Thai Rating and Information Services Co., Ltd. (TRIS) announced Tuesday 21 November 2000 that it has assigned a corporate rating of PTT Exploration and Production PLC (PTTEP) at "AA." The rating reflects the company's solid asset base, its leading position in the Thai exploration and production (E&P) market, proficient management, strong support from the government and its prudent financial policy and above average financial position.
TRIS reported that PTTEP is a leading petroleum exploration and production company in Thailand. As of December 1999, PTTEP held the largest share of petroleum reserves in Thailand, 24%, although the company's production rate of 74,000 barrels per day (bpd) ranks second following Unocal Thailand, Ltd. PTTEP's proved petroleum reserves as of December 1999 was 778 million barrels of oil equivalent (mmboe) located primarily in the Gulf of Thailand and the Andaman Sea. PTTEP's reserve size is comparable with world class E&P companies. Given its current production, PTTEP's reserves can last 29 years, far longer than the industry average of 10 to 15 years.
The Petroleum Authority of Thailand (PTT) holds 61% of PTTEP. PTT is an integrated oil and gas state enterprise engaged in various petroleum activities in Thailand, including being the sole purchaser of nearly all petroleum produced in Thailand. As the E&P arm of PTT and the only Thai E&P company, PTTEP has had the opportunity to participate under favorable terms and conditions in petroleum concessions with the successful bidders for such concessions and has also been in a good position to obtain concessions directly from the government. From its initial role as a non-operator partner with international oil and gas companies, PTTEP became in mid 1998 an operator in the Bongkot project, which is the largest gas field in Thailand. The smooth operation of this project proves that PTTEP's management is capable of competing as a reliable operator. TRIS also said that PTTEP's finding and development costs for the last three years averaged US$2.11 per barrel of oil equivalent (boe), which is far below the global average of US$5.00 per boe. PTTEP was able to keep finding and development costs low because of a significant increase in petroleum reserves during that time and a simultaneous drop in exploration cost. Its 1999 production cost of US$2.50 per boe was also favorable when compared to the global average of US$2.53 per boe.
During the past five years, despite increasing revenues and strong cash flow, PTTEP's debt-to-capitalization ratio increased from 32% in 1995 to 59% in 1999 because it increased its use of debt to fund capital expenditures. However, its long-term target of a debt-to-capitalization ratio of 50% is achievable as the company has completed the investment phase of its major projects while production continues to increase. Funds from operations (FFO) to total debts was moderate in the 10%-35% range during 1995 to 1999 while operating margins (before depreciation and amortization) were relatively high in the 48%-68% range during the same period.
PTT Exploration and Production PLC (PTTEP) Company Rating Senior debt AA