Thai energy firm seeks new assets
BANGKOK: The Asian energy companies sitting on the largest hoard of cash outside China are ready to put it to use.
Thailand’s PTT Exploration and Production Pcl (PTTEP) and its parent company have US$11 billion (RM48.73 billion) combined in cash and marketable securities, such as bonds and other short-term investments.
The explorer was ready to spend from its portion on projects and exploration acreage to rescue declining oil and gas reserves, according to chief executive officer Somporn Vongvuthipornchai.
PTTEP was eyeing early-life producing assets or projects that were already sanctioned and ready for development, he said.
It’s also looking to work with its parent, PTT Pcl, to invest in liquefied natural gas plants, which would help feed the country’s growing demand.
“We’ll have to rely on mergers and acquisitions to maintain our growth,” said Somporn. “We’re looking at opportunities in the few hundred million to US$1 billion range.”
There was no such hunger when Somporn took the reins of the upstream company in October 2015. Oil prices had already fallen from the US$100 a barrel range into the US$60s, and he watched as over his first six months they cratered below US$30 to hit the lowest in more than a decade.
He kept the firm focused on weathering the downturn by cutting costs and investments.
Meanwhile, proved reserves have fallen from the equivalent of 1.1 billion barrels of oil in 2009 to 695 million last year. That will last just five years at its current production rate.
“They have a relatively short reserves life and it’s pretty clear they’re going to have to acquire to grow as a firm,” said Neil Beveridge, an analyst with Sanford C. Bernstein. He has a neutral rating on the firm. Bloom berg