Phongsthorn Thavisin, PTTEP President and Chief Executive Officer, said the company recorded recurring net income in the first quarter of this year at USD 374 million (equivalent to THB 11,847 million) increasing by 23% from USD 304 million (equivalent to THB 9,578 million) in the same period of 2018. However, profits from non-recurring items was USD 20 million, decreasing from USD 119 million in the same reported period last year. This was mainly driven by a less appreciated Thai Baht against the US Dollar, which mostly have no impact to company's cash flow. Consequently, PTTEP reported net income for the first quarter this year at USD 394 million (equivalent to THB 12,479 million), decrease by 7% from USD 423 million (equivalent to THB 13,381 million) in the same period last year.
For the first quarter of 2019, the Company's total revenues were USD 1,428 million (equivalent to THB 45,147 million), increased by 15% from USD 1,240 million (equivalent to THB 39,105 million) in the same period last year. This was primarily driven by improved average sales volume to319,230 barrel of oil equivalent per day (BOED), comparing with 293,099 BOED in the first quarter of 2018 as a result of the acquisition of additional participating interests of the Bongkot Project, coupled with higher average selling price from USD 44.01 per barrel of oil equivalent (BOE) to USD 46.21 per BOE. Consequenly, PTTEP has operating cash flow of USD 943 million (equivalent to THB 29,815 million) and EBITDA Margin of 76% at the end of the first quarter.
"PTTEP is moving forward with the new "Expand & Execute"strategy which we've actively implemented since earlier this year and have successful achieved several major milestones. We marked our move in the Middle East by being awarded two offshore exploration blocks, along with our global strategic partners, in one of the world's highly petroleum potential locations, the United Arab Emirates. We also extended our footprint in Southeast Asia by acquiring Murphy Oil Corporation's business in Malaysia. This will help boost sales volume and sales revenue immediately. PTTEP were awarded additional two offshore exploration blocks in Malaysia as well. The aforementioned investments will help PTTEP grow in both short term and long term." Phongsthorn said.
Building on the success with the new "Expand & Execute" strategy
For the Expand part in the "Expand & Execute" strategy, PTTEP will mainly focus on investing in the region where it has expertise and experience, especially in Southeast Asia. Meanwhile, the Middle East is considered as a petroleum prolific area that PTTEP will invest in partnership with strategic alliances. Furthermore, the company will move actively forward in developing artificial intelligence (AI) and robotics business through AI and Robotics Ventures Company Limited (ARV), to increase the efficiency in petroleum's exploration and production business, provide better safety in operations, minimize impacts on environment and reduce cost of operations.
Under the Execute part, increasing production volumes and adding values to its existing projects are PTTEP's priorities. This includes increasing petroleum reserves by accelerating exploration's activities and the Final Investment Decision (FID) of key pre-development projects in the pipeline such as Mozambique Rovuma Offshore Area 1 project. In addition, PTTEP will efficiently carry at the transition of Bongkot and Erawan fields to ensure a consistency of natural gas production, while manage the production cost in order to increase its competitiveness with technologies and innovations.
PTTEP Operation Update for the first quarter of 2019
As of the first quarter of 2019, PTTEP's domestic and international operations altogether sum to 46 projects in 12 countries, with key project highlights as follows;
Projects in Thailand
The Bongkot Project maintained the production plateau as planned. In February 2019, PTTEP signed the Production Sharing Contracts (PSCs) of Block G1/61 (Erawan field) and Block G2/61 (Bongkot field), with the production starting from 2022 and 2023 to 2032 at minimum production volume of 800 million cubic feet per day (MMSCFD) and 700 MMSCFD respectively. The S1 Project has continuously drilled additional production wells to maintain production levels.
Projects in Southeast Asia
The Zawtika Project completed production drilling in Phase 1C with 4 production platforms and has continuously drilled additional wells to maintain production plateau. In Q1/2019, the natural gas sales volume averaged 290 MMSCFD (approximately 46,431 barrels of oil equivalent per day or BOED). The Myanmar M3 Project is awaiting approval for the Field Development Plan that was proposed in Q4/2018, from the Government of Myanmar. The Myanmar MD-7 Project is in preparation for drilling plan for an exploration well in Q4/2019. The Myanmar M11 Project is also in preparation for drilling plan of an exploration well in Q2/2019 and is seeking partner to manage the project's risk. The Myanmar MOGE 3 Project completed the drilling of an exploration well in January 2019 and is in process of drilling the second exploration well as well as preparing for 2 exploration wells drilling in 2019. For Malaysia, the Sarawak SK410B Project is currently under drilling preparation of an appraisal well in 2019. The Sarawak SK417 Project and Sarawak SK438 Project are currently evaluating the petroleum potential. The PM407 Project and PM 415 Project signed the Production Sharing Contracts on 21 March 2019 and are currently in the evaluation process of the petroleum potential. For offshore Vietnam, the Vietnam B & 48/95 Project and the Vietnam 52/97 Project are in the negotiation process on commercial terms in order to push forward the Final Investment Decision (FID).
Projects in the Middle East
The Abu Dhabi Offshore 1 Project and Abu Dhabi Offshore 2 Project, signed the concession agreements on 12 January 2019, are currently evaluating the petroleum potential.
Projects in the Americas
The Mariana Oil Sands Project, located in Canada, is under the evaluation of appropriate project development plan. The Barreirinhas AP1 Project and the Brazil BM-ES-23 Project are currently evaluating the petroleum potential. The Mexico block 12 (2.4) Project and the Mexico block 29 (2.4) Project are currently evaluating the petroleum potential.
Projects in Australia
PTTEP Australasia Project comprises of 8 permits. The Montara Field, which is in the operatorship transfer phase, is awaiting for approval from the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) which is expected to be within Q2/2019. The Cash Maple Field is under the evaluation of appropriate development plan and is seeking partner to manage the project's risk. The AC/P54 Block has completed the drilling of the exploration well in Q1/2019 with the successful results. The well encountered gas and condensate with the net pay thickness around 34 meters, which the result will be further incorporated in development planning of Cash Maple field.
Projects in Africa
The Algeria Hassi Bir Rekaiz Project has started development on Phase 1 following the conclusion with partners and its approved development plan by the Algerian government. The development activities has commenced since March 2019 with the expected first oil production for the initial phase around 10,000-13,000 barrels per day (BPD) in early 2021 and the second phase production capacity ramping up to around 50,000-60,000 BPD in 2025. The Mozambique Rovuma Offshore Area 1 Project has now finalized and signed the long-term LNG Sale and Purchase Agreements (SPAs) with various buyers for 9.5 MTPA per year, which is sufficient for project finance with financial institutions. In addition, the project has been granted the approval from the government and Area 4 Project (near-by project), as the first mover of the development of Onshore LNG Plant in Mozambique, to lead the construction of the shared facilities; Material Offloading Facility and LNG Jetty constructions. The FID is expected in Q2/2019 with the planned first phase of production at 12.88 MTPA starting in 2024.