Fitch Ratings: PTT#s Purchase of Murphy Oil#s Malaysia Assets to Raise Output, Reserves

Stocks and Financial Services Press Releases Tuesday March 26, 2019 14:08
Bangkok--26 Mar--Fitch Ratings

PTT Exploration and Production Public Company Limited's (PTTEP) plan to acquire Murphy Oil Corporation's (BB+/Stable) business in Malaysia will immediately increase the group's reserves and production profile, Fitch Ratings says. In our view, the acquisition plan and contract wins at the Erawan and Bongkot fields in Thailand should help reverse PTTEP's fall in proven reserves over the last eight years and improve its reserve life.

PTTEP is the exploration and production arm of PTT Public Company Limited (PTT, BBB+/AAA(tha)/Stable). We expect the PTT's financial profile to remain robust and comfortable for its current ratings despite our expectations of a modest increase in its leverage as a result of the proposed acquisition. We expect PTT's FFO adjusted net leverage to increase to about 1.2x in 2019 (end-2018: 0.7x). PTTEP's large cash balances of USD4.0 billion at end-2018 should be more than adequate to fund the USD2.1 billion acquisition cost. PTTEP's debt to EBITDA was only 0.6x end-2018.

PTTEP expects the acquisition to increase its sales volume by about 18% on a five-year average basis, from the expected pre-acquisition sales volume of 318,000 barrels of oil equivalent per day (boed) in 2019. The net sales volume of the Murphy assets was 48,000 boed in 2018.

PTTEP expects its proved and probable (2P) reserves to increase to 1,302 million barrels of oil (MMBOE), driving up its 2P post-acquisition reserve life to 8.8 years (end-2018: 7.8 years). This should help PTTEP to achieve its target to increase its proved (1P) reserve life to seven years from the current five years over the next two to three years. We expect PTTEP to continue its efforts to increase its reserve profile and support its production.

PTTEP has signed a share purchase agreement with Murphy to acquire 100% of Murphy's two subsidiaries in Malaysia for USD2.1 billion with a maximum USD100 million contingent payment upon certain future exploratory drilling results. These two companies hold five projects: two producing, one under development and two exploration projects. For the development project, the first production is expected in 2H20 and it will have full capacity of 270 million standard cubic feet per day (mmscfd) of natural gas. The net sales volume (to the company) is expected to be 130mmscfd. The production profile of the assets to be acquired will be increasingly weighted towards gas.


Latest Press Release

SCB joins with Intelspire to help SMEs increase people management efficiency with Timemint, an advanced digital platform powered by SCB Payroll

Siam Commercial Bank (SCB) continues to expand its digital partnerships to help increase efficiency. Recently, the bank joined hands with Intelspire Co., Ltd., a Thai startup and developer of the Timemint Application, a digital platform used for people...

TMB Appoints New Chief Retail Banking Officer (CRBO)

TMB has appointed Mrs. Marie Ramlie as Chief Retail Banking Officer, effective from August 1, 2019. Marie succeeds Roel Huisman who has completed his tenure with TMB on July 31, 2019. Marie has joined TMB as Head of Retail Products since 2013. She was...

Bankruptcy Court dismisses rehab petition against GL, removes automatic stay, and finds GL is not insolvent

The Central Bankruptcy Court has dismissed the rehabilitation petition submitted by JTA against GL as the Court ruled that GL is not insolvent and that JTA's claims have not proven to be true Previously, on August 15, the Central Bankruptcy Court for the...

SET welcomes power plant infrastructure fund SUPEREIF on August 21

The Stock Exchange of Thailand (SET) will list Super Energy Power Plant Infrastructure Fund, the first SET-listed solar power plant infrastructure fund, on August 21, under the ticker symbol "SUPEREIF", with a market capitalization at its initial public...

Photo Release: EXIM Thailand Joins Hands with Public and Private Sectors to Support Thai Entrepreneurs Entry to African Market

Mr. Pisit Serewiwattana (second right), President of Export-Import Bank of Thailand (EXIM Thailand), and Mrs. Jintana Sirisantana (third left), Secretary-General of Thai National Shippers' Council (TNSC), recently presided over "Opening Doors to Africa,...

Related Topics