PTTEP declares resilience against shoddy market
Despite global oil prices dropping considerably over the past month to nearly US$20 per barrel, PTT Exploration and Production (PTTEP) can survive the down market because of low production costs and high liquidity, says president and chief executive Phongsthorn Thavisin.
He said PTTEP can still move forward with its business plan for 2020, but it remains ready to adapt to challenging circumstances.
Crude oil sales, which account for roughly 30% of total sales volume for PTT, will be directly affected by oil price volatility, but the average sales price could partially hedge crude prices in place.
"Our strength is in our relatively low-cost structure compared with our peers, as we have prioritised these efforts in the past 4-5 years during the global oil price crisis to streamline our cost structure," Mr Phongsthorn said.
He said the company has a strong financial position and high liquidity as a result of a competitive cost structure, oil price hedging and secure natural gas selling prices as per sales agreements.
The company is ready to be flexible with investment plans to cope with challenging circumstances in the future.
Mr Phongsthorn said the pandemic and the global oil price collapse of over 60% since March would not make a significant impact on PTTEP's sales volume this year.
The average sales volume of 388,000 barrels of oil per day previously targeted for this year is expected to decrease by less than 5%. Sales volume of natural gas, which represents the majority of PTTEP's product, has already been secured in accordance with prior sales agreements.
Natural gas prices for several projects have already been set with gas sales agreements.
If the low-oil-price environment is prolonged, PTTEP is likely to be further affected in future periods, Mr Phongsthorn said.
PTTEP is considering revising its investment plan by maximising efficiency of capital management and postponing drilling plans for selected projects.
Last year, PTTEP won the auction to renew its concession with the Mineral Fuels Department in the Erawan field (G1/61) and Bongkot field (G2/61), both in the Gulf of Thailand.
The company will continue to deliver as planned a combined natural gas volume of 1.5 billion cubic feet per day as per the production-sharing contracts starting in 2022-23.
The mass coronavirus infections and night-time curfew order have prompted PTTEP to launch a business continuity management plan to ensure uninterrupted supply of petroleum by strictly increasing safety measures at all operating sites upcountry and overseas and implementing a work-from-home policy for employees where possible.