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PTTEP slashes spending as profits tumble
FINANCE & INVESTMENT
THAILAND’S state-owned PTT Exploration and Production (PTTEP) has unveiled plans to slash capital expenditure this year after the oil price collapse sent the company’s quarterly profit tumbling.
The company said on April 30 that it planned to slash its planned 2020 capex budget of $4.61bn by 15-20%, or $691.5-922mn. PTTEP intends to cut costs by deferring some of its exploration projects while reducing non-operation related expenses. It said it would keep its capex on main- tenance steady to ensure the country’s energy supply lines.
The oil price crisis coupled with the coronavi- rus (COVID-19) outbreak’s demand destruction saw PTTEP’s net profit in the first three months of the year contract by 28% quarter on quarter to $275mn. Revenue slid by 4% to $1.77bn.
Sales in the quarter amounted to 363,411 barrels of oil equivalent per day, compared with 395,028 boepd in the final quarter 2019. The company blamed the fall on low gas nomination from its Gulf of Thailand projects and said it had revised down its estimated sales for this year by 7% to 362,000 boepd from a previous target of 391,000 boepd.
PTTEP’s average selling price dropped to $44.81 per boe, compared with $48.28 per boe in October-December 2019. While the com- pany reported a $222mn financial gain – which it mainly attributed to its oil price hedging contracts – it said it had incurred income tax
expenses of $225mn owing to the baht’s depreci- ation against the US dollar.
The company has pledged to fully fund pro- jects such as Mozambique Area 1 project and the Lang Lebah gas field in Block Sarawak SK410B offshore Malaysia to ensure first production within in the next three to four years.
PTTEP president and CEO Phongsthorn Thavisin said that while upstream opera- tions were being challenged by the oil price crisis, the company’s pursuit of operational efficiency in the wake of 2014 oil price crash meant that its current costs “are low and competitive, compared with our peers”. PTTEP said its unit cost for the quarter was maintained at $31 per boepd.
Thavisin, however, warned that the current downturn was markedly different from the last one in that it affected almost all business sectors extensively. He said growth would come from a focus on being agile and adapting to the disrup- tions rather than simply focusing on lowering unit costs.
While the company is reviewing its upstream portfolio, it announced on May 5 that its Mexi- can partnership with Spain’s Repsol, Malaysia’s Petronas and Germany’s Wintershall Dea had struck oil at two deepwater wells. The venture drilled Polok-1 to a depth of 2,620 metres, while Chinwol-1 was drilled to a depth of 1,850 metres. PTTEP said both exploration wells showed “promising high potential”.™
KrisEnergy reviews Thai operations after oil price collapse
PROJECTS & COMPANIES
SINGAPOREAN independent KrisEnergy has warned that the steep fall in oil prices during the first four months of this year would weigh on rev- enue from its Thai and Bangladeshi operations.
KrisEnergy said on May 6 that the “unparal- leled volatility” on oil markets had driven it to review the commercial viability of the Wassana oilfield offshore Thailand.
The company said the field, which lies in G10/48 block, produced 3,605 barrels per day of oil on average in the first quarter of 2020. KrisEnergy’s share of production averaged 3,208 bpd. The company said was depressed oil prices, market volatility and the “imminent expiry of certain equipment charters” had driven the review.
KrisEnergy noted: “The decimation of oil prices in the first four months of 2020 to the
lowest levels in two decades due to the COVID- 19 pandemic, the devastating impact on demand for oil and gas and an unprecedented supply glut have presented monumental challenges to oil and gas operators across the globe.”
The independent said its crude and liquid sales from Gulf of Thailand assets were pegged to the Dubai benchmark, which had fallen from $64.29 per barrel in January to $20.39 in April.
Wassana’s production is managed in bulk lift- ings, with 249,747 barrels lifted in February and another 231,149 barrels lifted in April. As such, the company expects its revenue from Thai oil and liquids sales to demonstrate a similar decline to that seen from the Dubai benchmark. Kris- Energy said the magnitude of the impact would depend upon the timing of offloading schedules and prevailing market prices.
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w w w . N E W S B A S E . c o m Week 18 07•May•2020