PTTEP's first half suffers slight dent from baht dip

PTTEP's first half suffers slight dent from baht dip

SET-listed oil and gas drilling firm PTT Exploration and Production Plc (PTTEP) reported that first-half operating profit fell by 6% year-on-year in US dollar terms, resulting in a net profit of US$536 million (17.9 billion baht).

As PTTEP recorded a loss from non-recurring items of $104 million, driven by tax expenses owing to the baht's depreciation and hedging losses, most of which had no impact on the company's cash flow.

According to chief executive Somporn Vongvuthipornchai, the company's recurring net income was $640 million, up 69% from the same period of 2017, as sales volume increased and selling prices improved in line with global crude prices.

PTTEP's total revenue during January-June was $2.56 billion, up 21% year-on-year.

"The improved revenue was primarily attributed to the recovery in average selling price to $45.51 per barrel of oil equivalent, representing a 20% increase, compared with $38.04 per BOE in the first half of 2017," Mr Somporn said. "The average sales volume showed a slight increase to 297,999 barrels of oil equivalent per day from 292,709 BOED in the first half of last year."

Moreover, the six-month unit cost adjusted upward by 7% from $28.29 per BOE a year ago to $30.37 per BOE due to higher royalty expenses and depreciation, depletion and amortisation expenses as a result of larger completed asset recognition, mostly from the S1 project and the Contract 4 project.

But PTTEP is confident that the unit cost this year will be $30-31 as targeted.

Mr Somporn said the "3R" strategy (reset-refocus-renew) remains the company's key direction this year.

In the first half, PTTEP made significant achievements, particularly with the acquisition of the Bongkot stake from Shell affiliates under the refocus strategy.

This has increased PTTEP's stake in the Bongkot field to 66.7%, with an increment of average sales volume of 35,000 BOED.

"We are always open for opportunities and are resilient in adjusting our investment plan so that we can cope with changes in the industry landscape," Mr Somporn said. "Recently we have been successful in acquiring additional shares in the Bongkot field and, in July, announced the divestment of the Montara field.

"For the rest of the year, we will press ahead with bidding for the expiring Bongkot and Erawan concessions, and these reflect our focus on investments in our strategic areas, such as Southeast Asia and the Middle East, in which we have experience and which are low-risk."

The development plans of the Algeria Hassi Bir Rekaiz project were approved, and the Mozambique Rovuma Offshore Area 1 project has also made significant progress in the preparation for the construction of an onshore LNG liquefaction plant and the finalisation of other LNG sale and purchase agreements.

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