TRIS Rating Co., Ltd. has upgraded the company rating of PTT Exploration and Production PLC (PTTEP) and the rating of PTTEP's Bt2,500 million senior debentures (PTEP183A) to "AAA" from "AA+" with "stable" outlook. The upgrades reflect PTTEP's strengthened financial profile, its on-going benefits of the continued strong petroleum prices and its ability to finance growth without weakening its financial strength. The ratings also take into consideration PTTEP's leading position in the petroleum exploration and production (E&P) industry in Thailand, its diversified asset base, and the support received as the E&P arm of the Thai government.
The "stable" outlook reflects TRIS Rating's expectation that PTTEP will be able to maintain its strong financial position despite heavy capital expenditures during 2006-2008 and the repayment of its Samurai and Yankee bonds (totaled approximately US$400 million) in 2006-2007. An upward cost pressure in E&P spending and a challenge to maintain its reservelife are partially mitigated by favourably high petroleum prices. Its financial policy is expected to remain conservative to accommodate higher operational and political risks from its international operations.
TRIS Rating reported that PTTEP is the leading petroleum E&P company in Thailand. Its total proved petroleum reserves, including reserves from overseas projects, were 950 million barrels of oil equivalent (mmboe) as of December 2005. Given its projected production of approximately 184,000 barrels of oil equivalent per day (boed), PTTEP's reserves should last 14 years, comparable with world-class E&P
companies which average 10 to 15 years. As of 31 December 2005, the company had 29 projects on hand with ten projects being in the production phase and the remainder in the exploration and development phase.
TRIS Rating said, PTTEP was established to hold concession rights on behalf of the Thai government. As of November 2005, PTTEP was held 66% by the national oil and gas company, PTT PLC (PTT). 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 in Thailand and abroad. PTTEP's operating efficiency is competitive, compared with E&P peers. Its three-year average finding and development cost ending 2005 was US$4.76 per barrel of oil equivalent (boe), which was lower than global E&P companies. Though lifting cost increased from US$1.25 per boe in 2004 to US$1.82 per boe in 2005, it remained lower than global E&P companies.
PTTEP's financial position remains very strong. Its performance in 2005 has been above expectation. Its sales increased by 43.6% to Bt66,358 million while net profit increased by 49.6% to Bt23,735 million. Its debt-to-capitalization ratio improved from 23.9% in 2004 to 20.7% in 2005. Its funds from operations (FFO) to total debt ratio stood at 180.3% in 2005, while operating margins before depreciation and amortization were relatively high at 70%-75% during the last three years. PTTEP's planned capital expenditures of around Bt153,500 million during 2006-2010 is more aggressive than previously planned. Approximately 35%-40% of the budget will be used for the Bongkot and Arthit projects. However, as petroleum prices are expected to remain high and with projected operating cash flow of around Bt35,000 million-Bt40,000 million per year, PTTEP should be able to finance expenditures with internally generated cash. In addition, the company has high liquidity supported by a combined balance of cash and short-term investments totaling Bt30,507 million as of December 2005, said TRIS Rating. -- End
PTT Exploration and Production PLC (PTTEP)
Company Rating: Upgraded to "AAA" from "AA+"
Issue Rating:
PTEP183A: Bt2,500 million senior debentures due 2018 Upgraded to "AAA" from "AA+"
Rating Outlook: Removed to "Stable" from "Positive"
The "stable" outlook reflects TRIS Rating's expectation that PTTEP will be able to maintain its strong financial position despite heavy capital expenditures during 2006-2008 and the repayment of its Samurai and Yankee bonds (totaled approximately US$400 million) in 2006-2007. An upward cost pressure in E&P spending and a challenge to maintain its reservelife are partially mitigated by favourably high petroleum prices. Its financial policy is expected to remain conservative to accommodate higher operational and political risks from its international operations.
TRIS Rating reported that PTTEP is the leading petroleum E&P company in Thailand. Its total proved petroleum reserves, including reserves from overseas projects, were 950 million barrels of oil equivalent (mmboe) as of December 2005. Given its projected production of approximately 184,000 barrels of oil equivalent per day (boed), PTTEP's reserves should last 14 years, comparable with world-class E&P
companies which average 10 to 15 years. As of 31 December 2005, the company had 29 projects on hand with ten projects being in the production phase and the remainder in the exploration and development phase.
TRIS Rating said, PTTEP was established to hold concession rights on behalf of the Thai government. As of November 2005, PTTEP was held 66% by the national oil and gas company, PTT PLC (PTT). 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 in Thailand and abroad. PTTEP's operating efficiency is competitive, compared with E&P peers. Its three-year average finding and development cost ending 2005 was US$4.76 per barrel of oil equivalent (boe), which was lower than global E&P companies. Though lifting cost increased from US$1.25 per boe in 2004 to US$1.82 per boe in 2005, it remained lower than global E&P companies.
PTTEP's financial position remains very strong. Its performance in 2005 has been above expectation. Its sales increased by 43.6% to Bt66,358 million while net profit increased by 49.6% to Bt23,735 million. Its debt-to-capitalization ratio improved from 23.9% in 2004 to 20.7% in 2005. Its funds from operations (FFO) to total debt ratio stood at 180.3% in 2005, while operating margins before depreciation and amortization were relatively high at 70%-75% during the last three years. PTTEP's planned capital expenditures of around Bt153,500 million during 2006-2010 is more aggressive than previously planned. Approximately 35%-40% of the budget will be used for the Bongkot and Arthit projects. However, as petroleum prices are expected to remain high and with projected operating cash flow of around Bt35,000 million-Bt40,000 million per year, PTTEP should be able to finance expenditures with internally generated cash. In addition, the company has high liquidity supported by a combined balance of cash and short-term investments totaling Bt30,507 million as of December 2005, said TRIS Rating. -- End
PTT Exploration and Production PLC (PTTEP)
Company Rating: Upgraded to "AAA" from "AA+"
Issue Rating:
PTEP183A: Bt2,500 million senior debentures due 2018 Upgraded to "AAA" from "AA+"
Rating Outlook: Removed to "Stable" from "Positive"