TRIS Rating Co., Ltd. has affirmed the company rating of PTT Exploration and Production PLC (PTTEP) and the rating of its Bt2,500 million senior debentures (PTEP183A) at "AA+". The ratings continue to reflect PTTEP's leading position in the petroleum exploration and production (E&P) industry in Thailand, its solid asset base and the support it receives as the E&P arm of the Thai government. The ratings also take into consideration PTTEP's strong financial position and healthy internal cash generation, despite upcoming heavy capital expenditures during 2005-2007. While the "positive" outlook reflects PTTEP's better-than-expected financial performance as a result of favorable petroleum prices and increased production volume after acquiring the S1 project. The outlook also reflects PTTEP's solid performance and strong financial position.
TRIS Rating reported that PTTEP was established to hold concession rights on behalf of the Thai government with a 65% shares as of November 2004 held by the national oil and gas company, PTT PLC. PTT and PTTEP remain state enterprises as defined by Thai law. As the state-owned E&P arm of PTT, PTTEP has leveraged its position to participate in high potential petroleum projects both domestically and internationally.
TRIS Rating said that PTTEP is the leading petroleum E&P company in Thailand that held the largest share of 30% of the petroleum reserves in Thailand as of December 2003. Its total proved petroleum reserves, including reserves from its overseas projects, increased to 964 million barrels of oil equivalent (mmboe) as of 1 January 2004 from 882 mmboe at the end of December 2003. The size of PTTEP's reserves is comparable with world-class E&P companies. Given its current production of approximately 130,000 barrels of oil equivalent per day (boed), PTTEP's reserves can last 20 years, longer than the global industry average of 10 to 15 years. The increase of PTTEP's proved petroleum reserves came mainly from its increased ownership in the S1 project from 25% to 100% with the additional investment of US$185 million, financed internally. Full ownership of the S1 project helps enhance PTTEP's reserve base by 9% and increase its petroleum production by 17%.
PTTEP's operating efficiency is competitive, compared with its E&P peers. Its three-year average finding and development costs ending 2003 was US$2.03 per barrel of oil equivalent (boe), which is lower than the global average of US$4-US$5 per boe. PTTEP's unit cost of production improved from approximately US$2.55 per boe in 2002 to US$2.21 per boe in 2003. PTTEP's lifting cost also improved from US$2.09 per boe in 2002 to US$1.63 per boe in 2003 which was lower than the global average of US$3-US$4 per boe. While its financial position remains very strong. PTTEP's performance during 2003-2004 has been above TRIS Rating's expectations. During the first nine months of 2004, its sales increased by 33% to Bt33,305 million while net profit increased by 7% to Bt10,766 million. Its debt-to-capitalization ratio improved from 33.3% in 2002 to 26.5% in September 2004. The funds from operations to total debt ratio stood at 95.4% in the first nine months of 2004, while its operating margins were relatively high at around 70%-75% during the last three years.
PTTEP's planned capital expenditures of around Bt76,000 million during 2004-2008 is more aggressive than previously planned. Approximately Bt33,000 million is targeted to be used for the Arthit project which is planned to start production in late 2006. However, given its projected operating cash flow of around Bt13,000 million per year, PTTEP should be able to finance expenditures with internally generated cash. In addition, it has high liquidity supported by a combined balance of cash and short-term investments totaling Bt21,888 million as of September 2004. An investment in its Indonesian affiliate, PT. Medco Energi Internasional Tbk. (Medco), provided PTTEP with US$5.6 million in dividends for 2003 operations. However, PTTEP is in the process of divesting its investment in Medco, partly because of the rapid maturity of Medco fields and unsuccessful attempts to find enough reserves to replace its production. Although Medco's reserve base is relatively short at around 4-5 years, PTTEP should have some gains from the divestment, given the current high oil price situation, TRIS Rating said. -- End
PTT Exploration and Production PLC (PTTEP) Company Rating: Affirmed at AA+ Issue Rating: PTEP183A: Bt2,500 million senior debentures due 2018 Affirmed at AA+ Rating Outlook: Positive
TRIS Rating reported that PTTEP was established to hold concession rights on behalf of the Thai government with a 65% shares as of November 2004 held by the national oil and gas company, PTT PLC. PTT and PTTEP remain state enterprises as defined by Thai law. As the state-owned E&P arm of PTT, PTTEP has leveraged its position to participate in high potential petroleum projects both domestically and internationally.
TRIS Rating said that PTTEP is the leading petroleum E&P company in Thailand that held the largest share of 30% of the petroleum reserves in Thailand as of December 2003. Its total proved petroleum reserves, including reserves from its overseas projects, increased to 964 million barrels of oil equivalent (mmboe) as of 1 January 2004 from 882 mmboe at the end of December 2003. The size of PTTEP's reserves is comparable with world-class E&P companies. Given its current production of approximately 130,000 barrels of oil equivalent per day (boed), PTTEP's reserves can last 20 years, longer than the global industry average of 10 to 15 years. The increase of PTTEP's proved petroleum reserves came mainly from its increased ownership in the S1 project from 25% to 100% with the additional investment of US$185 million, financed internally. Full ownership of the S1 project helps enhance PTTEP's reserve base by 9% and increase its petroleum production by 17%.
PTTEP's operating efficiency is competitive, compared with its E&P peers. Its three-year average finding and development costs ending 2003 was US$2.03 per barrel of oil equivalent (boe), which is lower than the global average of US$4-US$5 per boe. PTTEP's unit cost of production improved from approximately US$2.55 per boe in 2002 to US$2.21 per boe in 2003. PTTEP's lifting cost also improved from US$2.09 per boe in 2002 to US$1.63 per boe in 2003 which was lower than the global average of US$3-US$4 per boe. While its financial position remains very strong. PTTEP's performance during 2003-2004 has been above TRIS Rating's expectations. During the first nine months of 2004, its sales increased by 33% to Bt33,305 million while net profit increased by 7% to Bt10,766 million. Its debt-to-capitalization ratio improved from 33.3% in 2002 to 26.5% in September 2004. The funds from operations to total debt ratio stood at 95.4% in the first nine months of 2004, while its operating margins were relatively high at around 70%-75% during the last three years.
PTTEP's planned capital expenditures of around Bt76,000 million during 2004-2008 is more aggressive than previously planned. Approximately Bt33,000 million is targeted to be used for the Arthit project which is planned to start production in late 2006. However, given its projected operating cash flow of around Bt13,000 million per year, PTTEP should be able to finance expenditures with internally generated cash. In addition, it has high liquidity supported by a combined balance of cash and short-term investments totaling Bt21,888 million as of September 2004. An investment in its Indonesian affiliate, PT. Medco Energi Internasional Tbk. (Medco), provided PTTEP with US$5.6 million in dividends for 2003 operations. However, PTTEP is in the process of divesting its investment in Medco, partly because of the rapid maturity of Medco fields and unsuccessful attempts to find enough reserves to replace its production. Although Medco's reserve base is relatively short at around 4-5 years, PTTEP should have some gains from the divestment, given the current high oil price situation, TRIS Rating said. -- End
PTT Exploration and Production PLC (PTTEP) Company Rating: Affirmed at AA+ Issue Rating: PTEP183A: Bt2,500 million senior debentures due 2018 Affirmed at AA+ Rating Outlook: Positive