PTTEP back in the black as efficiency,cost steps pay off
PTT Exploration and Production Plc (PTTEP)’s cost optimisation and efficiency improvement activities have squeezed out a net profit of US$388 million (Bt13.6 billion) for the first nine months of this year, reversing the net loss of $986 million in the same period of last year.
Somporn Vongvuthipornchai, president and CEO of PTTEP, said yesterday that during the period, operating cashflow remained healthy at $1.72 billion, adequate to fund capital expenditures needed to maintain production levels.
The company’s financial position remains solid with cash on hand of $3.72 billion at the end of the third quarter, enabling the company to pursue investment opportunities, focusing on producing assets or those that are soon approaching development or the production stage in Southeast Asia.
The cash can also help it expand investment in exploration projects, such as the recent acquisition of the Sarawak SK410B Project in Malaysia.
For the nine-month period, PTTEP’s revenue decreased to $3.28 billion due to lower average selling prices after global crude prices slumped.
The average selling price was $36.00 per barrel of oil equivalent (BOE), lower than $47.47 in the same period of last year.
However, petroleum sales stood at 320,600 barrels of oil equivalent per day, which remains on track with the business plan to maintain 2016 volume on par with 2015.
Thanks to efficient cost management, the unit cost for the nine-month period has decreased 23 per cent from the end of 2015, from $38.88 per BOE to $29.98 per BOE, surpassing the company’s cost-reduction target of 10 per cent. Thus, recurring net income was $345 million.
The company recorded a non-recurring gain of $43 million, primarily driven by the net effect of tax savings from the appreciation of the baht against the US dollar from 36.09 to 34.70 at the end of the third quarter.
As the oil price hedging contracts, of which was a USD 52 million mark-to-market valuation of outstanding hedging positions that has no impact on cashflow“PTTEP’s operating results in the first nine months of this year presented considerable improvement although the low oil price situation still remains.
“The result reflects the company’s ability to manage controllable factors mainly in production volume stabilisation and the ‘Save to be Safe’ cost reduction campaign.
“In addition, we have now introduced the ‘Spend Smart to Business Sustainability” campaign to strengthen our efforts on further cost-optimisation initiatives that will lead to long-term competitive advantages and sustainable growth,” he added.
