Average sales volume of 322,167 BOED in 2015, achieving 3% growth as planned
Strong financial position with approximately USD 3,200 million cash on hand, well prepared to navigate through current oil price volatility
Somporn Vongvuthipornchai, President and Chief Executive Officer of PTT Exploration and Production Public Company Limited (PTTEP), said that the company's operating performance remains on track, having achieved sales volume growth as planned. Recurring net profit was recorded at USD 718 million; while operating cash flow totaled over USD 2,800 million. The outcomes of cost reduction initiatives and strict discipline to investment prioritization, whereby the company selectively invest in projects that can be justified economically under the currently low oil price environment, contributed greatly to this financial performance. We successfully reduced operating and capital expenditures by 30% and, as a result, brought down the unit cost by 11% from 2014 level. The company also used oil price hedging instruments to alleviate the impact of oil price volatility, which resulted in hedging gain of USD 120 million in 2015. Cash on hand is currently approximately USD 3,200 million providing enough liquidity to manage with oil price fluctuation and allow the consideration of merger and acquisition (M&A) which creates value and matches strategic plans.
Meanwhile, continuing volatility in global crude prices and the depreciation in Thai Baht against U.S. dollar in 2015 led the company to book impairment loss of USD 1,385 million as well as deferred tax liabilities and other tax expenses caused by differing currencies the company uses as the functional currency (USD) and in tax filing (Thai Baht). These items are booked per the accounting standard and mostly have no impact on the company's cash flow. Consequently, the company posted net loss of USD 854 million in 2015, against net profit of USD 677 million in 2014.
PTTEP in 2015 recorded consolidated revenue of USD 5,654 million in comparison with USD 7,834 million in 2014. The revenue decrease was due to the average sales price, which dropped in 2015 to USD 45.29 per barrel of oil equivalent (BOE), from USD 63.71 per BOE in 2014, following the continued fall in oil prices. This is despite sales volume increase, driven by full-year recognition of production from the Zawtika project and the production startup of the Bir Seba field, the Algeria 433a and 416b project in the fourth quarter of 2015.
In 2015, total expense before impairment charge was USD 4,642 million, lower than USD 5,087 million recorded in 2014. Following progresses the company has made on the SAVE to be SAFE cost reduction program, PTTEP was successful at reducing its capital and operating expenditures and driving down the unit cost from USD 43.45 per BOE in 2014 to USD 38.88 per BOE in 2015. Unit cost reduction, which is seen across most cost categories including operating expenses, general and administrative expenses, exploration expenses and finance costs, was achieved through improved work and cost efficiency. This includes reducing drilling days especially in the Gulf of Thailand operations, as a result of which well cost was brought down by more than 20%. Other cost reduction activities also include logistics optimization (i.e. reducing number of vessels), better inventory management, renegotiation of major equipment rental and service contracts and strengthen capital structure through debt repayment of USD 1,100 million. Despite the cost reductions, the upholding of safety and environmental standard excellence remains the utmost importance.
At the end of the of 2015, total asset values of the company was recorded at USD 19,642 million, of which USD 3,260 million is cash and cash equivalents, the company's equity at USD 11,328 million and total interest bearing debt at USD 3,005 million. Referring to the aforementioned 2015 operating performance and financial status, PTTEP's Board of Directors on January 28, 2016 approved the payment of a dividend for the 2015 operating results to the shareholders at THB 3 apiece. The company has already paid an interim dividend for the first six months operating performance at THB 1 per share, while the remaining dividend will be paid at BHT 2 per share. The closing date of the company's share registration for the right to receive the dividend is scheduled on February 12, 2016, followed by a dividend payment on April 11, 2016.
"2016 will be another challenging year for PTTEP and the exploration and production industry as a whole. We, however, strongly believe that we can create value added for the company and reasonable returns to all stakeholders from our professionalism with the continued focus on efficiency enhancement and cost reduction while realizing the value of balance between profits and cash flow," said Somporn.