PTT hopeful for year despite 2014 slump

PTT said its 2014 operating results showed consolidated group sales totalled Bt2.83 trillion, nearly unchanged from the previous year, and net profit of Bt55.8 billion, down 40 per cent from 2013.
Earnings before interest, tax, depreciation and amortisation (EBITDA), reflecting actual cash generated from business operations, nevertheless rose 10 per cent to Bt251 billion.
President and chief executive Pailin Chuchottaworn said the drop in oil prices was in fact a “transferring of wealth from upstream to downstream” oil producers, and PTT, which is involved in both, had suffered minimal impacts.
“This has been reflected in our stock prices, which have not been affected since last July,” he said.
“This is the best time to invest … [because right now] when the oil price is at US$50 a barrel, the chance of getting it wrong is slim.”
Chief financial officer Wirat Uanarumit said PTT had not yet cut its five-year investment budget from Bt1 trillion because it believes slumping oil prices should enhance investment opportunities. Of the total planned budget, 53 per cent will be invested by its upstream subsidiary PTT Exploration and Production, which will finalise its review of the investment plan next month.
“Having a non-elected government has turned out to be good, because it has made energy reform happen. I’m ‘medium’ confident that this year our results will be good because oil prices have started to stabilise,” he said.
Among positive factors PTT expects this year the halving of costs of subsidising the retail price of natural gas for vehicles, which cost it Bt19 billion last year. Another positive is the ending of subsidy for liquefied petroleum gas, which cost it Bt10 billion last year. A turnaround from losses to gains of the inventories of its oil-refinery subsidiaries is also expected, with proceeds from the sales of its shares in two refineries.
Pailin said PTTEP recently conducted a “stress test” and found that it could survive oil prices as low as $30 a barrel. Wirat said PTTEP booked a net loss last year, because of its accounting policy to book impairment charges totalling Bt30 billion for its Canadian oil-sands project and Montara project in Australia, but it still had nearly $4 billion (Bt130 billion) cash on hand that could be used for investments.
He said PTT believed the global oil price would follow its 2008 pattern when it took six months to fall from $100 to $36 a barrel and 30-36 months to rebound to the $100 level.
World oil prices dropped 5 per cent last year when compared with 2013, and 44 per cent in the last quarter. However, PTT made 66 per cent of its income from natural gas, whose price rose by 1 per cent last year, Wirat said.