PTTEP’s 1Q Profit Falls 30% from Baht Depreciation, still Showing Strong Asset Status

PTT Exploration and Production Public Company Limited (PTTEP) has reported its 1Q20 consolidated financial statement through the Stock Exchange of Thailand as follows;

PTTEP reported a net profit of 8,612 million baht in the first quarter of 2020, decreased 30.99% from a net profit of 14,479 million baht in the same period of last year. The decrease was due to the increase of total expense of $462 million which was was primarily due to an increase in income tax expense of $344 million from a depreciation of Thai Baht against US Dollar at 2.52 Baht per USD in 1Q20 (1Q19: Thai Baht appreciated against US Dollar at 0.64 Baht per USD), and increase of sale revenue.

In addition, depreciation, depletion and amortization expenses increased $77 million. However, total revenue increased $343 million which was primarily due to increases in sales revenue of $154 million and recognition of gain on financial derivatives of $222 million in 1Q20 (1Q19 : recognized loss of $82 million).

 

When compared the average sales volume for 1Q20 to 1Q19 of 319,230 BOED, the average sales volume increased primarily from Malaysia Project and Partex Group from business acquisition while the average selling price decreased to 44.81 USD/BOE (1Q19: 46.21 USD/BOE).

The profit from normal operation for 1Q20 was $290 million, a decrease of $84 million when compared with the profit for 1Q19 of $374 million. The reason was an increase in total expenses primarily due to an increase in the depreciation, depletion and amortization expenses of $77 million from an increase of sales volume from Malaysia Project and Partex Group from business acquisition in the second half of 2019 and Bongkot Project which had higher average sales volume due to the decrease of shutdown days from maintenance activities.

Operating expenses increased $62 million in accordance with increase in sales volume from Malaysia Project and Partex Group from business acquisition as well as an increase in income tax expense of $50 million from an increase in sales revenue. However, sales revenue increased by $154 million due to an increase in average sales volume, while the average selling price decreased.

With the consideration of the loss from non-recurring items for 1Q20 was $15 million, a decrease of $35 million when compared with the profit for 1Q19 of $20 million. The reason was primarily due to an increase in income tax expense relating to changes in foreign exchange rate of $294 million from a depreciation of Thai Baht against US Dollar. However, there was a gain on financial derivatives of $222 million in 1Q20, while PTTEP recognized losses from such transactions of $82 million in 1Q19, mainly from oil price hedging instruments and forward contracts.

 

PTTEP has a low-cost structure compared to peers after the stream line of cost structure, in response to the previous oil price crisis in the past 4-5 years. The unit cost of PTTEP was then reduced from $40 per barrel of oil equivalent to $30 per barrel of oil equivalent or approximately 30%. The majority of our investments are in Thailand, Malaysia, Myanmar, and the Middle East where the operation cost is relatively low compared to other regions of the world. With the cash cost of approximately $15 per barrel of oil equivalent, PTTEP can maintain solid operating cash flow with earnings before interest, taxes, depreciation, and amortization (EBITDA Margin) at 65-70 percent.

As at March 31, 2020, PTTEP had total assets in the amount of $22,364 million, an increase of $162 million from total assets as at December 31, 2019 of $22,202 million.