PTTEP's recurring net profit remains healthy with strong operating cash flow over USD 2 billion despite nine-month net loss performance

  • Nine-month sales volume approximately 328,000 BOED, increased 5% year-on-year, while sales prices have dropped in relation to the global oil prices
  • Improved operational efficiency and achieved cost reduction target resulted in a 5% decrease in its Unit Cost
  • Started production from the Bir Seba oil field, Algeria 433A and 416B, with first crude oil sales expected in Q4/2015

Somporn Vongvuthipornchai, newly-appointed President and Chief Executive Officer, PTT Exploration and Production Public Company Limited (PTTEP), disclosed that 'The Company's operating performance remains on track with petroleum sales volume growth seen for the first nine months of this year over a year ago. Despite oil price falls, our operating cash flow remains strong at above USD 2 billion for the period sufficient to support our investment program. This is besides USD 3 billion of cash on hand which could be used to fund new business opportunities. Progress is also being made on the Bir Seba field of the Algeria 433a & 416b project. The project is in the process of commissioning for production start-up with commercial sales expected in the fourth quarter.'

In the first nine months of 2015, PTTEP generated consolidated revenue of USD 4,440 million, decreased from USD 5,989 million in the same period of last year. This was caused by a drop of average sales price from USD 66 per barrel of oil equivalent (BOE) to USD 47 per BOE, as a result of plummeted global crude prices. The company's recurring net profit at USD 705 million, compared to USD 1,355 million from the same period of last year, saved partly by better cost management which sees 5% reduction in overall unit cost from the same period of 2014.

Nevertheless, the first nine months recorded losses of USD 1,691 million for non-recurring items. The record was in accordance with the accounting standard and mostly has no impact to the company's cash flow. These items included:

- Impairment loss of USD 1,385 million caused by a continuous drop in global crude prices resulted in a reduction in fair value of PTTEP's assets

- Deferred tax liabilities and other tax expenses amounted to USD 316 million as a result of the Baht depreciation from 34 baht at the beginning of the year to 36.4 baht per US dollar at the end of September.

- Oil price hedging gain amounted to USD 50 million

PTTEP consequently booked consolidated net loss of USD 986 million for the nine months period of this year. At the end of the third quarter of 2015, total asset values of the company was recorded at USD 20,150 million, the company's equity at USD 11,203 million and total interest bearing debt at USD 3,277 million.

In the third quarter, the company posted consolidated revenue of USD 1,512 million, up from USD 1,486 million in the second quarter. Recurring net profit approximately at USD 264 million, higher than USD 194 million in the previous quarter mainly attributed to increased petroleum sales volume from both domestic and Myanmar assets. Lower unit cost down by 8% from the second quarter resulted from the 'SAVE to be SAFE' cost reduction project was also contributed. However, PTTEP posted consolidated net loss of USD 1,284 million due to the non-recurring items, especially the impairment loss.

'This downturn in oil prices has tremendous impact on global E&P industry. It has instigated impairment actions for several companies globally, including PTTEP as seen in our third-quarter financial results. As a good governance, impairment charge is recorded so that our book value appropriately reflects fair value of the assets under the changed environment. In the future if oil prices recover and our asset value appreciates beyond the book value, this value appreciation would gradually be realized through improved profitability.' said Mr. Somporn.

In PTTEP's view, the short-term outlook of global oil prices will remain in the low circumstances due to the continuous supply glut in the market. However, factors pressing on oil prices are likely to ease if the global economy recover, particularly China, and the production volume from the United States continues to decline. Under the uncertain situation, PTTEP keeps focusing on the cost reduction scheme with both capital expenditures (CAPEX) and operating expenditures (OPEX). In addition, the company has studied various oil price and foreign exchange rate scenarios in preparing for risk management.

In summary, Mr. Somporn added that 'The low oil price environment opens up a good opportunity for PTTEP to acquire new assets at good prices. Our primary focus for M&A remains within Southeast Asia for assets in producing or near to producing phase.'

October 22, 2015. For more information, please contact Media Management Section
Tongchit Pongorapin Tel. +66 (0) 2537 4587 E-mail: tongchitp@pttep.com Nalin Viboonchart Tel. +66 (0) 2537 4834 E-mail: nalinv@pttep.comRudklao Suwankiri Tel. +66 (0) 2537 5410 E-mail: rudklaos@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 assumptions are correct. Actual results may differ materially from those projected.

PTTEP Operation Update for the 3rd quarter of 2015

PTTEP currently invests in 39 projects in 11 countries and the progress of highlighted projects are as the following details;

Thailand:

In Q3 of this year, the Bongkot Project, the Arthit Project, the S1 Project and the Contract 4 Project continue to maintain production plateau with average sales volume of 242,738 barrels of oil equivalent per day (BOED) from all production projects in Thailand.

Southeast Asia :

The average sales volume from projects in Southeast Asia in Q3 2015 was approximately 71,916 BOED with key developments as follow:

Zawtika Project :As of Q3, the average sales volume of natural gas in the Zawtika Project is approximately 349 million standard cubic feet per day (MMSCFD), while the construction of four wellhead platform, under The Zawtika Phase 1B, is ongoing.

Vietnam 16-1 Project: On August 13, 2015 the first production of wellhead platform H5, which is located in the south of Te GIac Trang Field (TGT), was successful as planned. As of today, the H5 has reached its goal of average production volume of approximately 11,000 BPD.

Myanmar M3 project: Exploratory wells drilling is completed as planned, while four wells did not show commercial discoveries resulting in booking well write-off.

Australasia:

Montara fieldin PTTEP Australasia Project: Consequential from the planned annual maintenance, average production volume of the project in the third quarter was approximately 13,080 BPD.

America Continent:

Mariana Oil Sands project in Canada: In May, the project submitted application to the Alberta Energy Regulator (AER) requesting to develop in the phase 1 of the Thornbury field. The application is currently under consideration.

Brazil Barreirinhas AP 1 project in Brazil: Exploration activities are expected to begin in the fourth quarter of 2015.

Brazil BM-ES-23 project in Brazil: The project is expected to start drilling campaign in Pacoca and Jujuba exploration wells in the fourth quarter of this year.

Africa & Middle East:

Algeria 433a & 416b project: The production test has started and expected to commence production in the fourth quarter of this year.

Algeria Hassi Bir Rekaiz Project: The Third Exploration Phase has started while appraisal wells drilling is completed with four-of-six wells appraised.

Mozambique Rovuma Offshore Area 1 project: The Decree Law and endorsement from Mozambique's government has been approved. The project is in process of selecting contractor for offshore installation, while project financial loans is having positive progress.

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