PTT

For 1H 2015, Moody's notes that PTT's results were largely flat year-on-year, with improved contributions from its downstream refining segment offsetting weak upstream exploration and production (E&P) results.

The company posted 1H EBITDA of THB159.3 billion compared to THB162.8 billion in the previous year. Moody's comments were contained in a just-released report, "PTT Public Company Limited: Strong Refining Margins Support PTT's 1H Results But Full Year Earnings Expected To Weaken".

"Looking ahead, PTT's upstream segment will remain under pressure. This business -- through the company's 65%-owned subsidiary PTT Exploration & Production Public Company Limited (PTTEP, Baa1 stable) -- reported a 21.3% year-on-year EBITDA decline to THB70 billion as average selling prices fell to $48.6/bbl from $66.4/bbl," says Alan Greene, a Moody's Vice President and Senior Credit Officer.

"Moreover, we anticipate that PTTEP's full-year EBITDA will decline by around 30% and decrease a further 8%-

10% in 2016 on the back of lower selling prices," says Greene, who is also Lead Analyst for PTT.

"Downstream results will also likely weaken in 2H, given weakening industry fundamentals," says Greene. "Middle distillates, particularly diesel, will see the largest decline in product spreads, because of new supply in the Middle East and softer demand in China. For the full year, we anticipate regional refining margins to average marginally higher than 2014 levels of around $6/bbl, supported by healthy gasoline demand."

For 1H, EBITDA from the downstream refining segment -- which comprises Thai Oil Public Company Limited (Baa1 stable) and IRPC Public Company Limited (Ba1 negative) -- more than tripled to THB30.9billion from THB9.1 billion a year ago.

Moody's says these strong results were largely attributable to an improvement in gasoline and fuel oil product spreads, as seasonal refinery maintenance in the region constrained supply and in view of lower feedstock costs.

The company's gross refining margin averaged $7.64 per barrel (bbl) in 1H compared to $3.44/bbl in the previous year.

Moody's also expects weaker earnings from the petrochemical segment -- handled largely through its key associate PTT Global Chemical Public Company Limited (PTTGC, Baa2 stable) -- because of the planned shutdown of its aromatics plant for 75 days in Q3 in addition to the weakening refining and aromatics margins.

Moody's also expect PTTGC's credit profile to remain weak, given the company's ambitious 5-year $4.5 billion capex plan.