PTT Exploration & Production

PTT Exploration And Production Plc (PTTEP)  
 

COVE’s recent gas discovery could increase its value and price, heightening the risk of a capital increase to fund the acquisition. This, coupled with earnings downside from lower oil prices, could overhang PTTEP’s share price despite strong anticipated volume growth. COVE new discovery would boost its recoverable gas resources by 15%. The resulting higher NAV could prolong bidding and result in financial uncertainty given the rising risk of a capital increase for PTTEP, which could lead to a share price overhang. Maintain Underperform and target price, based on a 25% discount to DCF (11% WACC, 3% LTG).