Thai Oil

Moody's Investors Service has affirmed the 
Baa1 senior unsecured debt ratings of Thai Oil Public Company Limited 
(Thai Oil). The outlook for the ratings is stable.

RATINGS RATIONALE

"Thai Oil's ratings incorporate a one-notch uplift based on the expected 
support from 49.1% shareholder PTT Public Company Limited (PTT, Baa1 
stable) in an event of distress, considering the close business 
integration between the two companies," says Alan Greene, a Moody's Vice 
President and Senior Credit Officer.

The company has completed around two-thirds of the $1.7 billion capex 
expansionary plan it started in 2012. Of the remaining $549 million, Thai 
Oil expects to spend $396 million in 2015 and $98 million in 2016.

"We expect Thai Oil's earnings to rebound in 2015, with EBITDA falling to 
between THB15-18 billion this year and increasing to around THB20 billion 
in 2016. This compares to THB2 billion recorded in 2014 that was largely 
attributable to the substantial inventory loss triggered by the collapse 
in oil prices," adds Greene, who is also Lead Analyst for Thai Oil.

Moody's earnings expectations take into account Brent oil price
assumptions of $55 per barrel (bbl) in 2015 and $65/bbl in 2016, as well 
as a structural improvement in the company's gross refining margins of 
almost $1/bbl as a result of the successful execution of its capex 
investment plan.

"We expect Thai Oil's retained cash flow (RCF)-to-adjusted debt ratio 
will temporarily fall below our tolerance level of 20%-25% in 2015. 
However, RCF-to-adjusted net debt will remain above 30% which is strong 
for its Baa1 rating level," says Greene.

Moody's believes that the company's strong liquidity as characterized by 
its substantial cash and cash equivalents and well-spread out debt 
maturity profile continue to support its current rating level. At 31 
March 2015, Thai Oil had consolidated cash and short term investments of 
THB53.4 billion. The company has consistently maintained around THB40-45 
billion of cash on its balance sheet over the last three years.

The company also has undrawn committed multi-year credit facilities of 
$615 million as at 31 March 2015.

Thai Oil's underlying credit strength reflects its position as Thailand's
largest and most complex refiner, strong operating profile, and 
conservative financial leverage against the backdrop of the concentrated
nature of its operations and the cyclical nature of refining and 
petrochemical margins.

The outlook is stable, reflecting Moody's expectations of Thai Oil
maintaining its operational competiveness, conservative investment
strategy, and prudent financial profile.

The near-term possibility of an upgrade is limited, given the relatively 
small scale and low business diversity of Thai Oil when compared to its 
peers at the same rating. Over time, upward rating pressure could evolve 
with Thai Oil's ability to maintain retained cash flow (RCF)/adjusted 
debt above 35%-40% on a consistent basis. Greater operational diversity 
could also be a positive factor.

The rating would experience downward rating pressure should the balance
sheet be used for i) aggressive dividend payouts; or ii) aggressive
capital investments, or acquisitions that materially change its business 
mix. We will also consider a rating downgrade if there is a sustained 
deterioration in oil refining fundamentals, such that RCF/adjusted debt 
drops below 20%-25%.

Furthermore, a significant reduction in PTT's ownership of Thai Oil 
and/or a material change in the supply and offtake agreements between the 
two companies would be negative for the rating.

The principal methodology used in this rating was Global Refining and
Marketing Rating Methodology published in December 2009. Please see the 
Credit Policy page on www.moodys.com for a copy of this methodology.

Thai Oil is the leading integrated publicly listed refining and 
petrochemical companies in Thailand. It operates the largest single-site
refinery in the country with a nameplate capacity of 275,000 barrels per 
day (bpd).

Thai Oil is 49.1% owned by PTT Public Company Ltd which is in turn 51.1% 
owned by the Thai Government.