PTT Exploration and Production Plc (PTTEP) says it is close to finalizing an investment decision on three petroleum resources, delayed from last year due to the complicated process of obtaining licences from local and central governments and unclear business models.
The three projects are the Ubon Block in the Gulf of Thailand, Rovuma Offshore Area-1 in Mozambique, and the Hassi Bir Rekaiz project in Algeria, said Pannalin Mahawongtikul, executive vice-president for finance and accounting.
The decision on the three projects would help the SET-listed company re-focus business plans for projects that are still in the exploration stage, she added.
The strategy also includes mergers and acquisitions (M&A) of projects in AsiaPacific although most of the targeted firms are US companies, Pannalin said, adding that PTTEP is in talks over three to four M&A projects that are near the production stage. The negotiations are expected to be finalised early next year. PTTEP has US$3.7-billion cash on hand, which is set to rise to US$4-billion next year.
Mozambique’s Rovuma Area-1 project requires a LNG facility as well as massive investment of US$22-billion over the next five to six years. It is estimated to produce 12-million tons of LNG a year, of which 70% has already been contracted to major buyers, including PTT Plc.
Pannalin said PTTEP holds an 8.5% stake in Rovuma Area-1 and the project needs about US$1.9-billion capital expenditure.
Approval for the Ubon project is expected in 2018 and crude oil output is estimated at 25,000 barrels per day, while the Hassi Bir Rekaiz project is in the process of petroleum reserve appraisal, after which production would start.
PTTEP is reviewing its capex in line with recent developments. The average oil price next year may rise to US$50 per barrel, compared with this year’s average of US$39.
Meanwhile, PTT announced that it posted a net profit of ฿26.9-billion in the third quarter of 2016, reversing from a net loss of ฿26.5-billion in the same period of last year.
The substantial rise in profit was largely due to lower feed gas costs, which fell in line with global oil price.
In the first nine months, PTT had a net profit of ฿75.5-billion, up from ฿19.7-billion year-on-year.
Source: Bangkok Post
PTTEP cuts 2016 capex 18%, will focus on Mozambique, Algeria, Gulf of Thailand
On Friday 18 November, PTTEP said that it has slashed its capital spending budget 18% this year to US$1.4-billion, as it reduces exploration and production expenses and postpones high-risk projects.
The company had earlier planned to spend US$1.7-billion this year.
It has cash on hand of US$3.7-billion and plans to spend most of it on acquisitions of oil and gas assets that are producing or near-term producing in Southeast Asia, Yongyos Krongphanich, senior vice president for finance, said during earnings presentation, without identifying specific targets.
The company expects 2016 average gas price to be about US$5.5/million British thermal units, based on average Dubai crude oil price in fourth quarter of US$45 a barrel, he said.
PTTEP, the exploration arm of PTT Pcl, has said it was keen to buy stakes in gas blocks in Myanmar from Chevron Corp.
Hit by weak oil prices, PTTEP has focussed on cost-cutting and expects its cost per unit this year to drop 29% to US$31 a barrel, he said.
Mozambique, Algeria, Gulf of Thailand:
To increase its petroleum reserves in the short- to medium-term, PTTEP will focus on projects in Mozambique, Algeria and Contract-4 oil field in the Gulf of Thailand, Yongyos said.
PTTEP has an 8.5% stake in Mozambique’s Rovuma Offshore Area-1, which is operated by Anadarko Petroleum Corp, and expected to make final investment decision in late 2017, he said.
The company also aimed to raise output at Contract-4 in range of 20,000-30,000 barrels per day and speed up development at Algeria HBR after promising well appraisal results, he said.
In the long-term, PTTEP is studying feasibilities to reduce costs at its Mariana oil sands project in Canada and also discussed with nearby operators at Cash Maple gas field in Australia for joint development, he said.
PTTEP, along with PTT group, has cut its operating costs and will delay new investments in foreign projects to minimise the impact from declines in global oil prices.
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