PTT Exploration & Production

PTT Exploration & Production Plc (PTTEP)

Offering price and entitlement ratio to be announced on 30 Nov morning before market opens
According to PTTEP and its financial advisor, PHATRA, regarding the capital
increase plan, the company will announce the final offering price, the final
number of shares, and the entitlement ratio in the morning of 30 November
2012 before the market opens. Shareholders whose names appear on the
share register book as of 12 November 2012 (record date) are eligible to
subscribe for the shares. The subscription period for eligible shareholders will
be during 3-6 December 2012, with BBL, KTB, KBANK, and SCB as selling
agents. Shareholders can subscribe according to their entitlement or beyond
their entitlement. Allocation will be made in 2 steps as follows. 1) New share
will be allocated to subscribing eligible shareholders pro-rata to their
shareholding. Such eligible shareholders can calculate the number of new
ordinary shares they are entitled to from the number of shares held as of the
record date and the entitlement ratio. Any fraction of a share from the
calculation will be rounded down. 2) Any remaining shares from 1) will be
allocated to eligible shareholders who subscribe over their entitlement for on
additional round, pro-rata to their shareholding excluding PTT. 3) Any
remaining shares from 2) will be allocated to institutional investors who
participate in the bookbuilding process excluding PTT. The allocation result
will be announced on 7 December 2012 and the shares will be listed on the
SET on 14 December 2012 in the case that there are not remaining shares
from the allocation to eligible shareholders or on 19 December 2012 in the
case that there are remaining shares from the allocation to eligible
shareholders that will be allocated to institutional investors according to 3).

At minimum offering price of B150/share, entitlement ratio will be 1:0.164
Preliminarily estimating under PTTEP’s conditions for this round of capital
increase of 1) the number of shares of no over 650 million and 2) the capital
increase amount of up to B98bn, the minimum offering price should be
B150/share, which will result in the entitlement ratio of 1 existing share to
0.164 new share and the market price after the capital increase at
B158.59/share (based on the closing price on 20 November 2012 at
B160/share). However, if the offering price is B170/share, the ratio will be 1
to 0.145 and the market price will be B161.27/share (based on the closing
price on 20 November 2012 at B160/share) as detailed in Sensitivity Analysis
table. Nevertheless, we believe that negative factors from the capital increase
have partially been reflected in the share price. Moreover, the objective of
this round of capital increase is to enhance growth potential in the long run
as PTTEP will bring money from the capital increase to repay short-term loan
the company used in the purchase of Cove Energy (around US$1.5bn), while
the rest will be used for internal financing and prepare for future projects.

Buy. Fair value at end-2013 is B195.69/share
2013’s fair value is B195.69/share (including effects from the capital increase
in the case of 650 million new shares). We reiterate our Buy recommendation
from the company’s long-term growth potential from new investment
projects.