Thailand's Largest Oil and Gas Explorer Cuts 2016 Capex by 18 Percent


NOVEMBER 19, 2016

Bangkok. Thailand's largest oil and gas explorer, PTT Exploration and Production, said Friday (18/11) it has slashed its capital spending budget 18 percent this year to $1.4 billion, as it reduces exploration and production expenses and postpones high-risk projects.

The company had earlier planned to spend $1.7 billion this year.

It has cash on hand of $3.7 billion and plans to spend most of it on acquisitions of oil and gas assets that are producing or near-term producing in Southeast Asia, Yongyos Krongphanich, senior vice president for finance, said during earnings presentation, without identifying specific targets.

The company expects 2016 average gas price to be about $5.5 million British thermal units, based on average Dubai crude oil price in fourth quarter of $45 a barrel, he said.

PTTEP, the exploration arm of PTT, has said it was keen to buy stakes in gas blocks in Myanmar from Chevron.

Hit by weak oil prices, PTTEP has focused on cost-cutting and expects its cost per unit this year to drop 29 percent to $31 a barrel, he said.

To increase its petroleum reserves in the short to medium term, PTTEP will focus on projects in Mozambique, Algeria and Contract 4 oilfield in the Gulf of Thailand, Yongyos said.

PTTEP has an 8.5 percent stake in Mozambique's Rovuma Offshore Area 1, which is operated by Anadarko Petroleum, and expected to make final investment decision in late 2017, he said.

The company also aimed to raise output at Contract 4 in the range of 20,000-30,000 barrels per day and speed up development at Algeria HBR after promising well appraisal results, he said.

In the long term, PTTEP is studying feasibilities to reduce costs at its Mariana oil sands project in Canada and also discussed with nearby operators at Cash Maple gas field in Australia for joint development, he said.

PTTEP, along with PTT group, has cut its operating costs and will delay new investments in foreign projects to minimize the impact from declines in global oil prices.