PTTEP records solid Q3 profit despite odds
30 Oct 14

  • Net profit reaches USD 477 million
  • Petroleum saIe volumes soar to 325,248 BOED
  • An 8% rise in sales volumes projected for 2014

October 30 -- PTT Exploration and Production Plc (PTTEP) continued to report solid profit in the third quarter of this year, although higher asset depreciation, write-off and exploration costs have curtailed growth.

The company posted an un-reviewed consolidated net profit of USD 477 million (equivalent to 15,284 million baht) in the July-September period, down by 16 % year-on-year (Y-o-Y), from USD 566 million.

Revenues grew by 14% Y-o-Y to USD 2,093 million, largely buoyed by a rise in sales volumes which came to an average of 325,248 barrels of oil equivalent per day (BOED), up from 286,578 BOED in the same period last year.

The decline in profitability was attributed mainly to USD 256 million in depreciation of PTTEP Australasia and Contract 4 projects as well as greater exploration expenditure which was inflated to USD 77 million as a result of the write-off of the hydrocarbon searching cost for PTTEP Australasia and Kenya L10 A projects.

The rise in petroleum sales volume was spurred by PTTEP's Australasia and Zawtika fields. Due to weakened global oil prices, PTTEP's average petroleum sales price reduced to an average of USD 65.15 per barrel of oil equivalent compared to USD 65.71 a year ago.

The quarter saw PTTEP recording an increase in non-recurring net profit of USD 51 million which was gained from oil price hedging.

The quarter's net profit of USD 477 million (equivalent to 15,284 million baht) can be divided by segments as follows: the profit of domestic exploration and production segment of USD 381 million, the gain of international exploration and production segment of USD 9 million, the earnings of pipeline transportation segment of USD 88 million and the net loss of head office and others segments of USD 1 million.

For the first nine months of this year, PTTEP recorded a net profit to USD 1,417 million (equivalent to 45,905 million baht).

PTTEP Business Outlook in the fourth quarter of 2014

Crude oil price volatility will persist in the fourth quarter of this year with increased output from Libya and Iran's possible resumption of crude export. This becomes key influential factors in supply side. The subdued outlook for the Eurozone, Japanese and Chinese economies will also continue to weigh on crude oil prices. But stronger energy demand in the northern hemisphere winter as well as the possibility of OPEC deciding soon to slash oil production next year could halt the fall in oil prices.

The majority of PTTEP's production is natural gas accounted for 67% of total sales volumes. Additionally, between 30-50% of the company's natural gas sales price is indexed to oil prices with a 3-month, 6-month or 1 year lag-time depending on the project. Therefore, the short-term outlook of lower oil prices has relatively subduce impact on gas prices. The crude oil and condensates accounted for 33% of PTTEP's sales volumes will be affected by lower oil prices. In the fourth quarter, PTTEP has hedged about 70% of its crude oil and condensate volumes based on Brent benchmark crude to manage the risk arising will impact financial performance. In addition, PTTEP has initiated the "SAVE … to be SAFE" project to efficiently manage investment and operation costs, including cutting unnecessary costs and changing working culture in all activities to be cost conscious. "For the whole of 2014, the company is on course to raise sales volumes by 8% from last year's level, driven primarily by output from Zawtika field and those from Hess Thailand which PTTEP acquired in the first half of this year. The offshore Myanmar and the Thai onshore producers are poised to become major contributors to PTTP's 2015 growth" said Tevin Vongvanich, PTTEP President and CEO.

Updates on PTTEP's portfolios

As of September 30, PTTEP has engaged in 45 projects in 11 countries.

Thailand:

PTTEP is involved in 18 ventures with the most of them are in production, both in the Gulf of Thailand and onshore. There were some production stoppages from Bongkot, Contract 4 and MTJDA-B17 projects for scheduled maintenance.

Southeast Asia:

PTTEP has interests in 16 projects in the region with Myanmar is the most active site. Zawtika, operated by PTTEP, successfully commenced gas delivery to Thailand in August this year. Together with gas supplied to Myanmar for its domestic consumption, the Zawtika produces an average of 345 million standard cubic feet per day (MMSCFD). Construction of additional wellhead platforms for Zawtika and drilling appraisal wells in the acreage are well underway to support long term production. Elsewhere in Myanmar where exploration is carried out, at the Myanmar M3 project with drilling additional appraisal wells are in the pipeline. At Myanmar PSC G & EP 2 scheme, geological structure study is in progress and spudding of exploration wells would follow. In addition, PTTEP has signed a Production Sharing Contract with Myanma Oil and Gas Enterprise for exploring and developing the onshore MOGE 3 block with an 85% interest and as the operator.

Australasia:

After a 20-day scheduled maintenance shutdown earlier this year, PTTEP Australasia's Montara field has resumed normal operations with expected average production of 17,000 barrels per day. An exploration well drilled at Cash Maple field was abandoned as a dry hole and was written off in the third quarter. PTTEP is currently studying the engineering design and development options for the field. During this quarter, the company also relinquished the AC/P4 block permit after completed the exploration drilling with no commercial prospect.

America:

PTTEP's Mariana Oil Sands Project in Canada is slated for drilling start-up in the fourth quarter of this year, while Pre-FEED activities as well as studying development options for Thornbury Phase 1 have moved ahead. In Brazil, PTTEP signed an agreement to acquire a 20% stake in the BM-ES-23 block from Shell Brasil Petroleo Ltd which is located in deep water off the coast of Brazil.

Africa & Middle East:

PTTEP participates in seven projects in Oman, Algeria, Mozambique and Kenya. For Algeria 433a & 416b project, construction of production facility and pipelines is underway for output start-up by the end of this year at the rate of 20,000 BPD. Plans are afoot to drill appraisal wells in the last quarter of this year at Mozambique Rovuma Offshore Area 1 project to find additional reserves potential. The first LNG delivery being launch in 2019 is under Engineering and development studies for LNG facilities. At Kenya L10 A project, exploration well drilling was completed with no commercial discovery, also the drilling expense were written off during this quarter. However, the well's drilling results will be utilized for further geological use.

Key achievements in the quarter

With the good corporate governances and business ethics, PTTEP received recognition awards and certificates in this quarter as the below details;

  • PTTEP has been selected as a listed company of the Dow Jones Sustainability Index or DJSI in Sustainability World Index of the Oil and Gas Sector. This world recognition marks the company's success and pride that reflects its commitment to operate business sustainably. 
  • PTTEP receives certificate as a member of Thailand's Private Sector Collective Action Coalition Against Corruption Council (CAC) from Anti-Corruption Organization Thailand or ACT.
  • The CSR Excellence Award from the Ministry of Social Development and Human Security, the award was presented to the organization with the best performance in social development.
  • Thailand's Top Corporate Brand Value 2014 in Industrial Resources sector for the third time. The award is based on research results of the Faculty of Commerce and Accountancy, Chulalongkorn University assessing brand values from the financial, accounting and marketing aspects which PTTEP is ranked as the highest brand value in the Industrial Resources sector in Thailand.
  • The Best Strategic Corporate CSR award and the Best Senior Management IR Support award in Thailand from Alpha Southeast Asia Magazine. The two awards were ranked from the votes of more than 400 investors, fund managers and analysts across Asia, Europe and America.

For more information, please contact Media Management Section
Tongchit Pongorapin Tel. +66 (0) 2537 4587 E-mail: tongchitp@pttep.com
Vanduan Vijintanasarn Tel. +66 (0) 2537 5418 E-mail: vanduanv@pttep.com

Disclaimer
The information, statements, forecasts and projections contained herein reflect the Company's current views with respect to future events and financial performance. These views are based on assumptions subject to various risks. No assurance is given that these future events will occur, or that the Company's future assumption are correct. Actual results may differ materially from those projected.

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