“Phongsthorn” Aims for More Investment in Asia, U.A.E., Oman, Targeting 400KBOED in 2020

Thailand’s state-run oil and gas explorer PTT Exploration & Production Pcl (PTTEP) plans to carry out more acquisitions this year and next as it seeks to boost sales. The goal is to increase sales to 400,000 barrels per day in 2020, up from about 320,000 currently.

Mr. Phongsthorn Thavisin, President and Chief Executive Officer of PTTEP, said in an interview on Monday in Lisbon that the exploration unit of state-run PTT Pcl (PTT), Thailand’s biggest company, ended last year with more than $4 billion in cash and equivalents, and has been on the hunt for the past few years to use that war chest to replenish declining reserves.
Mr. Phongsthorn has also informed, “We have a few more deals that we are looking at and if there’s a match in strategic and financial terms, and everything fits, we will go for it, and after that, we will try to maintain or increase production through organic growth.”

On Monday (17 June 19), PTTEP agreed to buy Calouste Gulbenkian Foundation’s Partex unit for about $622 million. In March, PTTEP used some of its cash reserves to purchase oil and gas assets in Malaysia from Murphy Oil Corp. for $2.13 billion. In 2018, it spent $750 million to pick up Royal Dutch Shell Plc’s 22% stake in an offshore gas field in the Gulf of Thailand.
“We still have some cash left,” said Mr.Phongsthorn. A possible acquisition may take place “sometime this year or maybe at the beginning of next year” in Thailand, Malaysia, Myanmar, United Arab Emirates or Oman, he said.

The Partex acquisition would boost PTTEP’s production by about 5% and reserves by about 6%, Citigroup Inc. analysts including Duke Suttikulpanich said in a note Monday, June 17, 2019. The deal, which is expected to be complete by the end of this year, brings in about 65 million barrels of proved and probable reserves, as well as 16,000 barrels a day of petroleum sales. That makes the acquisition cost about $9.60 per barrel of oil equivalent, in the middle of the range of recent oil and gas transactions, according to the analysts.
In addition to the note the Citigroup analysts said “The announcement adds to the positive news flow on PTTEP from a production and reserves perspective, and at first glance, the valuation of US$9.6 per barrel of oil equivalent does not look overly excessive.”

Mr.Phongsthorn said oil prices at around $70 a barrel were appropriate for both consumers and producers. Brent crude, the global benchmark, has averaged about $66 so far this year, down from 2018’s average of nearly $72. “I think that everyone has learned from the past,” said Mr.Phongsthorn, referring to oil producers. “They know that if they push oil prices too high that consumption will be low and that if oil prices are too low they can’t survive.”