TRIS Rating Co., Ltd. has assigned a “AAA” rating to the proposed Bt3,500 million senior debentures of PTT Exploration and Production PLC (PTTEP) at “AAA”. At the same time, TRIS Rating has affirmed the ratings of PTTEP and its current Bt2,500 million senior debentures (PTEP183A) at “AAA”. The outlook remains “stable”. 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 received as the E&P arm of the Thai government. The ratings also take into consideration the company’s very strong financial profile and healthy cash flow, despite large capital expenditures planned for 2007-2009.
The “stable” outlook reflects TRIS Rating’s expectation that PTTEP will be able to maintain its strong financial position despite heavy capital expenditures during 2007-2009. Rising E&P costs and a challenge to maintain the life of its reserves are partially mitigated by petroleum prices which are currently strong. The company’s 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. As of December 2006, its total proven petroleum reserves, including reserves from overseas projects, were 923 million barrels of oil equivalent (mmboe). Given the projected production of approximately 188,000 barrels of oil equivalent per day (boed), PTTEP’s reserves should last 13 years, comparable with world-class E&P companies which average 10 to 15 years. As of 31 December 2006, the company had 34 projects in hand with 11 projects in the production phase and the remainder in the exploration and development phase. PTTEP was established to hold concession rights on behalf of the Thai government. As of November 2006, 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.
TRIS Rating said, PTTEP’s operating efficiency is competitive compared with E&P peers. Its three-year average finding and development (F&D) cost ending 2006 was US$10.11 per barrel of oil equivalent
(boe). Though lifting cost increased from US$1.82 per boe in 2005 to US$2.13 per boe in 2006, this cost remains lower than global E&P companies. PTTEP’s financial position remains very strong. In 2006, sales increased to Bt86,339 million, a 30.1% rise from 2005. Net profit increased by 18.2% to Bt28,047 million. Its debt-to-capitalization ratio improved to 9.4% at the end of December 2006. The ratio of earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage stood at 59.3 times in 2006. Operating margins before depreciation and amortization were relatively high, averaging 70%-75% during the last three years.
PTTEP’s planned capital expenditures of Bt191,514 million during 2007-2011 are higher than previously planned. The rise is partly due to increased costs for the Arthit project and an upward revision of production. With capital spending of approximately Bt50,000 million per year during 2007-2009 and projected operating cash flow of Bt35,000-Bt40,000 million per year, the company should be able to fund most of its planned expenditures with internally generated cash. Additional borrowings of Bt10,000-Bt20,000 million per year would not weaken the balance sheet which is currently solid. In addition, the company has high liquidity supported by a combined balance of cash and short-term investments totaling Bt18,521 million as of December 2006, said TRIS Rating. -- End
PTT Exploration and Production PLC (PTTEP)
Company Rating: Affirmed at AAA
Issue Ratings:
PTEP102A: Bt3,500 million senior debentures due 2010 AAA
PTEP183A: Bt2,500 million senior debentures due 2018 Affirmed at AAA
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co.,Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook reflects TRIS Rating’s expectation that PTTEP will be able to maintain its strong financial position despite heavy capital expenditures during 2007-2009. Rising E&P costs and a challenge to maintain the life of its reserves are partially mitigated by petroleum prices which are currently strong. The company’s 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. As of December 2006, its total proven petroleum reserves, including reserves from overseas projects, were 923 million barrels of oil equivalent (mmboe). Given the projected production of approximately 188,000 barrels of oil equivalent per day (boed), PTTEP’s reserves should last 13 years, comparable with world-class E&P companies which average 10 to 15 years. As of 31 December 2006, the company had 34 projects in hand with 11 projects in the production phase and the remainder in the exploration and development phase. PTTEP was established to hold concession rights on behalf of the Thai government. As of November 2006, 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.
TRIS Rating said, PTTEP’s operating efficiency is competitive compared with E&P peers. Its three-year average finding and development (F&D) cost ending 2006 was US$10.11 per barrel of oil equivalent
(boe). Though lifting cost increased from US$1.82 per boe in 2005 to US$2.13 per boe in 2006, this cost remains lower than global E&P companies. PTTEP’s financial position remains very strong. In 2006, sales increased to Bt86,339 million, a 30.1% rise from 2005. Net profit increased by 18.2% to Bt28,047 million. Its debt-to-capitalization ratio improved to 9.4% at the end of December 2006. The ratio of earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage stood at 59.3 times in 2006. Operating margins before depreciation and amortization were relatively high, averaging 70%-75% during the last three years.
PTTEP’s planned capital expenditures of Bt191,514 million during 2007-2011 are higher than previously planned. The rise is partly due to increased costs for the Arthit project and an upward revision of production. With capital spending of approximately Bt50,000 million per year during 2007-2009 and projected operating cash flow of Bt35,000-Bt40,000 million per year, the company should be able to fund most of its planned expenditures with internally generated cash. Additional borrowings of Bt10,000-Bt20,000 million per year would not weaken the balance sheet which is currently solid. In addition, the company has high liquidity supported by a combined balance of cash and short-term investments totaling Bt18,521 million as of December 2006, said TRIS Rating. -- End
PTT Exploration and Production PLC (PTTEP)
Company Rating: Affirmed at AAA
Issue Ratings:
PTEP102A: Bt3,500 million senior debentures due 2010 AAA
PTEP183A: Bt2,500 million senior debentures due 2018 Affirmed at AAA
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co.,Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.