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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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Thursday, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
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Showing 3216 to 3220 news of total 6871 |
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- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Thai Mozambique Logistica
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Tata Chemicals Ltd - India
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