PTTEP posts 21% Q1 net profit on oil prices, higher baht

SET-listed PTT Exploration and Production Plc (PTTEP), an oil and gas drilling firm, posted a substantial rise in net profit buoyed by higher global oil prices and lower income tax expenses resulting from the baht appreciation.

The company reported a first-quarter net profit of US$423 million (13.4 billion baht), up 21% year-on-year and 46% quarter-on-quarter, primarily thanks to the continuous recovery of global oil prices and effective cost management, said PTTEP in its statement.

The average selling price (ASP) was supported by rallying oil prices, leading to a 5% increase in ASP from US$41.74 per barrel of oil equivalent (BOE) in last year’s fourth quarter to $44 per BOE, said PTTEP in its statement.

The spike in oil prices also contributed to an increase in total revenue to $1.24 billion, up 14% year-on-year but down by 2% quarter-on-quarter.

The company also posted non-recurring gains mainly attributed to gains and tax savings of $138 million, arising from baht appreciation relative to the greenback during the first three months.

“PTTEP was able to sustain a competitive unit cost at $29.20 per BOE resulting from our cost management,” the statement said.

“We started this year with impressive operating results. In addition, we have been able to expand our investments through the acquisition of more stakes in the Bongkot project, which will immediately add to our sales volume and revenues after the transaction is completed. We were also successful in bidding for exploration blocks in high-potential areas,” said chief executive Somporn Vongvuthipornchai.

PTTEP is also gearing up to bid for the Bongkot and Erawan gas fields after the National Energy Policy Committee recently announced the terms of reference, said Mr Somporn.

The two gas block concessions will expire soon, in 2022 and 2023.

Applications are scheduled to be filed with the Mineral Fuels Department from April 24, while preliminary qualifiers will be shortlisted and announced by May.

The department will allow participating bidders four months to pass preliminary qualifications by making information about the gas blocks available before auction proposals are due to be filed in late September.

The department will take about 2½ months to consider the proposals and will announce the winners by late December this year. A contract is expected to be signed by February 2019.

PTTEP’s domestic and international operations consist of 38 projects in 10 countries as of the first quarter.

The company expects Dubai crude prices to be in a range of $60-70 per BOE despite pressure from rising US crude supply, with the current output of over 10 million barrels per day.

Bullish factors include a strong commitment to cut production between Opec and non-Opec countries, with market speculation on an extension of the output reduction agreement beyond 2018, said the statement.

On the other hand, there are several factors keeping a lid on global crude prices, including the US monetary policy and its trade measures, particularly its import tariffs on Chinese goods, which could result in a trade war and have an adverse effect on global economic growth, it said.

PTTEP shares closed yesterday on the SET at 132.50 baht, down 1.50 baht, in trade worth 2.43 billion baht.