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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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Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
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- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
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