PTTEP’s net profit jumps 60% from recovered oil prices and effective operation and cost management Dividend payment proposed at 4.25 Baht per share
26 Jan 2018
- Achieved target sales volume at 299,206 BOED
- Reduced unit cost by 5% to USD 29.05 per BOE resulted from continued cost management
- Focus on investment expansion and increasing petroleum reserves with strong cash on hand of USD 4,468 million
PTT Exploration and Production Public Company Limited (PTTEP) reported 2017’s net profit at USD 594 million (equivalent to THB 20,579 million), soaring by more than 60% despite the impairment recognition of USD 558 million from the development plan adjustment in the Mariana Oil Sands project. Earnings Before Intereset, Taxes, Depreciation and Amortization (EBITDA) margin maintained at 70%, reflecting the success in effective cost management to enhance competitiveness. Improved global crude prices also delivered the positive results to PTTEP’s finanical position, allowing the company to push forward the Final Investment Decision (FID) in 3 pre-development projects. Other key activities this year include the participation in the expiring concessions bidding process, mergers and acquisition deals of targeted projects in Southeast Asia and the Middle East, and more exploration projects in high potential areas in order to increase petroleum reserves to accommodate long-term growth.
Somporn Vongvuthipornchai, Chief Executive Officer of PTTEP, said the company in 2017 generated total revenues of USD 4,523 million (equivalent to THB 153,198 million), up from USD 4,339 million (equivalent to THB 152,745 million) in 2016. The company saw recurring net income of USD 836 million, an 80% increase from a year earlier. The increment was mainly due to recovered average selling price of USD 39.20 per barrel of oil equivalent (BOE) from USD 35.91 per BOE, while unit cost was lowered from USD 30.46 per BOE to USD 29.05 per BOE. The average sales volume last year, however, was impacted from lower demand for natural gas from projects in the Gulf of Thailand. PTTEP mitigated the impact by increasing condensate and crude oil volumes, which finally helped the company to maintain the average sales volume as planned at 299,206 barrels of oil equivalent per day (BOED). By end of 2017, PTTEP could maintain strong liquidity position with cash on hand of USD 4,468 million (equivalent to THB 146,008 million)
Based on the company’s performance and financial status in 2017, the Board of Directors on January 26, 2018 proposed the payment of 2017 dividend at THB 4.25 per share. PTTEP paid the interim dividend for the first six months operating results at THB 1.50 per share, while the remaining dividend will be paid at THB 2.75 per share on April 12, 2018 after obtaining approval from the 2018 Annual General Shareholders’ Meeting. The record date of the company’s share registration for the right to receive the dividend is scheduled on February 9, 2018.
“The operating results in 2017 proved that despite the volatility and changes in business environment in the oil and gas industry, we are resilient and able to adjust our business plan and strategy so that we can maintain our competitiveness and profitability. Moreover, we’ve completed the organization restructuring last year, making us ready to move forward for new business that we hope to create fair returns to the shareholders in the longer term, and to achieve our aspiration in being a sustainable organization. Under the reorganization, a new business unit was set up to review potential areas where we can make new investments. The Business and Organization Transformation Group was also created to bring a new revolution in the way we work in order to thrive in the age of disruptive technogloy by applying digital technology to the entire corporate’s working system,” he said.
2018 Investment budget earmarked at USD 3,103 million with plan to accelerate FID of 3 projects
Mr. Somporn continued that PTTEP in 2018 allocated total expenditure at USD 3,103 Million (equivalent to THB 105,510 million), of which USD 1,771 million (equivalent to THB 60,227 million) is Capital Expenditure (CAPEX) and the remaining USD 1,332 million (equivalent to THB 45,283 million) is Operating Expenditure (OPEX). This year’s CAPEX will be mostly spent to maintain the production level at 302,000 BOED, primarily focusing on increasing crude oil and condensate production volumes. The unit cost will also be sustained at around USD 30 per BOE to strengthen PTTEP’s competitiveness.
PTTEP’s ambitious business plan for this year to add more production in the future is to accelerate the FID of 3 key pre-development projects including the Mozambique Rovuma Offshore Area 1 project, the Algeria Hassi Bir Rekaiz project and the Vietnam Block B & 48/95 and Block 52/97 project. Planned to commence first gas in 2023 with production capacity of 12 million tonnes per annum, the Mozambique Rovuma Offshore Area 1 Project has already started the resettlement activity and is waiting for the approval of development plan. The company late last year submitted the development plan of the Algeria Hassi Bir Rekaiz project to the Algerian Government and anticipates the approval in the first quarter of this year. The Vietnam Block B & 48/95 and Block 52/97 project is targeted to produce first gas in 2021 with capacity of 490 million cubic feet per day.
“This year, PTTEP will absolutely join the bidding process of the expiring concessions – Bongkot and Erawan – in order to enhance our petroleum reserves and production volumes. This is critical for building the country’s energy security. Apart from that, we will keep our eyes open for the investment opportunities in the strategic locations including Thailand, Southeast Asia and the Middle East. We also have plans to expand our investment along the gas value chain in countries where we can build our competitive advantage upon our upstream presence” he added.
PTTEP Operation Update for Year 2017
At the end of 2017, PTTEP’s domestic and international operations, including projects in the exploration and production phase, altogether sum to 36 projects in 10 countries, with total proved reserves of 631 million barrels of oil equivalent (MMBOE), probable reserves of 400 MMBOE. The followings are key project highlights.
Projects in Thailand: PTTEP currently has 16 projects in Thailand, the majority of which are in the production phase. These projects are located in both the Gulf of Thailand and onshore; including the Bongkot Project; the project succeeded in increasing condensate production to alleviate the impact of natural gas low nomination and currently is in the process of concession bidding preparation. The S1 Project has continuously drilled additional production wells with exploration drilling plan in 2018 in order to increase production levels of the project. For the year 2017, total sales volume from projects in Thailand amounted to 230,504 BOED, accounting for 77% of PTTEP’s total sales volume. Apart from production projects, Ubon Field of the Contract 4 Project is in the process of negotiation with current partners on development preparation with expected first oil production by 2022 at planned capacity of 25,000-30,000 BOED.
Projects in Southeast Asia: Sales volume for the year ended 2017 from the projects in the Southeast Asian region amounted to 55,371 BOED, representing 19% of PTTEP’s total sales volume. Most of the projects in the production phase have maintained production levels as planned. The Zawtika Project has maintained its production as planned and completed the construction of 1 production platform in Phase 1C in 2017 while the remaining 3 production platforms have been scheduled to set up in 2018. The project also continues to carry out drilling activities. The Vietnam 16-1 Project started the production from 4 additional developed wells as planned in order to maintain its production level. The exploration phase projects in this region are mainly located in onshore and offshore of Myanmar. The major highlights include the Myanmar M3 Project, which is currently in the process of negotiation on commercial framework with the Government of Myanmar. The Myanmar MD-7 Project, is in the process of assessing for the fields’ resource potential. The Myanmar M11 Project, the Myanmar MOGE 3 and the Sarawak SK410B Project, in Malaysia, are currently assessing for the fields’ resource potential with a plan to drill exploration wells in 2018. The Vietnam B & 48/95 Project and the Vietnam 52/97 Project have signed a letter of agreement between joint venture partners on wellhead gas prices and transportation costs and currently are in the negotiation process on commercial contracts in order to push forward the Final Investment Decision (FID) with targeted first production at 490 MMSCFD by the end of 2021.
Projects in the Americas: PTTEP has 3 projects in this region located in Canada and the Federal Republic of Brazil (Brazil). All projects are in the exploration phase. The Mariana Oil Sands Project, Canada, has revised its development plan and is seeking for appropriate approach to develop the project. PTTEP has 2 projects in Brazil. The Barreirinhas AP1 Project and the Brazil BM-ES-23 Project are currently studying the petroleum potential for future development plan.
Projects in Australasia: PTTEP has 1 project in this region which is located in the Commonwealth of Australia (Australia), comprising 12 permits. The Montara Field completed the drilling of producing well in 2017 in order to accelerate production levels. The project has average sales volume for the year 2017 of 10,580 BPD in accordance with the production plan. The Cash Maple Field is in the exploration phase. The project has achieved the Pre-FEED study and is currently in the process of FEED study preparation which is scheduled to complete by 2018.
Projects in Africa: PTTEP has 3 projects in this region, located in the People's Democratic Republic of Algeria (Algeria) and the Republic of Mozambique (Mozambique). The Algeria 433a and 416b Project, which is in production phase, has achieved its average production volumes for the year 2017 at 17,360 BPD. The Algeria Hassi Bir Rekaiz Project, which is in the exploration phase, successfully finished a drilling campaign with satisfactory crude oil and natural gas flow rates. Currently, the project’s development plans have been submitted to the Algerian government since December 2017 and expected to receive the approval within the first quarter of 2018 to support the Final Investment Decision (FID). The project is expected to start production within 2019 with the first phase capacity of around 10,000-13,000 BPD. Subsequently, further investment will be considered to ramp up to full capacity at around 50,000 BPD. The Mozambique Rovuma Offshore Area 1 Project has made a significant progress by achieving several key milestones including the receipt of government approval on Legal & Contractual Framework as well as the receipt of official approval the marine concessions from the government of Mozambique. The resettlement has been commenced since November 2017, while the Project’s development plan is currently in the process of final approval from the Government of Mozambique which is expected to achieve by early 2018. The project also expedites the finalization of LNG off-take agreements, and is negotiating for project finance with financial institutions in order to support the Final Investment Decision (FID), with planned first phase of production at 12 Million tons per annum (MTPA) in 2023.
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