Continue to deliver strong cost performance with unit cost lowered to USD 27.54 per BOE
Accelerating development projects to boost future sales volume
Ready to bid for expiring concessions in the Gulf of Thailand, confident will be able to deliver gas supply continuity
PTT Exploration and Production Public Company Limited (PTTEP) announced an increased net profit to USD 349 million (equivalent to THB 12,284 million) in the first quarter of 2017. This was mainly attributed to average selling price which stood at USD 38 per barrel of oil equivalent (BOE) improving in line with global crude oil price, cost efficiency that was achieved as planned and the appreciation in Thai Baht. As a result, the Company's financial position remains strong, ready for future investments and acquisitions as well as bidding for the expiring concession of the natural gas fields in the Gulf of Thailand.
Mr. Somporn Vongvuthipornchai, President and Chief Executive Officer of PTTEP, said that PTTEP recorded total revenue of USD 1,092 million (equivalent to THB 38,377 million) for the first quarter of 2017, an increase from USD 1,085 million (equivalent to THB 38,692 million) in the same period last year, despite the reduction in sales volume to 304,108 barrels of oil equivalent per day (BOED) compared to 329,858 BOED for the first quarter of last year. The reduction in sales volume was primarily due to the lower sales from the Australian project and the divestment of producing asset in Oman. Consolidated net profit stood at USD 349 million (equivalent to THB 12,284 million) for the first quarter of 2017, more than 100% increase compared to the first quarter of 2016, with recurring net profit of USD 211 million (equivalent to THB 7,437 million) mainly attributed to an increase of average selling price to USD 38 per BOE, compared to USD 35 per BOE for the same period of last year. Unit cost was lowered to USD 27.54 per BOE from USD 28.57 per BOE in the same period last year, primarily due to a decrease in depreciation expenses in correlation with investment activities and reserve addition. The Company also recorded gains from non-recurring items of USD 138 million (equivalent to THB 4,847 million) as a result of tax savings caused by Thai Baht appreciation against US dollar and gains from oil price hedging. With this performance, the Company has managed to strengthen its profitability as reflected in earnings before interest, tax, depreciation and amortization (EBITDA) margin of 74% and the operating cash flow of USD 688 million. At the end of the first quarter of 2017, PTTEP had cash on hand of more than USD 4,400 million (equivalent to THB 153,158 million).
In the first quarter of 2017, PTTEP's total asset amounted to USD 19,251 million (equivalent to THB 663,207 million), of which total liabilities accounted for USD 7,800 million (equivalent to THB 268,710 million) with total interest bearing debts of USD 2,863 million (equivalent to THB 98,616 million) and the remaining USD 11,451 million (equivalent to THB 394,497 million) was the total shareholders' equity.
Business direction in 2017
For the business outlook this year, PTTEP views that global oil price is in the upward trend supported by the agreement on production cuts between OPEC and Non OPEC members with forecasted oil prices to range between USD 50-55 per barrel in the first half of this year, leading to the improved average sales price in 2017. The Company continues to pursue cost reduction programs with the targeted unit cost of approximately USD 29 per BOE for 2017, representing an improvement from USD 30.46 per BOE in 2016. However, the average sales volume this year is likely to lower from the previous expectation to a range of 300,000-310,000 BOED given the uncertainty surrounding the demand for natural gas from the Gulf of Thailand which might be affected by currently low spot LNG prices. Nonetheless, the Company is assessing options to increase liquid and condensate production to make up for potential reduction in gas sales volume and revenues. Besides, in order to strengthen its long-term production outlook, the Company is accelerating the development of key projects including the Algeria Hassi Bir Rekaiz Project, the Mozambique Rovuma Offshore Area 1 Project and Contract 4 (Ubon Field).
With regard to the expiring concessions in 2022-2023, the Company is ready to participate in the bidding.
"Our expertise and experiences in the exploration, development and production, especially in Bongkot gas field for almost 20 years have positioned us as a capable operator to continue the operations with competitive cost base. Most importantly, we are confident that we can deliver the continuity in natural gas supply which is fundamentally critical to Thailand's energy security," added Mr. Somporn.
In addition, PTTEP is exploring an opportunity with its parent company PTT Public Company Limited for the investment along the Liquefied Natural Gas (LNG) value chain with a joint venture company expected to be set up within this year. PTTEP also maintains its plan for mergers and acquisition (M&A) in projects located in Thailand and Southeast Asia where it has expertise and can operate with low risks and costs.