PTT Exploration & Production
Production increase at Oman 44
PTT Exploration & Production Plc (PTTEP)
What’s new? PTTEP announced in a press release yesterday that its oil production will rise, led by the Oman 44 Project (100% stake), whose overall output of oil and condensate will jump to 5,000 barrels per day (bpd) in October 2012 from 1,500bpd currently.
Our thoughts: The production ramp-up at Oman 44 will have only a negligible impact on PTTEP’s production and earnings profiles, given its small size. Currently, Oman 44 comprises only 4% of the firm’s total production, a number that will rise to 5% next year. That increase will boost earnings by a negligible 0.6% in FY12 and an insignificant 1.6% in FY13, pushing up our DCF target price from Bt168 to Bt170.
Action: We doubt that this news will generate any positive sentiment toward the stock—it just isn’t significant enough. The market is waiting on the resolution of PTTEP’s overhanging recapitalization plan (which was delayed because of legal issues tied to US-based shareholders being allowed to subscribe to the new shares. The market also wants the Montara field’s long-delayed start-up to go ahead. Our HOLD rating stands.
