Thai Rating and Information Services Co., Ltd. (TRIS) announced that it has upgraded the company rating of PTT Exploration and Production PLC (PTTEP) to "AA+" from "AA". The rating reflects PTTEP's significantly improved financial position, its solid asset base, its leading position in the Thai exploration and production (E&P) market and the structure of gas sale agreements that limits PTTEP's exposure to downside risk of crude oil price fluctuations. TRIS believes that the company remains sufficiently strong to weather the downtrend cycle of the industry.
TRIS reported that PTTEP is a leading petroleum exploration and production company in Thailand. As of December 2000, PTTEP held the largest share of petroleum reserves in Thailand, 25%. PTTEP's proved petroleum reserves as of December 2000 was 779 million barrels of oil equivalent (mmboe). PTTEP's reserve size is comparable with world class E&P companies. Given its current production of 93,000 barrels of oil equivalent per day (boed), PTTEP's reserves can last 23 years, far longer than the industry average of 10 to 15 years.
TRIS said PTTEP is currently held 61% by the national oil and gas company, PTT PLC (PTT), formerly the Petroleum Authority of Thailand. The recent corporatization of PTT has minimal effect on PTTEP's business, because both remain state enterprises as defined by Thai law. As the E&P arm of PTT and the only Thai E&P company, PTTEP has had the opportunity to participate in some petroleum concessions with the successful bidders under the favorable terms and conditions of such concessions. 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. Compared to E&P peers, PTTEP's operating efficiency is fairly competitive. Its finding and development costs for the last three years averaged US$1.78 per barrel of oil equivalent (boe), which is far below the global average of US$5.00 per boe. Its 2000 production cost of US$2.61 per boe was also acceptable when compared to the global average of US$2.53 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 costs. Being granted some petroleum concessions as a state-owned enterprise also contributes to the company's cost competitiveness.
PTTEP's financial position is very strong. Oil and gas prices reaching 10-year highs in 2000 has contributed to PTTEP's impressive financial performance for 2000 and for the nine months of 2001. Its net profit for 2000 was Bt5,433 million, a 148% increase from the 1999 figure. Though crude oil prices started to drop in September 2000, the company's gas price upward momentum continued well into the first half of 2001, and its net profit for the first nine months of 2001 was healthy at Bt8,680 million. As of September 2001, PTTEP's combined cash and short-term investment was very high at Bt21,841 million. This level is more than enough to finance its planned US$225 million acquisition of PT. Medco Energi Internasional Tbk. (Medco), an exploration and production company in Indonesia by this year end, TRIS said. Declining economic growth together with lower natural gas demand for the next several years will have little impact on PTTEP because more than two-thirds of its natural gas sales have long-term take or pay contracts with PTT. Despite crude oil prices being in a declining trend, the pricing formula of natural gas in the purchase contracts limits the company's exposure to the down side risk of crude oil price fluctuations.
PTT Exploration and Production PLC (PTTEP) Company Rating Upgraded to AA+ from AA
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TRIS reported that PTTEP is a leading petroleum exploration and production company in Thailand. As of December 2000, PTTEP held the largest share of petroleum reserves in Thailand, 25%. PTTEP's proved petroleum reserves as of December 2000 was 779 million barrels of oil equivalent (mmboe). PTTEP's reserve size is comparable with world class E&P companies. Given its current production of 93,000 barrels of oil equivalent per day (boed), PTTEP's reserves can last 23 years, far longer than the industry average of 10 to 15 years.
TRIS said PTTEP is currently held 61% by the national oil and gas company, PTT PLC (PTT), formerly the Petroleum Authority of Thailand. The recent corporatization of PTT has minimal effect on PTTEP's business, because both remain state enterprises as defined by Thai law. As the E&P arm of PTT and the only Thai E&P company, PTTEP has had the opportunity to participate in some petroleum concessions with the successful bidders under the favorable terms and conditions of such concessions. 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. Compared to E&P peers, PTTEP's operating efficiency is fairly competitive. Its finding and development costs for the last three years averaged US$1.78 per barrel of oil equivalent (boe), which is far below the global average of US$5.00 per boe. Its 2000 production cost of US$2.61 per boe was also acceptable when compared to the global average of US$2.53 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 costs. Being granted some petroleum concessions as a state-owned enterprise also contributes to the company's cost competitiveness.
PTTEP's financial position is very strong. Oil and gas prices reaching 10-year highs in 2000 has contributed to PTTEP's impressive financial performance for 2000 and for the nine months of 2001. Its net profit for 2000 was Bt5,433 million, a 148% increase from the 1999 figure. Though crude oil prices started to drop in September 2000, the company's gas price upward momentum continued well into the first half of 2001, and its net profit for the first nine months of 2001 was healthy at Bt8,680 million. As of September 2001, PTTEP's combined cash and short-term investment was very high at Bt21,841 million. This level is more than enough to finance its planned US$225 million acquisition of PT. Medco Energi Internasional Tbk. (Medco), an exploration and production company in Indonesia by this year end, TRIS said. Declining economic growth together with lower natural gas demand for the next several years will have little impact on PTTEP because more than two-thirds of its natural gas sales have long-term take or pay contracts with PTT. Despite crude oil prices being in a declining trend, the pricing formula of natural gas in the purchase contracts limits the company's exposure to the down side risk of crude oil price fluctuations.
PTT Exploration and Production PLC (PTTEP) Company Rating Upgraded to AA+ from AA
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