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PTTEP reports a net profit jump of 60%

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Oilfield Technology,

  • Achieved target sales volume at 299 206 boed.
  • Reduced unit cost by 5% to US$29.05 per boe resulted from continued cost management.
  • Focus on investment expansion and increasing petroleum reserves with strong cash on hand of US$4468 million.

PTT Exploration and Production Public Company Limited (PTTEP) reported 2017’s net profit at US$594 million (equivalent to THB 20 579 million), soaring by more than 60% despite the impairment recognition of US$558 million from the development plan adjustment in the Mariana Oil Sands project. earnings before interest, taxes, depreciation and amortisation (EBITDA) margin maintained at 70%, reflecting the success in effective cost management to enhance competitiveness. Improved global crude prices also delivered the positive results to PTTEP’s finanical position, allowing the company to push forward the Final Investment Decision (FID) in three pre-development projects. Other key activities this year include the participation in the expiring concessions bidding process, mergers and acquisition deals of targeted projects in Southeast Asia and the Middle East, and more exploration projects in high potential areas in order to increase petroleum reserves to accommodate long-term growth.

Somporn Vongvuthipornchai, CEO of PTTEP, said the company in 2017 generated total revenues of US$4523 million (equivalent to THB 153,198 million), up from US$4339 million (equivalent to THB 152 745 million) in 2016. The company saw recurring net income of US$836 million, an 80% increase from a year earlier. The increment was mainly due to recovered average selling price of US$39.20 per boe, from US$35.91 per boe, while unit cost was lowered from US$30.46 per boe to US$29.05 per boe. The average sales volume last year, however, was impacted from lower demand for natural gas from projects in the Gulf of Thailand. PTTEP mitigated the impact by increasing condensate and crude oil volumes, which finally helped the company to maintain the average sales volume as planned at 299 206 boed. By end of 2017, PTTEP could maintain strong liquidity position with cash on hand of US$4468 million (equivalent to THB 146 008 million).

Based on the company’s performance and financial status in 2017, the Board of Directors on January 26, 2018 proposed the payment of 2017 dividend at THB 4.25 per share. PTTEP paid the interim dividend for the first six months operating results at THB 1.50 per share, while the remaining dividend will be paid at THB 2.75 per share on April 12, 2018 after obtaining approval from the 2018 Annual General Shareholders’ Meeting. The record date of the company’s share registration for the right to receive the dividend is scheduled on February 9, 2018.

“The operating results in 2017 proved that despite the volatility and changes in business environment in the oil and gas industry, we are resilient and able to adjust our business plan and strategy so that we can maintain our competitiveness and profitability. Moreover, we’ve completed the organisation restructuring last year, making us ready to move forward for new business that we hope to create fair returns to the shareholders in the longer term, and to achieve our aspiration in being a sustainable organization. Under the reorganisation, a new business unit was set up to review potential areas where we can make new investments. The Business and Organisation Transformation Group was also created to bring a new revolution in the way we work in order to thrive in the age of disruptive technology by applying digital technology to the entire corporate’s working system,” he said.

2018 Investment budget earmarked at US$3,103 million with plan to make FID in 3 projects

Mr. Somporn continued that PTTEP in 2018 allocated total expenditure at US$3,103 Million (equivalent to THB 105 510 million), of which US$1771 million (equivalent to THB 60 227 million) is Capital Expenditure (CAPEX) and the remaining US$1332 million (equivalent to THB 45 283 million) is Operating Expenditure (OPEX). This year’s CAPEX will be mostly spent to maintain the production level at 302 000 BOED, primarily focusing on increasing crude oil and condensate production volumes. The unit cost will also be sustained at around US$30 per BOE to strengthen PTTEP’s competitiveness.

PTTEP’s ambitious business plan for this year to add more production in the future is to accelerate the FID of 3 key pre-development projects including the Mozambique Rovuma Offshore Area 1 project, the Algeria Hassi Bir Rekaiz project and the Vietnam Block B & 48/95 and Block 52/97 project. Planned to commence first gas in 2023 with production capacity of 12 million t per annum, the Mozambique Rovuma Offshore Area 1 Project has already started the resettlement activity and is waiting for the approval of development plan. The company late last year submitted the development plan of the Algeria Hassi Bir Rekaiz project to the Algerian Government and anticipates the approval in the first quarter of this year. The Vietnam Block B & 48/95 and Block 52/97 project is targeted to produce first gas in 2021 with capacity of 490 million ft3/d.

“This year, PTTEP will absolutely join the bidding process of the expiring concessions – Bongkot and Erawan – in order to enhance our petroleum reserves and production volumes. This is critical for building the country’s energy security. Apart from that, we will keep our eyes open for the investment opportunities in the strategic locations including Thailand, Southeast Asia and the Middle East. We also have plans to expand our investment along the gas value chain in countries where we can build our competitive advantage upon our upstream presence” he added.

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