous

77,699
7,902
120
210
279
72,317
27,034
11,378
6,995
514
637
155
7,456
582

48,587
2,435

1,168
7,116
11,532
18,847
4,862
15
1,009
93
640
108

213,278

96,412

Figures have been rounded off to the nearest Pak Rupee unless otherwise stated.

103

Annual Report 2011

Notes to the Financial Statements

for the year ended June 30, 2011

40.

DATE OF AUTHORIZATION FOR ISSUE

These nancial statements have been authorized for issue by the Board of Directors of the Company
on September 26, 2011.

Lt Gen (R) Raza Muhammad Khan

Managing Director / CEO

104

Qaiser Javed
Director

 Mari Gas Company Limited

Proxy Form
The Company Secretary
Mari Gas Company Limited
21 Mauve Area, 3rd Road,
G10/4, P.O. Box No. 1614.
Islamabad

I/We,

the

undersigned,

being

of

member(s)

of

Mari

Gas

Company

Limited

and

holder

Ordinary Shares, hereby appoint

of
whom failing
of
as my/our proxy to vote and act for me/our behalf, at the 27th Annual General Meeting of the Company,
to be held on October 26, 2011 and at any adjournment thereof.

Afx
Revenue
Stamp

Dated this

day of

2011.

Signature of the Shareholder

Signature of Proxy

Name in Block Letters

Folio/CDC Ref:

Note:
1.

This instrument appointing a proxy, duly completed, in order to be effective, must be received at
the Registered Ofce of the Company at 21Mauve Area, 3rd Road, Sector G10/4, Islamabad not
less than 48 hours before the time of holding of Meeting.

2.

A member who has deposited shares into Central Depository Company of Pakistan Limited,
must bring participants ID Number and Account/SubAccount Number alongwith original
Computerized National Identity Card (CNIC) or original Passport at the time of attending the
meeting. In case of corporate entity, the Board of Directors resolution/power of attorney with
specimen signature of the nominee shall be produced at the time of the meeting for the purpose
of identication.

3.

Members who have not yet submitted photocopy of their Computerized National Identity Cards
to the Company are requested to send the same at the earliest.

Witnesses:
1.

2.

105

AFFIX
CORRECT
POSTAGE

The Company Secretary

MARI GAS COMPANY LIMITED
21Mauve Area, 3rd Road,
Sector G10/4, P.O. Box 1614,
ISLAMABAD.