Esso earns A+ for track record

Esso earns A+ for track record

Tris Rating has given an A+ rating to the Thailand-based affiliate of Exxon Mobil Corporation, Esso Thailand Plc.

The rating is attributed to Esso's affiliation with ExxonMobil, one of the world's largest oil refiners and petrochemical companies, its solid operating track record and efficient integrated refinery, and strong market position in Thailand.

As of October 2018, the company operates a refinery with a production capacity of 174 thousand barrels per day (KBD) -- some 16% of the refinery capacity nationwide in Thailand -- and an aromatics plant integrated with the refinery. It has capacity of 500 thousand tonnes per year of paraxylene, and there were 595 Esso petroleum service stations.

Tris said Esso's strong link with ExxonMobil and various agreements allow access to technology and management practices developed by the parent. Esso also leverages ExxonMobil Group's global supply chain to enhance its procurement and sales of refined petroleum and petrochemical products, which reduces cost through economies of scales. Esso receives financial support from its parent from time to time, enhancing financial flexibility.

The company benefits from operating a refinery integrated with an aromatics plant, which gives flexibility to adjust the product mix, such as diesel, gasoline, reformate, jet fuel and kerosene or fuel oil. Esso's refinery is also energy-efficient with high operational reliability.

Tris said Esso will uphold its strong market position in Thailand from 2019-21. During the first nine months of 2018, revenue continued to grow by 16% year-over-year, arriving at 149 billion baht, with earnings before interest, tax, depreciation and amortisation (ebitda) of 7.9 billion baht. During the same period, gross refining margin (GRM) was maintained high at US$7.8 per barrel.

The company's ebitda is forecast at 6-7 billion baht per year during 2019-21, based on a Dubai crude oil price range of $60-65 per barrel.

However, Esso's performance is still exposed to volatility in oil and petrochemical prices, in Tris's view. The ratings company said Esso will also be affected by intense competition among oil retail businesses in Thailand.

Do you like the content of this article?
COMMENT