TRIS Rating Co., Ltd. has affirmed the company rating of PTT Exploration and Production PLC (PTTEP) and the ratings of its current debentures at “AAA”. At the same time, TRIS Rating has assigned the “AAA” rating to PTTEP’s proposed up to Bt12,000 million senior debentures. The outlook remains “stable”. The ratings continue to reflect PTTEP’s leading position in the petroleum exploration and production (E&P) industry in Thailand, 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 rate 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.
TRIS Rating said, PTTEP was established to hold concession rights on behalf of the Thai government.
As of March 2007, PTTEP was held 66.5% 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 (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 but it decreased slightly to US$2.08 in the first quarter of 2007. 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. The debt to capitalization ratio
rose slightly to 12.1% at the end of March 2007. The earnings before interest, tax, depreciation
and amortization (EBITDA) interest coverage ratio stood at 88.0 times for the first three months of 2007. Operating margins before depreciation and amortization were relatively high, averaging 70%-75% during the last three years.
TRIS Rating said that 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 Bt28,192 million as of March 2007. -- End
PTT Exploration and Production PLC (PTTEP)
Company Rating: Affirmed at AAA
Issue Ratings:
PTEP102A: Bt3,500 million senior debentures due 2010 Affirmed at AAA
PTEP183A: Bt2,500 million senior debentures due 2018 Affirmed at AAA
Up to Bt12,000 million senior debentures due 2010-2022 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 rate 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.
TRIS Rating said, PTTEP was established to hold concession rights on behalf of the Thai government.
As of March 2007, PTTEP was held 66.5% 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 (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 but it decreased slightly to US$2.08 in the first quarter of 2007. 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. The debt to capitalization ratio
rose slightly to 12.1% at the end of March 2007. The earnings before interest, tax, depreciation
and amortization (EBITDA) interest coverage ratio stood at 88.0 times for the first three months of 2007. Operating margins before depreciation and amortization were relatively high, averaging 70%-75% during the last three years.
TRIS Rating said that 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 Bt28,192 million as of March 2007. -- End
PTT Exploration and Production PLC (PTTEP)
Company Rating: Affirmed at AAA
Issue Ratings:
PTEP102A: Bt3,500 million senior debentures due 2010 Affirmed at AAA
PTEP183A: Bt2,500 million senior debentures due 2018 Affirmed at AAA
Up to Bt12,000 million senior debentures due 2010-2022 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.