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PTTEP targets distressed

upstream assets

Thailand’s state-run oil company wants to use the current industry
downturn to snap up assets in Southeast Asia and the Middle East

COMMENTARY THAILAND’S PTT Exploration and Production The company believes it can afford to splash
(PTTEP) intends to use the oil and gas industry’s out on new assets, having built up a sizeable war
current downturn to expand its upstream port- chest in recent years. Thavisin said PTTEP had
WHAT: folio, despite having been forced into slashing its $3bn of cash on hand and could also raise addi-
PTTEP has $3bn in cash own budgets earlier this year. tional funding should the right deal come along.
on hand and is looking to The state-run developer wants to acquire The company’s focus on cutting costs in
buy oil and gas fields. energy assets in the near and far abroad as it the years following the 2014 oil price crash has
continues to use acquisitions to offset declining given it wriggle room. During the company’s
WHY: domestic production potential. Thailand’s oil first-quarter results announcement in April,
Assets are cheaper production has slowly declined from a peak of Thavisin said the company’s per unit costs of
following the oil price 489,000 barrels per day in 2016 to 477,000 bpd $31.7 per barrel were “low and competitive,
collapse and COVID-19. in 2019, according to BP’s Statistical Review of compared with our peers”.
World Energy 2020. Lower costs could not fully insulate PTTEP
WHAT NEXT: After trimming its 2020 capital expenditure from this year’s collapsing energy prices, with
PTTEP is unlikely to be plans in April, owing to the twin pressures of col- the company revealing that its net profit in
the only Asian NOC to be lapsing oil prices and the coronavirus (COVID- January-March had shrunk by 28% quarter on
weighing up acquisitions, 19) pandemic’s destruction of demand, PTTEP quarter to $275mn. This prompted the company
believes it is now time to go bargain hunting. to revise down its originally capex budget of
$4.61bn for 2020 by 15-20%, or $691.5-922mn.
Acquisition ambitions The explorer is not the only one feeling the
PTTEP wants to open talks with financially pinch, however, with parent company PTT
troubled upstream players, company CEO and revealing its own spending cuts earlier this
president Phongsthorn Thavisin told the Bang- month.
kok Post on June 19, noting that the company
is interested in assets in Southeast Asia and the Parental guidance
Middle East. State-owned PTT said on June 12 that it would
He said: “We should not close our eyes to a big shave 10-15% from its original group budget for
chance in these regions. But if opportunity emerges 2020 of THB250bn ($8.07bn). The anticipated
elsewhere, we must first make sure we have pro- 10-15% reduction should yield savings of around
spective buyers [for our oil] in those regions.” THB25-37.5bn ($807mn-1.21bn).

P6 www. NEWSBASE .com Week 25 25•June•2020