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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, 17 February 15
FOB SUB-BIT INDONESIA COAL SWAP UP 8% MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 3.58 (+8.00%) month o ...
Tuesday, 17 February 15
Q2' FOB RICHARDS BAY COAL SWAP CLOSED AT $63.45; $ 1.85 HIGHER COMPARED TO Q4 CLOSING
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month, week on week and day on day.
The Q2 swap has ...
Monday, 16 February 15
COAL MINING SLUMP A BLESSING IN DISGUISE - THE JAKARTA POST
The growth of the coal-mining industry, which has diminished in the last two years, is expected to slump even further this year following weakening ...
Monday, 16 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK ON WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 1.31 per MT (+2.59%) week over week and US$ 4.35 (+9.13%) month on ...
Monday, 16 February 15
Q2' 15 - CFR SOUTH CHINA COAL SWAP ROSE 5.22% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 2.88 (+5.22%) per MT month over month and US$ 1.08 (+1.90% ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Australian Coal Association
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
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