PTTEP has rosy capital view

PTT Exploration and Production's capital increase of over 92 billion baht last month helped strengthen the firm's capital structure and support the company's expansion plans over the next several years, says Tevin Vongvanich, the company's president and chief executive.

Debt-to-equity for the company has dropped to 0.35 times from 0.7 times following the capital increase. Mr Tevin said the additional capital would give the company flexibility to raise up to US$1.5 billion in new debt to support business growth.

Last month PTTEP placed 650 million shares in a rights issue priced at 142 baht each.

But Mr Tevin acknowledged that revenues over the medium term from 2015-2016 are expected to show flat growth, as the firm's new production fields cannot offset declining production in its mature fields.

PTTEP reported third-quarter income of 17.5 billion baht on revenues of 57 billion, compared with income of 7.45 billion on revenues of 42.8 billion the same period the year before. For the nine months ending last September, PTTEP reported net income of 43.5 billion baht on revenues of 158.6 billion, compared to revenues of 29.59 billion baht on revenues of 125.85 billion baht the year before.

Mr Tevin said the company would issue new foreign-denominated debentures this year to refinance maturing debt, and added that since the company's revenues and expenses are already booked in US dollars, the recent appreciation of the baht against major currencies would have no material effect on the firm.

On Monday, PTTEP announced it would invest $24.67 billion over the next five years in capital and operating expenditures. Expenditures for 2013 are estimated at $5.809 billion, of which $3.949 billion will be capital expenditures, including development of ongoing projects such as the PTTEP Australasia Project, the Myanmar Zawtika project and two fields in Algeria. PTTEP currently has 44 projects underway, with 19 under production, three under development and 22 under exploration.

Mr Tevin said the company estimated it would invest $1.3 billion over the next seven years in Cove Energy, which PTTEP took over last year. Some $500 million in investment will be allocated to upstream production, with the rest in gas separation facilities.

Production this year is projected at 310,000 barrels of oil-equivalent (BOE) per day, up from 276,000 BOE in 2012, with the gains attributed to the beginning of operation for the Montara project in the first quarter.