PTT Exploration & Production

(Bt169; HOLD; TP Bt162.00; PTTEP TB)

PTTEP plans to shut down its gas field in Burma from 29 Dec to 6 Jan for maintenance. Yetagun contributes 5% of sales volume to PTTEP. Meanwhile, PTT, the parent company of PTTEP, will buy natural gas from other fields in the Gulf of Thailand to prevent any shortages.

Comment:

The shutdown will have minimal impact on PTTEP’s bottom line given that it only makes up 3 days for 4Q11. We also incorporated the shutdown in our forecast for 2011 sales volume at 266k bbd, flat y-o-y. We expect PTTEP to report 4Q11 core earnings of Bt11.5bn, down 10% q-o-q (PTTEP reported FX loss of Bt5.5bn in 3Q11).  Higher average crude oil prices of US$106/bbl (US$102/bbl for 3Q11) and average gas prices of US$6.5/mmbtu (US$5.9/mmbtu for 3Q11) are the key highlights for 4Q11 earnings. PTTEP re-priced its gas at Bongkot, Arthit, Pailin and MTJDA to reflect the higher oil prices over the past six to twelve months (depending on project). Our rating remains HOLD with TP at Bt162. Key risks is the delay in the commercial start-up of new Bongkot South in Thailand (2Q12) and Montara project in Australia (3Q12).