PTT Exploration & Production

PTT Exploration & Production Plc (PTTEP)

We view PTTEP’s £1.1bn bid for 100% of E&P company COVE Energy as a bold but risky step towards achieving its ambitious goal of tripling production to 900kbpd by 2020. While the move is not entirely a surprise, it could create near-term overhang. The acquisition could sustain growth from promising East Africa and propel PTTEP to the forefront of the LNG market. However, the growing risk of a capital increase and rising capex could hurt share price. Maintain Trading Buy and DCF-based target price.