PTT Exploration & Production
BUY
PTT Exploration & Production (PTTEP)
Q2 2013’s net profit to make year’s low. To grow again in Q3 2013
Q2 2013’s norm profit to drop 1.7%qoq, but net profit to fall 42%qoq due to Fx
We estimate PTTEP’s net profit in 2Q13 to sink significantly by 41.9%qoq to
B11.8bn, due mainly to an extraordinary expense, a loss from exchange
rates of Baht/US Dollar and Canadian Dollar/US Dollar at end-2Q13 that
have weakened from end-1Q13 respectively by 6.1%qoq and 3.2%qoq,
totaling B5bn worth. However, the norm profit would decrease only 1.7%qoq
to B16bn. Although sales volume in 2Q13 would increase by 0.7%qoq to
293,000 bbls/day from a full resumption of MTJDA project after a
maintenance shutdown in 1Q13, it has been partially offset by a 12-day and
8-day shutdown of Bongkot South and Arthit projects, so the increase in
sales volume would not be enough to negate the negative factors in 2Q13 as
follows. 1) Average petroleum selling price would decrease by 3.0%qoq to
US$65/barrel, in line with a decrease of 6.5%qoq in Dubai crude oil price to
US$101/barrel. Natural gas selling price would remain high close to that of
the previous quarter at US$7.9/million BTU. 2) Lifting cost is projected to
increase by 2.9%qoq to US$4.6/barrel because in 2Q13 there has been a
maintenance shutdown of 2 projects: Bongkot South and Arthit, which makes
the average cost rise. Moreover, in this quarter there would be a write-off of
around B300m from Kenya and Mozambique wells. Overall, 1H13’s net profit
is anticipated at B32bn, growing 23.1% from the same period last year (yoy)
and accounting for 52.1% of our FY2013’s forecast.
Profit to grow again in 3Q13. FY2013’s growth estimated at 7.3%yoy
Preliminarily, we still maintain our earnings forecast for FY2013. The profit
would return to grow again in 3Q13 as sales volume is anticipated to
increase after Montara project starts a commercial run and the company
begins to recognize an income from sales for the first time in 3Q13 at 10,000
barrel/day, which would increase to 30,000 barrel/day in late 2013. In
addition, Dubai crude oil price would be able to stand above US$100/barrel
following the economic recovery, especially the US. Furthermore, political
crunch in the Middle East is another factor to support the oil price surge.
Moreover, there is also hope for recognition of remaining insurance claims for
Montara project at B850m in 2H13, which would make FY2013’s profit grow
continuously by 7.3%yoy. The profit is also projected to make a new yearly
high from continuously increasing production volume each year.
Buy. Still have growth potential in long run
2013’s fair value, DCF, is B188.70. We reiterate our BUY recommendation.
The current share price has 17% upside, while in the long run the company
still has growth potential from new investment projects.
