PTTEP Second-Quarter Profit Rises 38% on Higher Oil, Gas Prices

PTT Exploration & Production Pcl, Thailand’s biggest publicly listed explorer, said profit rose 38 percent in the second quarter on higher prices and increased sales of oil and gas.

Net income was 10.7 billion baht ($344 million), or 2.67 baht per share, compared with 7.7 billion baht, or 2.33 baht, a year earlier, the company said in a regulatory filing today. Revenue rose 6 percent to 55.3 billion baht.

PTTEP has expanded its investments to 45 projects in 12 countries, including last year’s acquisition of Cove Energy Plc’s oil and gas assets in Mozambique, to diversify output. The company said today that sales from its Montara field off the coast of Australia will start in August and the Zawtika project near Myanmar will begin commercial production in the first quarter of next year.

“PTT Exploration’s normalized earnings and production in second quarter was in line with most analysts’ expectation,” said Sutthichai Kumworachai, an analyst at Maybank Kim Eng Securities (Thailand) Pcl. “Earnings will rise further in the second half because of higher oil and energy prices.”

PTTEP shares rose 1.3 percent to 162.5 baht after the announcement, which came during the midday break in Bangkok. The stock has fallen 1.2 percent this year, compared with a 1.1 percent drop in the 68-member Bloomberg World Oil & Gas Index.

PTTEP sold 292,712 barrels of oil equivalent per day in the period, 11 percent more than a year earlier. Average petroleum prices rose to $65.16 per barrel, from $64.17 in the same period last year.

Currency Volatility

PTTEP’s earnings volatility has increased because exchange-rate fluctuations between the baht and the U.S. and Canadian dollars have distorted asset values and related tax rates, Kasikorn Securities Pcl said in a July 19 research note. The company reports earnings in U.S. dollars and then translates its financial statements into baht.

PTTEP reported comprehensive income of 19.8 billion baht in the second quarter after accounting for exchange differences on translating its earnings. The company’s net income compared with a 13.8 billion baht average of 11 analyst estimates in a Bloomberg survey.

Expenses fell 4 percent to 29.5 billion baht because of a drop in exploration spending. Foreign-exchange losses jumped 58 percent to 2.2 billion baht because of currency volatility, including changes in PTTEP Canada Ltd.’s dollar-denominated loans caused by the depreciation in the Canadian dollar.

“The rest of 2013 is characterized by uncertainties and volatility in economic conditions and oil prices,” PTTEP said in a separate statement. “This unpredictable environment impacts energy costs and Thailand’s domestic economy.”

PTTEP said it “has readied action plans” in key Thai projects to ensure full-year production meets its targets, after output grew less than expected in the second quarter.

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