A large drop in revenue and profit is compelling SET-listed PTT Exploration and Production Plc (PTTEP) to focus on diversification into artificial intelligence, robotics and the supply and value chain of liquefied natural gas (LNG).
The shift in priorities was highlighted yesterday as PTTEP, the oil drilling arm of national oil and gas firm PTT, reported its performance for the first six months of 2020.
Revenue in the second quarter tumbled 30% year-on-year to US$1.1 billion. Net profit stood at $134 million, a 51% drop compared with the same period last year, PTTEP said.
The declines were driven by lower sales volume and sales prices as a result of weakening energy demand and falling global crude oil prices.
PTTEP president and chief executive Phongsthorn Thavisin said the company is operating its wholly owned AI and Robotics Venture Co (ARV) in hopes of strengthening PTTEP's businesses and increasing competitiveness.
The company plans to expand ARV, now in the early stages of development, in four core areas: subsea, agricultural, medical and drone inspection.
ARV is set to strengthen the exploration and production (E&P) business by optimising development and production plans for cost competitiveness.
Some ARV jobs will facilitate oil drilling operations, such as maintenance and repair, which can help PTTEP save a great deal of budget, Mr Phongsthorn said.
PTTEP also plans to achieve an annual production growth rate of 5% in E&P business until 2030, he said.
In the LNG business, PTTEP is considering joining forces with Global Power Synergy Plc, a power generation arm of PTT, to develop gas-to-power projects. PTTEP is also conducting a feasibility study to start a gas-to-power business in Myanmar.
In the long term, ARV is set to generate 20% of total net profit by 2030.
Despite its unimpressive earnings in the second quarter, PTTEP was able to maintain unit cost and cash cost at $30 and $14 per barrel of oil equivalent, respectively.
During the first half of 2020, PTTEP saw revenue drop 7% to $2.78 billion and net profit fall 51% to $409 million.
The company generated $1.2 billion in cash flow from operations and maintained its earnings before interest, taxes, depreciation and amortisation margin at 70%.
During the second quarter, PTTEP recognised an impairment loss on assets of $47 million.
The loss was centred on the company's Mariana Oil Sands Project in Canada after a forecast of low oil prices in the long term, making the project difficult for commercial development.