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Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
 Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their generally low cash production costs and strong liquidity. Fitch expects companies to further reduce capex if oil prices remain at current levels for a longer period.
Fitch further noted that, the fall of oil prices below USD50 per barrel is hurting cash generation and affecting investment decisions of companies in the sector. However, the impact on operating cash generation varies across Fitch-rated companies. South-east Asian companies, such as PTT Public Company Limited that produce more gas (60% or more of total production), will be less affected immediately compared with their north and south Asian counterparts that are more liquids-heavy. Liquids at companies like Petrochina, CNOOC, Sinopec, Oil India Ltd and MIE Holdings Corporation account for over 70% of total production in barrels of oil equivalent (boe) terms. Companies that hedged the prices of part of their oil production benefited from the protection in 2014, but they are likely to be exposed to market prices in 2015 because these types of hedges typically do not cover long periods.
Low cash production costs and the largely conventional upstream projects of the rated Asian oil companies provide them with additional flexibility in today's low oil price environment, said Fitch. While all-in costs (cash production costs plus depreciation, depletion and amortisation, or DD&A) are important in the long run, the relatively longer production lives of conventional oil and gas wells provide additional capex flexibility during periods of low hydrocarbon prices. Lifting costs in US dollars per boe are typically in the teens for the rated companies in Asia. Lower production tax requirements stemming from low realised prices, especially in China, also reduce the net impact of the oil price rout on operating cash generation. Companies are also looking to reduce opex, which can squeeze margins of oil field services companies.
Over the longer term though, with all-in costs exceeding USD35/boe for the rated Asian names, the economic viability of projects will be impaired if there is no meaningful increase in oil prices. At current prices, we expect certain high-cost projects to be delayed. These could include ventures in the Canadian oil sands and certain enhanced oil recovery projects on mature-depleting fields in Asia. Sponsor companies could also delay final investment decisions on some large projects with long lead times, such as some green field LNG projects, to preserve cash reserves.
Capex flexibility also varies across the rated companies. CNOOC and PTT have relatively low developed reserve lives of around four years, which gives them less flexibility to curtail development capex for a long period. The state-owned companies are unlikely to cut domestic capex drastically because they are mandated by states to raise production to supply their growing economies. In addition, PTT has lagged considerably behind its Asian peers in reserve replacement, with several large acquisitions not yet adding to proved reserves. For most of the other rated oil producers, though, reserve replacement has been robust (near 100% or above) in recent years, adding further to their flexibility. We also see the prospect of reserve write-downs for some companies if oil prices do not meaningfully improve by the time reserve reports are updated over the next few months.
Rated Asian oil companies, especially the state-owned ones, have very strong balance sheets, with low financial leverage and substantial cash balances. We expect these companies to have good financial flexibility arising from their good liquidity (large cash balances and strong access to capital). In India, we expect the government to reduce the substantial discounts (USD56/barrel) the two state-controlled upstream companies, Oil India and ONGC, have to provide to refiners, improving their cash margins under low oil prices. Malaysia's PETRONAS has a very strong balance sheet. However, the high dividends required by the Malaysian government remains a challenge, although the company is pushing to lower this burden.
According to Fitch, Fitch is also expect cash-rich companies to take advantage of attractive M&A opportunities, although their approach is likely to be measured to ensure their cash balances remain strong to deal with the uncertain oil price outlook. Asian companies are likely to focus on mid-sized assets that are producing or close to production that put less stress on their balance sheets.
Smaller companies like MIE of China have less financial flexibility. While MIE's lifting costs of around USD10/boe are low, it has relatively weaker access to funding than its larger peers, especially when oil prices are low. However, MIE's cash on hand at end-September 2014 (plus expected proceeds in 4Q14 from some asset disposals) and unutilised credit lines provide adequate short-term liquidity, while its major debt maturities are several years away.
Our approach with oil and gas companies is to rate through the cycle, Fitch says in its latest analysis report. While strong production, weak demand growth and high inventory levels put significant near-term pressure on oil prices, high global marginal production costs and capex cuts leading to reduced production should over time result in a more balanced market that supports higher prices for oil. While low oil prices and high capex requirements will dent the credit metrics of Asian oil producers, ratings of many of these companies, especially the state-owned companies whose ratings benefit from state linkages, remain resilient.
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Tuesday, 13 December 22
AUSTRALIA TO CAP PRICES OF COAL, GAS TO DRIVE DOWN ENERGY BILLS - REUTERS
Australia will cap coal and gas prices for a year in a bid to shave utility bills for households and businesses hit by soaring costs because of the ...
Tuesday, 13 December 22
YANCOAL AUSTRALIA TO PREPAY $459 MLN DEBT AS RECORD COAL PRICES BOOST CASHFLOWS - REUTERS
Coal miner Yancoal Australia Ltd. said on Friday it intended to prepay $459 million of its debt on or around Dec. 16, as elevated coal prices were ...
Tuesday, 13 December 22
WHY COAL LEADS THE RISE IN COMMODITIES THIS YEAR - MARKETWATCH
This year marked a resurgence for coal, often known — and loathed — by environmentalists as the dirtiest energy source, with prices mor ...
Thursday, 08 December 22
BIMCO TO REVISE WAR RISK CLAUSES
Work to revise the BIMCO War Cancellation Clause 2004, the BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013) and the BIMCO War Risk ...
Thursday, 08 December 22
COAL ROYALTY PAYMENTS BOOST AUSTRALIAN STATE'S BUDGET FORECAST - REUTERS
Australia’s Queensland state on Wednesday forecast a record surplus for the current financial year, largely driven by higher royalty payments ...
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- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
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