PTT Exploration and Production (PTTEP) remains confident to move forward with its 2020 business plan under the current global oil price crisis and the spread of coronavirus (COVID-19).
The reasons are its strong financial position and high liquidity attributed to its competitive cost structure, oil price hedging and secured natural gas selling prices as per sales agreements. The company is ready to be flexible with its investment plan to cope with challenging circumstances in the future.
Mr. Phongsthorn Thavisin, President and Chief Executive Officer of PTTEP, said due to the COVID-19 outbreak and the global oil price collapse of over 60% since March 2020, PTTEP’s volume this year would not experience a significant impact. The average sales volume previously targeted for this year at 388,000 barrels of oil equivalent per day (BOED) is expected to decrease by less than 5% as sales volume of natural gas, which represents the majority of PTTEP’s products, has already been secured in accordance with the sales agreement.
On the average selling price front, crude oil sales, which accounts for roughly 30% of total sales volume, will be directly impacted by the oil price volatility although with insulation from partial crude price hedges in place.
Meanwhile, natural gas prices of several projects have already been determined in accordance with the gas sales agreements. However, if the low-oil price environment is prolonged, it will likely continue impacting PTTEP in future periods.
“Another strength of PTTEP is that we are now a low-cost structure oil and gas company when compared with our peers as we prioritized of our efforts in the past 4-5 years during the global oil price crisis to streamline our cost structure.
In addition, the majority of our investments are focused in Thailand, Malaysia, Myanmar and the Middle East, which are considered to be areas with low operating costs compared to other regions.
As a result, the company’s operating cash flows as well as financial status remain robust, evidencing our ability to sustain for at least 2-3 years in this period of volatility. However, to ensure we are well-positioned to navigate a possible prolonged low-oil price environment, PTTEP is considering revising its investment plan such as maximizing efficiency of capital management and postponing drilling plans of selected projects. Even though some plans have to be revisited, our utmost priority is to ensure no impact to our future operations and no interruptions to the energy supply of the country,” said Phongsthorn.
The investments in G1/61 (the Erawan field) and G2/61 (the Bongkot field) will continue as planned in order to deliver a combined natural gas volume of 1,500 million cubic feet per day (MMSCFD) as per the Production Sharing Contracts (PSC) starting in 2022-2023.
Phongsthorn continued that the COVID-19 outbreak has affected all industries extensively. PTTEP has implemented the Business Continuity Management (BCM) plan to ensure uninterrupted supply of petroleum to the country. The company also sets a very high priority on preventing the spread of the virus on organization grounds. At the head office, PTTEP implements the Work from Home policy, while strictly increasing safety measures at all operating sites both offshore and onshore, in upcountry and overseas. The safety measures also extend to the company’s stakeholders as PTTEP postponed the 2020 Annual General Meeting to reduce the risk of the virus spreading while keeping dividend payment unchanged.
PTTEP has actively sponsored frontline organizations that are handling the outbreak by, for example, donating fabric masks to Chatuchak District office for distribution to people in-need and donating alcohol to Chulalongkorn University to produce hand sanitizers for the public.
The company also supports academic institutions and hospitals in developing innovations and solutions that will reduce and contain the spread of the virus, including Chula COVID-19 Strip Test, VISTEC Test Kit Diagnostics, Mobile Negative Pressure Chamber, as well as provides funding for ambulances and ventilators.
“I believe that every organization in Thailand shares the same goal to ensure the safety of the Thai people. PTTEP stands ready to collaborate with the public sectors and various other organizations at our full capabilities.
At the same time, we ensure that PTTEP will continue our mission of petroleum exploration and production to deliver reliable energy sources for Thailand and for Thai people, as we together fight to overcome this difficult situation” Phongsthorn said.