PTTEP sees low revenue growth amid volatile crude prices
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PTT Exploration and Production expects revenue growth of only 8 per cent this year as the volatility in crude oil prices persists this quarter with Libya's increasing output and Iran planning a possible resumption of crude exports.
These factors have become key influences on the supply side. The subdued outlook for the euro zone, Japan and China’s economies will also continue to weigh on crude oil prices.
However, stronger energy demand during the winter of the northern hemisphere as well as the possibility of the Organisation of the Petroleum Exporting Countries deciding soon to slash oil production next year could halt the fall in oil prices, Tavin Vongvanich, president and CEO, said yesterday.
Most of PTTEP’s production is natural gas. This fuel accounts for 67 per cent of its sales volume. About 30-50 per cent of the company’s natural gas price is indexed to oil prices with a three-month, six-month or one-year lag-time depending on the project.
The short-term outlook for lower oil prices has a relatively subdued impact on gas prices. Crude oil and condensates account for 33 per cent of PTTEP’s sales volume. They will be affected by lower oil prices.
This quarter, PTTEP has hedged about 70 per cent of its crude oil and condensate volumes based on the Brent benchmark crude to manage the risks.
PTTEP has initiated the “Save…to be safe” project to efficiently manage investment and operating costs, including cutting unnecessary costs and changing the work culture in all activities to be cost-conscious.
The company’s third-quarter net profit dropped 16 per cent to US$477 million or Bt15.28 billion from $566 million in the same quarter of last year even though its revenue grew 14 per cent to $2.09 billion.
The decline in profitability was attributed mainly to $256 million in depreciation of PTTEP Australasia and Contract 4 projects as well as greater exploration expenses, which were inflated to $77 million as a result of the write-off of the hydrocarbon searching cost for PTTEP Australasia and Kenya L10A projects.
The rise in petroleum sales volume was spurred by PTTEP’s Australasia and Zawtika fields. Due to weakened global oil prices, PTTEP’s average petroleum sales price was reduced to an average of $65.15 per barrel of oil equivalent from $65.71 a year ago.
The quarter saw PTTEP recording an increase in non-recurring net profit of $51 million, which was gained from oil price hedging.
The quarter’s net profit can be divided into the domestic exploration and production segment of $381 million, gain of international exploration and production segment of $9 million, earnings of the pipeline transportation segment of $88 million and the net loss of head office and other segments of $1 million.
For the first nine months of this year, PTTEP recorded a net profit of $1.41 billion.
“For the whole of 2014, the company is on course to raise sales volume by 8 per cent from last year’s level, driven primarily by output from the Zawtika field and those from Hess Thailand, which PTTEP acquired in the first half of this year.
“The offshore Myanmar and the Thai onshore producers are poised to become major contributors to PTTEP’s 2015 growth,” he added.
