PTT/GC/EP: Rooms to Play with Near 20% Upside after Saudi Cuts Oil Production by Half!

September 16, 2019, the first trading day after two of Saudi Arabia’s Aramco oil plants were attacked by unknown drones which caused the country to shut down more than half of their production, SET Energy sector is the leader in moving the index while PTT Public Company Limited (PTT) rises to the most active in value at 4.3 billion baht.

The stock that always pops up into investors mind when it comes to oil price is PTT along with its two subsidiaries, PTT Global Chemical Public Company Limited (PTTGC) and PTT Exploration and Production Public Company Limited (PTTEP).

 

As of 15:02 local time in Bangkok, the share price of PTT records at ฿46.75/share, increased ฿1.25/share or 2.75%. PTTGC’s share price records at ฿56.00/share, increased ฿1.25/share or 2.28% while PTTEP records at ฿126.00/share, increased ฿3.50/share or 2.86%.

According to the consensus, there are some upside on these three shares, giving rooms for investors to play. PTT’s consensus is ฿51.16/share (upside 9.4%). PTTGC’s consensus is ฿63.02/share (upside 12.5%), and PTTEP’s consensus is ฿150.87/share (upside 19.7%)

 

Krungsri Securities stated that energy shares will be boosted by the spike in crude prices following drone attacks on two Saudi oil facilities, which is estimated to reduce oil & gas supply by 5.7m bpd or 50% of the Kingdom’s capacity, and 5% of global supply.

Oil plays – attacks on Saudi oil facilities could boost earnings: Geopolitical risks have escalated in the Middle East after two major oil fields operated by Saudi Aramco, the world’s largest crude producer, were hit by drones Saturday. That has led to the temporary production suspension of operations and drove up crude prices by US$5.5-6/bbl (+10%) this morning. The two facilities have a combined capacity of 8.45m bpd, equal to 50% of Saudi’s total capacity and 5%of global crude production capacity.

The suspension will immediately tighten global supply (authorities are determining the extent of damage) and bolster oil, refinery, and petrochemical plays. Top picks are PTTEP, TOP, and IVL. The other interesting stock is PTTGC (gas feedstock would be cheaper than naphtha).