Bloomberg cites Pakistani newspapers reporting that the Tal block of natural gas field in the northwestern part of the country contains some 3 trillion cubic feet natural gas. The exploration is carried out by a joint venture in which MOL has 10% stake. Three tcf natural gas equals to 500m barrel of oil equivalent, which – based on our 6 USD/boe reserve value estimate – could worth some USD 3bn. Thus, MOL’s 10% stake could be valued at USD 300m, or HUF 580 per share.
We believe that prior to the current news, the market did not allocate any value to MOL’s Pakistani exploration projects. Therefore, this should lift the share price if the news is proved to be correct. However, MOL’s share price rose HUF 375 (+1.7%) yesterday, despite negative market sentiment, which indicates to us that investors have started to price in the news. Our rating on MOL is a Buy, with a price target of HUF 25,730 (before including the value of the Pakistani exploration project).