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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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Friday, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Central Electricity Authority - India
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