REFERENCE CODE GDGE0658V PUBLICATION DATE M ARCH 2014

Transcription

1 REFERENCE CODE GDGE0658V PUBLICATION DATE M ARCH 2014 PTT EXPLORATION AND PRODUCTION PUBLIC

2 Executive Summary PTTEP, Key Valuation Metrics, 2013 Stock exchange Stock symbol Current share price (THB (US$)/share) as of March 31, 2014 Target price (THB (US$)/share) SET PTTEP (4.8) xxx(xx) 2013 revenue (THB bil) Market capitalization of class a (THB bil) as of December 31, 2014 Estimated enterprise value (THB bil) 52-week high/low (THB (US$)/share) Source: GlobalData; Google Finance, 2014a xxx xx xxx (xx) / xxx (xx) PTTEP vs. Peer Group, Operational Performance, 2012 Parameters PTTEP Peer average* Proved reserves (mmboe) xxx xxx Oil/gas share in total proved reserves (%) Total production (mmboe) xxx xxx Lifting cost (US$ per boe), three-year xxx xxx Net-back (US$ per boe), three-year xxx xxx Recycle ratio, three-year xxx xxx Oil and gas F&D cost per boe, threeyear Reserve replacement cost (US$ per boe), annual Reserve life index xxx xxx Development costs (US$ bil) xxx xxx Acquisition costs (US$ bil) xxx xxx boe: barrels of oil equivalent; mmboe: million barrels of oil equivalent; F&D: Finding and Development *Peers include Chevron Corporation, Eni S.p.A., Exxon Mobil Corporation, BP p.l.c., Royal Dutch Shell plc and Lukoil Oil Company. Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking database [Accessed on March 12, 2014] xxx xxx xxx xxx xxx xxx Strengthening Upstream Operations and Diversify Asset Portfolio Geographically Upcoming Projects Lead the Company s Production Growth Plan PTT Exploration and Production Public Company Limited (PTTEP) s primary objective is to reach a production capacity of xxx thousand barrels of oil equivalent per day (mboed) by The company s oil and natural gas production growth rate showed an increasing trend over the period, with a Compound Annual Growth Rate (CAGR) of xx%. The company currently has 20 production assets in its portfolio, including 14 in Thailand. The company s major producing domestic assets include the S1, Bongkot, Arthit and Malaysia Thailand Joint Development Area (MTJDA) projects. The production growth seen during can be attributed primarily to the Bongkot, Vietnam 16-1, S1 and PTTEP Australasia projects, while the growth during the period can be attributed to the MTJDA B17 project and the Bongkot and Arthit North projects. The key strategy to achieve the production level target is to maintain a production plateau in domestic projects through exploration, appraisal and development activities, growth from international projects through start-ups and ramp-ups, and investment in prospective and producing assets in new regions. PTTEP s upcoming projects will make substantial contributions to the company s overall production. Organic and Inorganic Activities to Support Geographical Diversification PTTEP s overseas acquisitions will help the company to expand its operations into international markets, which are currently skewed towards Thailand. Major acquisitions by the company in the recent past include the acquisition of a stake in Natuna Sea A, a producing gas field in Indonesia in 2013, and the acquisition of Cove Energy plc, a company that holds oil and gas assets in Mozambique and Kenya, both in The company will also achieve geographical diversification through the development of its

3 Executive Summary projects in Australia, Myanmar and Algeria, in 2014 and beyond. PTTEP is focusing on the development of its projects, including the Montara project, which is located in the Bonaparte Basin in the Northern Territory, Australia; the Zawtika project in Myanmar; blocks 433A and 416B in Algeria; the 16-1 project in Vietnam, and the Liquefied Natural Gas (LNG) project in Offshore Area 1 of the Rovuma Basin, in Mozambique. Strategic Agreements for Restructuring Development Plans PTTEP entered into various strategic agreements in 2012 and 2013 that will assist the company in restructuring its upstream asset portfolio and related development plans. One of the major transactions entered by PTTEP in recent past include Kai Kos Dehseh (KKD) asset swap transaction, where it relinquished its 40% interest in the Leismer and Corner development projects for a 60% stake in the Thornbury, Hangingstone and South Leismer (THSL) area of the KKD project area. This asset swap transaction is expected to provide PTTEP benefits like the elimination of losses arising from KKD project operations, delayed investments and flexibility in scheduling development plans, among other things. Moreover, in 2013, the PTTEP partnered some of the major players in the industry to accelerate the development of its assets, including M3 and M11 projects in Myanmar. In addition, the company also secured exploration rights for MD-7 and MD-8 projects in Myanmar, securing additional resources for the company. 3

4 Executive Summary PTTEP, Key Production Data, Parameter Unit Crude oil and liquids mmbbl xxx xxx xxx xxx Natural gas bcf xxx xxx xxx xxx Total production mmboe xxx xxx xxx xxx Oil as % of total production* % mmbbl: million barrels of oil; bcf: billion cubic feet Note: 1 mmboe = 1 bcf/6 xxx xxx xxx xxx Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] PTTEP, Key Production Data, Production (mmboe) Crude oil oil and liquids Total production Natural gas (RHS) RHS: Right Hand Side Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] 0 Production (bcf) PTTEP, Key Cost per boe, PTTEP, Key Cost per boe, Parameter Unit F&D cost per boe, three-year Reserve replacement cost per boe, three-year US$/ boe US$/ boe xxx xxx xxx xxx xxx xxx xxx xxx US$/boe 50 Oil and gas finding cost per boe, three-year US$/ boe xxx xxx xxx xxx Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] F&D cost per boe, three-year Reserve replacement cost per boe, three-year Oil and gas finding cost per boe, three-year Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] PTTEP, Key Valuation Metrics, Parameter Unit EV/Reserves US$/boe 17.3 xxx xxx xxx EV/Production US$/boe 68,212 xxx xxx xxx EV/DACF X 6.6 xxx xxx xxx EV/EBITDA X 5.8 xxx xxx xxx PTTEP, Key Valuation Metrics, X (US$/boe) EV: Enterprise Value; DACF: Debt-Adjusted Cash Flow; EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] EV/DACF EV/EBITDA EV/1P reserves Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014]

5 Executive Summary PTTEP, Key Reserves and Reserves Metrics, Parameter Unit Proved crude oil reserves Proved natural gas reserves Proved total oil and gas reserves Oil as % of total reserves mmbbl bcf mmboe % xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] PTTEP, Key Reserves and Reserves Metrics, mmboe 1,200 1, Proved crude oil reserves (mmbbl) Proved total oil and gas reserves (mmboe) Proved natural gas reserves (bcf) 6,000 5,000 4,000 3,000 2,000 1,000 Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] 0 bcf PTTEP, Result of Oil and Gas Operations per boe, Parameter Unit PTTEP, Result of Oil and Gas Operations per boe, Oil and gas revenue per boe Lifting cost per boe, three-year US$/boe US$/boe xxx xxx xxx xxx xxx xxx xxx xxx US$/boe Recyle ratio (X) Net-back per boe, three-year Recycle ratio, threeyear US$/boe % xxx xxx xxx xxx xxx xxx xxx xxx Source: GlobalData, Oil and Gas etrack, Companies Operational and Financial Database [Accessed on March 12, 2014] Oil and gas revenue per boe Net-back per boe, three-year Lifting cost per boe, three-year Recycle ratio, three-year Source: GlobalData, Oil and Gas etrack, Advanced Company Operational and Financial Benchmarking [Accessed on March 12, 2014] - 5

6 Table of Contents Table of Contents Table of Contents List of Tables List of Figures PTT Exploration and Production Public Company Limited, Company Overview PTT Exploration and Production Public Company Limited, Key Highlights Near-term Projects to Drive Production Growth Extensive Drilling Activities to Strengthen Upstream Assets Portfolio Restructuring of Overseas Asset Portfolio through Strategic Partnerships and Acquisitions Significant Focus on Southeast Asia to Drive Growth PTT Exploration and Production Public Company Limited, SWOT Analysis Strengths Increasing Production Levels Wide Geographic Presence and Immense Resource Base Relatively High Exploration Drilling Success Ratio Prominent Profit Margins and Salubrious (Healthy) Operating Cash Flows Weaknesses Declining Reserve Replacement Ratio Resulting in Slumping Reserve Life Index Heavy Dependence on Natural Gas Opportunities New Investment Opportunities with Primary Focus on Acquisition and Development of Liquid-rich Assets Development of Overseas Oil and Gas Resources Strategic Agreements to Accelerate Development of Assets Threats High Dependence on Upcoming Projects Heighten Risk and may Impact Cash Flows PTT Exploration and Production Public Company Limited, Goals and Strategies Production Target of 600 Thousand Barrels of Oil Equivalent per Day by

7 Table of Contents 5.2 Enhance Proved Reserves life Diversify Operations and Strengthen Worldwide Position PTT Exploration and Production Public Company Limited, Exploration and Development Overview Thailand A4/48 and 5/48 Project G9/43 Project L21/48 and L28/ L22/43 Project L53/43 and L54/43 Project Arthit Project B6/27 Project B8/32 and 9A Project Bongkot Project Contract 3 (Unocal III) Project Contract 4 (Pailin) Project G4/43 Project MTJDA Project PTTEP 1 Project S1 Project Sinphuhorm Project Southeast Asia Union of Myanmar Vietnam Indonesia Cambodia North America Canada

8 Table of Contents 6.4 Middle East and Africa Algeria Mozambique Kenya Oman Australasia Australia Capital Expenditure Costs Incurred PTT Exploration and Production Public Company Limited, Production Overview Production Profile Assets Portfolio Thailand Myanmar Vietnam Oman Australia Canada Indonesia PTT Exploration and Production Public Company Limited, Forecast Production and Financial Statements Income Statement ( ) Balance Sheet ( ) Cash Flow Statement ( ) PTT Exploration and Production Public Company Limited, Valuation Net Asset Value PTT Exploration and Production Public Company Limited, Peer Comparison Share Price Performance

9 Table of Contents 11.2 Operational and Financial Performance Key Financial and Operational Ratio PTT Exploration and Production Public Company Limited, Production and Reserves Trends Total Oil and Gas, Reserves and Production Total Crude Oil and Natural Gas Production and Reserves Trend, Total Crude Oil & Natural Gas Production and Reserves By Country/Region, Total Crude Oil and Natural Gas Reserve Changes, Crude Oil/Liquids Production and Reserve Crude Oil/Liquids Production and Reserve Trend, Crude Oil Production and Reserves By Country/Region, Crude Oil/Liquids Reserve Changes, Natural Gas Production and Reserve Natural Gas Production and Reserve Trend, Natural Gas Production and Reserves, By Country/Region, Natural Gas Reserve Changes, Total Crude Oil and Natural Gas Reserves Life Index Total Crude Oil and Natural Gas Reserves Life Index, Total Crude Oil and Natural Gas Reserves Life Index, By Country/Region, PTT Exploration and Production Public Company Limited, E&P Costs Trends Allocation of the Upstream Capital Expenditure Upstream Capital Expenditure, Acquisition Costs By Country/Region, Exploration and Development Costs, By Country/Region, Oil and Gas Cost Per boe, US$/boe Oil and Gas Cost Per boe, US$/boe, Oil and Gas Cost Per boe, US$/boe, By Country/Region, PTT Exploration and Production Public Company Limited, Reserve Replacement Ratio

10 Table of Contents 14.1 Oil and Gas Production Replacement Ratio Oil and Gas Production Replacement Ratio, Oil and Gas Production Replacement Ratio, By Country/Region, PTT Exploration and Production Public Company Limited, Results of Oil & Gas Operations Trend Oil and Gas Revenue and Expenses Oil and Gas Revenue and Expenses, Oil and Gas Revenue and Expenses, By Country/Region, Oil and Gas Revenue and Expenses, Per boe Oil and Gas Revenue and Expenses, By boe, Oil and Gas Revenue and Expenses Per boe, By Country/Region, Oil and Gas Performance Metrics Well Statistics Producible Oil and Gas Well, Producible Oil and Gas Well, By Country/Region, Exploration and Development Wells Drilled, Exploration and Development Wells Drilled, By Country/Region, Appendix Abbreviations Sources Methodology Coverage Secondary Research Primary Research Disclaimer List of Tables Table 1: PTT Exploration and Production Public Company Limited, Major Near-term Growth Projects,

11 Table of Contents Table 2: PTT Exploration and Production Public Company Limited, Thailand, Exploration and Development Blocks and Interest, Table 3: PTT Exploration and Production Public Company Limited, Myanmar, Exploration and Development Blocks and Interest (%), Table 4: PTT Exploration and Production Public Company Limited, Vietnam, Exploration and Development Blocks and Interest (%), Table 5: PTT Exploration and Production Public Company Limited, Indonesia, Exploration and Development Blocks and Interest (%), Table 6: PTT Exploration and Production Public Company Limited, Algeria, Exploration and Development Blocks and Interest (%), Table 7: PTT Exploration and Production Public Company Limited, Mozambique, Exploration and Development Blocks and Interest (%), Table 8: PTT Exploration and Production Public Company Limited, Kenya, Exploration and Development Blocks and Interest (%), Table 9: PTT Exploration and Production Public Company Limited, Australasia Project, Concession and Interest (%), Table 10: PTT Exploration and Production Public Company Limited, Investment Expenditure Classification, by Segment (as % of Total Expenditure), Table 11: PTT Exploration and Production Public Company Limited, Costs Incurred (US$ mil), Table 12: PTT Exploration and Production Public Company Limited, Reserve Replacement Ratio and Finding and Development Costs Incurred (US$ per boe), Table 13: PTT Exploration and Production Public Company Limited, Total Oil and Gas Production Forecast, Table 14: PTT Exploration and Production Public Company Limited, Thailand, Production Licenses and Interest, Table 15: PTT Exploration and Production Public Company Limited, Overseas, Production Licenses and Interest, Table 16: PTT Exploration and Production Public Company Limited, Historical and Forecast Production, Table 17: GlobalData, Price Forecasts,

12 Table of Contents Table 18: PTT Exploration and Production Public Company Limited, Income Statement (THB mil), Table 19: PTT Exploration and Production Public Company Limited, Balance Sheet (THB mil), Table 20: PTT Exploration and Production Public Company Limited, Cash Flow Statement (THB mil), Table 21: PTTEP Resources Inc, Net Asset Value, Table 22: PTT Exploration and Production Public Company Limited, Peer Group Comparison, Operational and Financial Performance, Table 23: PTT Exploration and Production Public Company Limited, Peer Group Comparison, Total Reserves and Production (mmboe), Table 24: PTT Exploration and Production Public Company Limited, Peer Group Comparison, Financial and Operational Ratios, Table 25: PTT Exploration and Production Public Company Limited, Total Crude Oil and Natural Gas, Production and Reserves, mmboe, Table 26: PTT Exploration and Production Public Company Limited, Total Crude Oil & Natural Gas Production and Reserves, By Country/Region, mmboe, Table 27: PTT Exploration and Production Public Company Limited, Total Crude Oil and Natural Gas Reserve Changes, mmboe, Table 28: PTT Exploration and Production Public Company Limited, Crude Oil Production and Reserves Metrics, mmbbl, Table 29: PTT Exploration and Production Public Company Limited, Crude Oil Production and Reserves, By Country/Region, mmbbl, Table 30: PTT Exploration and Production Public Company Limited, Crude Oil Reserve Changes, mmbbl, Table 31: PTT Exploration and Production Public Company Limited, Natural Gas Production and Reserves Metrics, bcf, Table 32: PTT Exploration and Production Public Company Limited, Natural Gas Production and Reserves, By Country/Region, bcf, Table 33: PTT Exploration and Production Public Company Limited, Natural Gas Reserve Changes, bcf,

13 Table of Contents Table 34: Figure 53: PTT Exploration and Production Public Company Limited, Oil and Gas Reserves Life Index, Years, Table 35: PTT Exploration and Production Public Company Limited, Oil and Gas Reserves Life Index, By Country/Region, Years, Table 36: PTT Exploration and Production Public Company Limited, Upstream Capital Expenditure, US$ mil, Table 37: PTT Exploration and Production Public Company Limited, Proved and Unproved Acquisition Costs, By Country/Region, US$ mil, Table 38: PTT Exploration and Production Public Company Limited, Exploration and Development Costs, By Country/Region, US$ mil, Table 39: PTT Exploration and Production Public Company Limited, Reserves Replacement, Finding and Development Costs, Finding Cost and Proved Acquisition Costs Per boe, US$/boe, Table 40: PTT Exploration and Production Public Company Limited, Reserves Replacement, Finding and Development Costs, Finding Cost and Proved Acquisition Costs Per boe, US$/boe, By Country/Region, Table 41: PTT Exploration and Production Public Company Limited, Oil and Gas Production Replacement Ratio, %, Table 42: PTT Exploration and Production Public Company Limited, 3-Year Wt.Avg. Oil and Gas Production Replacement Ratio, By Country/Region, %, Table 43: PTT Exploration and Production Public Company Limited, Revenue and Expenses, US$ mil, Table 44: PTT Exploration and Production Public Company Limited, Revenue and Expenses, By Country/Region, US$ mil, Table 45: PTT Exploration and Production Public Company Limited, Oil and Gas Revenue and Expenses, US$/boe, Table 46: PTT Exploration and Production Public Company Limited, Oil and Gas Revenue and Expenses, US$/boe, By Country/Region, Table 47: PTT Exploration and Production Public Company Limited, Oil and Gas Performance Metrics, Table 48: PTT Exploration and Production Public Company Limited, Producible Oil and Gas Wells,

14 Table of Contents Table 49: PTT Exploration and Production Public Company Limited, Producible Oil and Gas Wells, By Country/Region, Table 50: PTT Exploration and Production Public Company Limited, Exploratory and Developed Wells, Table 51: PTT Exploration and Production Public Company Limited, Exploratory and Developed Wells, By Country/Region, List of Figures Figure 1: PTT Exploration and Production Public Company Limited, Operational Map, Figure 2: PTT Exploration and Production Public Company Limited, Financial and Operational Overview, Figure 3: PTT Exploration and Production Public Company Limited, Share Price Movement, April 2013 March Figure 4: PTT Exploration and Production Public Company Limited, Oil and Gas Sales Growth Targets, Figure 5: PTT Exploration and Production Public Company Limited, Exploration Targets, Figure 6: PTT Exploration and Production Public Company Limited, Southeast Asia, Figure 7: PTT Exploration and Production Public Company Limited, Production Growth Rate (%), Figure 8: PTT Exploration and Production Public Company Limited, Reserves and Resource Base (mmboe), By Geography and Product, Figure 9: PTT Exploration and Production Public Company Limited, Exploration Drilling Success Ratio (%), Figure 10: PTT Exploration and Production Public Company Limited and Peer Group, Exploration Drilling Success Ratio (%), Figure 11: PTT Exploration and Production Public Company Limited, Profit Ratios (%), Figure 12: PTT Exploration and Production Public Company Limited and Peer Group, Profit Ratios (%), Figure 13: PTT Exploration and Production Public Company Limited, CFO and Capex, Figure 14: PTT Exploration and Production Public Company Limited and Peer Group, Reserve Replacement Ratio (%),

15 Table of Contents Figure 15: PTT Exploration and Production Public Company Limited, Exploration and Development Costs, by Region, Figure 16: PTT Exploration and Production Public Company Limited, Production Growth Targets, Figure 17: PTT Exploration and Production Public Company Limited, Resource Base and Reserves (mmboe), by Type, Figure 18: PTT Exploration and Production Public Company Limited, Major Exploration Targets and Drilling Expenditure by Region, Figure 19: PTT Exploration and Production Public Company Limited, Number of Exploration Wells Planned, by Region, Figure 20: PTT Exploration and Production Public Company Limited, Proved Reserves (mmboe), by Product, Figure 21: PTT Exploration and Production Public Company Limited, Proved Reserves, by Region (%), Figure 22: PTT Exploration and Production Public Company Limited, Net Productive and Dry Exploratory and Development Wells, Figure 23: PTT Exploration and Production Public Company Limited, Net/Gross Oil and Gas Ratio (%) for Wells, Figure 24: PTT Exploration and Production Public Company Limited, Total Oil and Gas Productive and Dry Exploratory Wells by Region, Number of Wells Drilled, Figure 25: PTT Exploration and Production Public Company Limited, Total Oil and Gas Productive and Dry Development Wells by Region, Number of Wells Drilled, Figure 26: PTT Exploration and Production Public Company Limited, Thailand, Operational Overview Map, Figure 27: PTT Exploration and Production Public Company Limited, Myanmar, Operational Overview Map, Figure 28: PTT Exploration and Production Public Company Limited, Total Capex (US$ mil), by Geography, Figure 29: PTT Exploration and Production Public Company Limited, Estimated Capex by Geography (%),

16 Table of Contents Figure 30: PTT Exploration and Production Public Company Limited, Planned Capital and Operational Expenditure (US$ bil), by Segment, Figure 31: PTT Exploration and Production Public Company Limited, Costs Incurred (US$ mil), Figure 32: PTT Exploration and Production Public Company Limited, Costs Incurred (US$ mil), by Region, Figure 33: PTT Exploration and Production Public Company Limited, Reserve Replacement Ratio and Finding and Development Costs Incurred per boe, Figure 34: PTT Exploration and Production Public Company Limited, Total Production (mmboe), Figure 35: PTT Exploration and Production Public Company Limited, Production Mix (%), Figure 36: PTT Exploration and Production Public Company Limited, Production (%), by Region, Figure 37: PTT Exploration and Production Public Company Limited and Peers, Relative Share Price Performance Index (%), March 2013 February Figure 38: PTT Exploration and Production Public Company Limited, Financial Parameters, Figure 39: PTT Exploration and Production Public Company Limited and Peer Group, Financial Parameters, Figure 40: PTT Exploration and Production Public Company Limited and Peer Group, F&D Cost and Reserve Replacement Comparison, Figure 41: PTT Exploration and Production Public Company Limited, Peer Group Comparison, Total Reserves and Production (mmboe), Figure 42: PTT Exploration and Production Public Company Limited and Peer Group, Reserve Life Index (in Years), Figure 43: PTT Exploration and Production Public Company Limited, Peer Group Comparison, Valuation Ratios, Figure 44: PTT Exploration and Production Public Company Limited, Total Crude Oil and Natural Gas, Production and Reserves, mmboe, Figure 45: PTT Exploration and Production Public Company Limited, Total Oil & Gas Reserves, End of Period, By Country/Region, mmboe, Figure 46: PTT Exploration and Production Public Company Limited, Total Crude Oil and Natural Gas Reserve Changes, mmboe,

17 Table of Contents Figure 47: PTT Exploration and Production Public Company Limited, Crude Oil Production and Reserves Metrics, mmbbl, Figure 48: PTT Exploration and Production Public Company Limited, Oil Reserves, End of Period, By Country/Region, mmbbl, Figure 49: PTT Exploration and Production Public Company Limited, Crude Oil Reserve Changes, mmbbl, Figure 50: PTT Exploration and Production Public Company Limited, Natural Gas Production and Reserves Metrics, bcf, Figure 51: PTT Exploration and Production Public Company Limited, Gas Reserves, End of Period, By Country/Region, bcf, Figure 52: PTT Exploration and Production Public Company Limited, Natural Gas Reserve Changes, bcf, Table 34: Figure 53: PTT Exploration and Production Public Company Limited, Oil and Gas Reserves Life Index, Years, Figure 54: PTT Exploration and Production Public Company Limited, Gas Reserve Life Index, By Country/Region, Ratio, Figure 55: PTT Exploration and Production Public Company Limited, Oil & Gas Reserve Life Index, By Country/Region, Ratio, Figure 56: PTT Exploration and Production Public Company Limited, Oil Reserve Life Index, By Country/Region, Ratio, Figure 57: PTT Exploration and Production Public Company Limited, Upstream Capital Expenditure, US$ mil, Figure 58: PTT Exploration and Production Public Company Limited, Proved Acquisition Costs, By Country/Region, US$ mil, Figure 59: PTT Exploration and Production Public Company Limited, Development Costs, By Country/Region, US$ mil, Figure 60: PTT Exploration and Production Public Company Limited, Exploration Costs, By Country/Region, US$ mil, Figure 61: PTT Exploration and Production Public Company Limited, 3-Year Wt.Avg., Reserves Replacement, Finding and Development Costs, Finding Cost and Proved Acquisition Costs Per boe, US$/boe,

18 Table of Contents Figure 62: PTT Exploration and Production Public Company Limited, Oil & Gas Finding & Development Cost/boe, 3-Year Average, By Country/Region, US$/boe, Figure 63: PTT Exploration and Production Public Company Limited, Oil & Gas Finding Cost per boe, 3- Year Average, By Country/Region, US$/boe, Figure 64: PTT Exploration and Production Public Company Limited, Reserve Replacement Cost per boe, 3-Year Average, By Country/Region, US$/boe, Figure 65: PTT Exploration and Production Public Company Limited, Proved Reserves Acquisition Cost per boe, 3-Year Average, By Country/Region, US$/boe, Figure 66: PTT Exploration and Production Public Company Limited, 3-Year Wt.Avg., Oil and Gas Production Replacement Ratio, %, Figure 67: PTT Exploration and Production Public Company Limited, 3-Year Wt. Avg. Gas F&D Production Replacement, By Country/Region, %, Figure 68: PTT Exploration and Production Public Company Limited, 3-Year Wt. Avg. Gas RRC Production Replacement, By Country/Region, %, Figure 69: PTT Exploration and Production Public Company Limited, 3-Year Wt. Avg. Oil & Gas F&D Production Replacement, By Country/Region, %, Figure 70: PTT Exploration and Production Public Company Limited, 3-Year Wt. Avg. Oil & Gas RRC Production Replacement, By Country/Region, %, Figure 71: PTT Exploration and Production Public Company Limited, 3-Year Wt. Avg. Oil F&D Production Replacement, By Country/Region, %, Figure 72: PTT Exploration and Production Public Company Limited, 3-Year Wt. Avg. Oil RRC Production Replacement, By Country/Region, %, Figure 73: PTT Exploration and Production Public Company Limited, Revenue and Expenses, US$ mil, Figure 74: PTT Exploration and Production Public Company Limited, Depreciation, Depletion and Amortization From Upstream Oil & Gas Operations, By Country/Region, US$ mil, Figure 75: PTT Exploration and Production Public Company Limited, Income Tax Provision (Benefit) From Upstream Oil & Gas Operations, By Country/Region, US$ mil, Figure 76: PTT Exploration and Production Public Company Limited, Net Income/ Loss From Upstream Oil & Gas Operations, By Country/Region, US$ mil,

19 Table of Contents Figure 77: PTT Exploration and Production Public Company Limited, Oil & Gas Revenue, By Country/Region, US$ mil, Figure 78: PTT Exploration and Production Public Company Limited, Profit (loss) Before Taxation From Upstream Oil & Gas Operations, By Country/Region, US$ mil, Figure 79: PTT Exploration and Production Public Company Limited, Production Costs, By Country/Region, US$ mil, Figure 80: PTT Exploration and Production Public Company Limited, Total Expenses From Upstream Oil & Gas Operations, By Country/Region, US$ mil, Figure 81: PTT Exploration and Production Public Company Limited, Oil and Gas Revenue and Expenses, US$/boe, Figure 82: PTT Exploration and Production Public Company Limited, Exploration Expenses per boe, By Country/Region, US$/boe, Figure 83: PTT Exploration and Production Public Company Limited, Income Tax/(Benefit) per boe, By Country/Region, US$/boe, Figure 84: PTT Exploration and Production Public Company Limited, Lifting Cost per boe, By Country/Region, US$/boe, Figure 85: PTT Exploration and Production Public Company Limited, Annual Net Income per boe, By Country/Region, US$/boe, Figure 86: PTT Exploration and Production Public Company Limited, Oil & Gas Revenue per boe, By Country/Region, US$/boe, Figure 87: PTT Exploration and Production Public Company Limited, Total DD&A per boe, By Country/Region, US$/boe, Figure 88: PTT Exploration and Production Public Company Limited, Total Revenue per boe, By Country/Region, US$/boe, Figure 89: PTT Exploration and Production Public Company Limited, Oil and Gas Performance Metrics, Figure 90: PTT Exploration and Production Public Company Limited, Producible Oil and Gas Wells, Figure 91: PTT Exploration and Production Public Company Limited, Gross Productive Gas Wells, By Country/Region, Number,

20 Table of Contents Figure 92: PTT Exploration and Production Public Company Limited, Gross Productive Oil & Gas Wells, By Country/Region, Number, Figure 93: PTT Exploration and Production Public Company Limited, Gross Productive Oil Wells, By Country/Region, Number, Figure 94: PTT Exploration and Production Public Company Limited, Net/Gross Oil & Gas Ratio, By Country/Region, %, Figure 95: PTT Exploration and Production Public Company Limited, Net Productive Gas Wells, By Country/Region, Number, Figure 96: PTT Exploration and Production Public Company Limited, Net Productive Oil & Gas Wells, By Country/Region, Number, Figure 97: PTT Exploration and Production Public Company Limited, Net Productive Oil Wells, By Country/Region, Number, Figure 98: PTT Exploration and Production Public Company Limited, Exploratory and Developed Wells,

21 Company Overview 2 PTT Exploration and Production Public Company Limited, Company Overview PTT Exploration and Production Public Company Limited (PTTEP) is the national petroleum company of Thailand, established on June 20, 1985, and is engaged in the exploration, development, production and acquisition of crude oil and natural gas prospects. It is a subsidiary of PTT Public Company Limited, which holds a 65.3% equity stake in PTTEP. The company produces around XX% of the total petroleum production in the country. The company has its operations round the world, including Southeast Asia, the Middle East, North Africa, Australasia and North America, operating more than XX projects. PTTEP s major operations include upstream activities along with other associated business functions such as providing transport and logistic support services, the construction of Floating Liquefaction Natural Gas production (FLNG) vessels and certain other infrastructure-related projects. The company s upstream operations are primarily located in the onshore and offshore areas of Thailand. However, the company also has operations in international areas including Algeria, Australia, Canada, Cambodia, Indonesia, New Zealand, Oman, Republic of Mozambique, Myanmar, Kenya and Vietnam. PTTEP s Exploration and Production (E&P) operations are spread over XX projects in XXcountries, of which XX projects are in an exploration phase of development, three projects are in a development phase, and XX projects are in a production phase. 21

22 Key Highlights 3 PTT Exploration and Production Public Company Limited, Key Highlights 3.1 Near-term Projects to Drive Production Growth PTTEP has mainly focused on strengthening its production profile in domestic as well as overseas locations. The company s production capacity was increased from XX mboed in 2011 to XX mboed in 2012 and then to XX mboed in 2013, at a CAGR of XX % during the period and a YOY growth rate XX % over the capacity in The company currently has XX production assets in its portfolio, including XX in Thailand and two in Myanmar, two in Vietnam, and one project in both Oman and Australia. The company also recently acquired the Natuna Sea A project, which is expected to contribute to the production from PTTEP is aiming at a target production volume of XX mboed by 2020, which is a revised capacity from the 900 mboed mentioned in In line with the strategy to reach target production levels, the company intends to accelerate its E&P programs in order to maintain the production capacity and ameliorate its proved (1P) reserves lifespan to 10 years. To support this move, the company intends to enhance its investments in both domestic and international assets. The production contribution from near-term growth projects such as Montara, Vietnam 16-1, Zawtika and Algeria 433A and 416B together with long-term contributors like the Myanmar M3, Algeria Hassi Bir Rekaiz (HBR), and Mozambique Offshore Area 1 projects, the Cash Maple field in the PTTEP Australasia project, and its Canada oil sands projects, will guide the company in attaining its targeted production level. During 2013, the company successfully achieved first production at its Montara project and the highest production to date at the S1 project, with XX barrels of oil per day (bd). 26

23 SWOT Analysis 4 PTT Exploration and Production Public Company Limited, SWOT Analysis 4.1 Strengths Increasing Production Levels The primary objective of PTTEP is to reach a production capacity of XX mboed by In line with this objective, the company s production consistently grew during 2009 and 2013, at a CAGR of XX%. The key strategy behind the consistent growth of the company s production is the exploration, appraisal and development activities conducted at current producing areas, and investment in prospective new regions. Additional development drilling and appraisal activities contributed to sustained production at existing projects along with the growth of production due to the addition of new producing areas in the project. The company s short-term growth strategy includes organic growth in production through consistent exploration, appraisal and development activities. However, the company also intends to grow inorganically by engaging in an increasing number of Mergers and Acquisitions (M&As) activities in the long-term. These strategies are conducive to the maintenance of a five-year average reserves replacement ratio of more than one, and consistent growth in production contributing to the achievement of the target production level. The following figure illustrates the growth of the company s production during Figure 7: PTT Exploration and Production Public Company Limited, Production Growth Rate (%), Source: GlobalData, Oil and Gas etrack [Accessed on March 12, 2014] 32

24 SWOT Analysis 4.2 Weaknesses Declining Reserve Replacement Ratio Resulting in Slumping Reserve Life Index Despite PTTEP s relatively high exploration drilling success ratio, the company was unable to replace the reserves that were utilized for production. Its five-year average proved reserves replacement ratio also dropped from XX% in 2011 to XX% in 2012 and XX% in The company s reserve replacement ratio decreased from XX% in 2010 to XX% in 2011, then increased to XX% in 2012 and to XX% in Consequently, the company s reserve life index declined to XX years in 2013, from XX years in 2012 and XX years in PTTEP s proved reserves declined by XX % to XX mmboe from XX mmboe in 2012, its 2P reserves declined by XX % to XX mmboe in 2013, compared to XX mmboe in The 2P reserves at the end of 2013 do not account for the effect of the KKD asset swap transaction announced in January 2014, which further decreased 2P reserves by XX mmboe and the reserve life of the company to XX years. This declining reserve replacement ratio may disrupt the company s future development and production plans. 40

25 Goals and Strategies 5 PTT Exploration and Production Public Company Limited, Goals and Strategies PTTEP s vision is to become one of the leading Asian exploration and production companies through technological development and green practices. The company intends to follow a balanced approach that will allow it to become a prominent international exploration and production company. 5.1 Production Target of XX Thousand Barrels of Oil Equivalent per Day by 2020 PTTEP is aiming to increase its production to XX mboed by 2020, from the XX mboed of production recorded in The company s average production rate in 2013 recorded an increase of XX% from XX mboed in The strategy to reach the targeted production potential by maintaining current production levels from its domestic assets at approximately XX mboed through to 2020, by making additions through overseas projects, start-ups and ramp-ups; and through the addition of extra capacity through new discoveries and the acquisition of production or near-term production projects. PTTEP expects three of its projects, Montara, Zawtika and Natuna Sea A, to contribute to the company s production in The company also anticipates that Canadian oil sands will be one of its major prospects for the future, and expects it to support the company s production beyond Currently, PTTEP intends to develop prospects such as Cash and Maple in Australia and HBR in Algeria and explore for more discoveries in international locations such as Mozambique and Kenya in order to add to its resources. Along with these E&D activities, the company intends to secure resources through the acquisition of prospects. For this purpose, the company targets producing assets in Southeast Asia, shale assets with high liquid content in North America, and any other such assets in overseas territories. The following figure illustrates the company s strategy for increasing its production to 600 mboed, through both organic and inorganic production growth. 45

26 Forecast Production and Financial Statements 9 PTT Exploration and Production Public Company Limited, Forecast Production and Financial Statements PTTEP s production and financial projections have been made using information that is publicly available. GlobalData has used a forecast period of five years for its analysis. The table below shows PTTEP s historic and estimated production during the period. Table 16: PTT Exploration and Production Public Company Limited, Historical and Forecast Production, Production share Actual Projected annual forecast Crude oil and NGL production (mmboe) XX XX XX XX XX XX XX XX Natural gas production (bcf) XX XX XX XX XX XX XX XX Overall geographical Production (mmboe) XX XX XX XX XX XX XX XX Source: GlobalData; PTTEP, 2012; PTTEP, 2013b GlobalData s price deck is divided into strong, base and weak cases to forecast a company s performance. GlobalData has applied company-specific differentials to its projected crude oil and natural gas prices. The table below shows GlobalData s price deck for the period. Table 17: GlobalData, Price Forecasts, Crude oil price (THB per bbl) Strong case XX XX XX XX XX Base case XX XX XX XX XX Weak case XX XX XX XX XX Natural gas price (THB per mcf) Strong case XX XX XX XX XX Base case XX XX XX XX XX Weak case XX XX XX XX XX Mcf: thousand cubic feet Source: GlobalData Note: GlobalData has considered base case prices for crude oil and natural gas. Dubai prices are considered for crude oil and Henry Hub prices are considered for natural gas 92

27 Forecast Production and Financial Statements 9.1 Income Statement ( ) PTTEP s income statement is shown in the table below. The company s total E&P revenue is expected to increase by almost 20% from THB220.3 billion (US$7.2 billion) in 2013 to THB264.1 billion (US$8.1 billion) in However, GlobalData expects the company s E&P revenues to decline at a CAGR of 5% during the period. The production costs are expected to increase at an annual growth rate of 12.4% during the period. The company s Earnings Before Interest and Taxes (EBIT) in 2014 are expected to be THB127.8 billion (US$3.9 billion), which is 47.5% of its total revenue. The company s Similarly, the company s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in 2014 is expected to grow by 27.3% to around THB202.1 billion (US$6.2 billion), which is around 75% of its total revenue. The company is expected to generate a net income of THB70.6 billion (US$2.2 billion) in 2014, which translates into a basic Earnings Per Share (EPS) of THB17.8 (US$0.5). Table 18: PTT Exploration and Production Public Company Limited, Income Statement (THB mil), E&P revenue XX XX XX XX XX XX XX XX Other revenue, net XX XX XX XX XX XX XX XX Total revenue XX XX XX XX XX XX XX XX Production costs XX XX XX XX XX XX XX XX G&A expenses XX XX XX XX XX XX XX XX EBITDAX XX XX XX XX XX XX XX XX Exploration expense/dry hole XX XX XX XX XX XX XX XX EBITDA XX XX XX XX XX XX XX XX DD&A expense XX XX XX XX XX XX XX XX Operating income (EBIT) XX XX XX XX XX XX XX XX Net interest expense XX XX XX XX XX XX XX XX EBT XX XX XX XX XX XX XX XX Current tax XX XX XX XX XX XX XX XX Deferred tax XX XX XX XX XX XX XX XX Total income tax XX XX XX XX XX XX XX XX PAT XX XX XX XX XX XX XX XX Net income to common shareholders XX XX XX XX XX XX XX XX Basic shares outstanding XX XX XX XX XX XX XX XX 93

28 Forecast Production and Financial Statements Diluted shares outstanding XX XX XX XX XX XX XX XX Basic EPS XX XX XX XX XX XX XX XX Dilutive EPS XX XX XX XX XX XX XX XX EBITDAX: Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Exploration expenses; EBIT: Earnings Before Interest and Tax; EBT: Earnings Before Tax; G&A : General and Administrative, PAT: Profit After Tax Source: GlobalData; PTTEP, 2013a; PTTEP, 2012; PTTEP,

29 Forecast Production and Financial Statements 9.2 Balance Sheet ( ) PTTEP s balance sheet is depicted in the following table. GlobalData expects the company to maintain a healthy level of cash and cash equivalents during the period. PTTEP s leverage is expected to decrease from 34.3% in 2013 to 28.1% in 2014 and to 13.8% by Table 19: PTT Exploration and Production Public Company Limited, Balance Sheet (THB mil), Cash and cash equivalent XX XX XX XX XX XX XX XX Accounts receivable XX XX XX XX XX XX XX XX Inventories XX XX XX XX XX XX XX XX Other current assets XX XX XX XX XX XX XX XX Total current assets XX XX XX XX XX XX XX XX Prop. plant and equipment, net XX XX XX XX XX XX XX XX Other non-current assets XX XX XX XX XX XX XX XX Total assets XX XX XX XX XX XX XX XX Accounts payable XX XX XX XX XX XX XX XX Current portion of longterm debt XX XX XX XX XX XX XX XX Other current liabilities XX XX XX XX XX XX XX XX Total current liabilities XX XX XX XX XX XX XX XX Long-term debt XX XX XX XX XX XX XX XX Deferred income tax XX XX XX XX XX XX XX XX Other long-term liabilities XX XX XX XX XX XX XX XX Total liabilities XX XX XX XX XX XX XX XX Common stock XX XX XX XX XX XX XX XX Additional paid-in capital XX XX XX XX XX XX XX XX Retained earnings XX XX XX XX XX XX XX XX Total shareholder equity XX XX XX XX XX XX XX XX Total equity XX XX XX XX XX XX XX XX 95

30 Forecast Production and Financial Statements Total liabilities + shareholder equity XX XX XX XX XX XX XX XX Source: GlobalData; PTT Exploration and Production Public Company Limited, 2011; PTT Exploration and Production Public Company Limited, 2012; PTT Exploration and Production Public Company Limited, 2013a; 96

31 Forecast Production and Financial Statements 9.3 Cash Flow Statement ( ) The table below shows PTTEP s cash flow statement for the period. The company s CFO increased to THB114.5 billion (US$2.9 billion) in 2013, from THB107.4 billion (US$3.4 billion) in 2012 and THB88.7 billion (US$3.7 billion) in GlobalData expects that the company will be able to maintain a sufficient level of cash flows during the period. The company will be able to fund most of its capex plans through internally generated operational cash flows during the period. Table 20: PTT Exploration and Production Public Company Limited, Cash Flow Statement (THB mil), Net income XX XX XX XX XX XX XX XX Depreciation, depletion, and amortization XX XX XX XX XX XX XX XX Taxes paid XX XX XX XX XX XX XX XX Change in working capital XX XX XX XX XX XX XX XX Operating cash flows XX XX XX XX XX XX XX XX Capex additions to PP&E XX XX XX XX XX XX XX XX Investing cash flows XX XX XX XX XX XX XX XX Additions to (reductions in) long-term debt XX XX XX XX XX XX XX XX Common and preferred dividends XX XX XX XX XX XX XX XX Financing cash flows XX XX XX XX XX XX XX XX Total increase/decrease of cash XX XX XX XX XX XX XX XX PP&E: Property, Plant and Equipment Source: GlobalData; PTT Exploration and Production Public Company Limited, 2011; PTT Exploration and Production Public Company Limited, 2012; PTT Exploration and Production Public Company Limited, 2013a; 97