PTTEP ratings unchanged as 9-month results meet forecast
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MOODY'S Investors Service says PTT Exploration and Production Public Company Limited's (PTTEP) results for the nine months ended 30 September 2013 are in line with it's expectations, and the company's issuer and bond ratings remain well positioned at
PTTEP's revenues in the first nine months of this year grew 9 per cent year-on-year to $5.5 billion ( Bt 172 billion) and its EBITDA grew 11 per cent over the same period to $3.9 billion.
The company's strong financial results were supported by a 7.6 per cent year-on-year increase in average sales volume to 290 thousand barrels oil equivalent (kboe)/day and a marginal 2.6 per cent increase in the average selling price.
The increase in PTTEP's sales volume was the result of ongoing strong contributions from the stable output at its domestic Bongkot and S1 fields, and also from the Montara oil field in Australia, which began production in June 2013.
“We expect PTTEP's production volumes to maintain an upward trajectory in 2014 as the Montara field ramps up to its full capacity of 30 kboe/day, and as the Zawtika field in Myanmar achieves commercial gas delivery in the first quarter next year. In addition, the Algeria 433a and 416b fields will be commencing oil production at the end of next year. If all these projects are delivered as scheduled, we expect PTTEP's production volume will likely grow by about 10 per cent in 2014,” says Vikas Halan, Moody's Vice President and Senior Analyst.
Target
To achieve its ambitious production target of 600 kboe/day by 2020 from 327 kboe/day in Q3 this year, PTTEP has an aggressive capital expenditure investment plan of $15 billion for 2013-17. Of the $3.9 billion planned capex for 2013, $2.1 billion was spent in the first nine months.
“We will continue to monitor PTTEP's capex and any acquisition plans beyond its existing $15 billion investment plan, because its credit metrics may weaken if it makes a sizeable debt-funded acquisition, thereby putting negative pressure on the company's rating,” says Halan, who is also Lead Analyst for PTTEP.
Downward rating pressure will emerge if PTTEP further engages in debt-funded acquisitions that increase its level of development risk, or if the company invests in assets which are not immediately accretive to cash flow, resulting in a total adjusted debt to proved developed reserves ratio consistently higher than $8/boe, a retained cash flow (RCF) to total adjusted debt of less than 50 per cent, or a total adjusted debt to average daily production of more than $19,000 on a sustained basis.
Upward rating pressure in the next 12-18 months is limited, given the |substantial development risks faced |by PTTEP.
Nonetheless, positive rating momentum may emerge, if the com-pany reduces its debt leverage such |that its total adjusted debt to proved developed reserves is below $6/boe, |or if its RCF to total adjusted debt exceeds 70 per cent.
