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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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Wednesday, 28 January 15
CAPES CONTINUED THEIR UPWARD MOVEMENT LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market displayed a mirror performance of that of the week prior, with the Capesize market correcting further upwards and ...
Tuesday, 27 January 15
Q1 FOB INDONESIA COAL SWAP CLOSED AT $ 47.87 FOR WEEK ENDING JAN. 23
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 gain week over week and declined month on month.
The Q1 swap has decline US$ 0.9 ...
Tuesday, 27 January 15
Q2 FOB NEWCASTLE COAL SWAP UP 4.5% W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 0.28 per MT (-0.54%) month over month and increased US$ 1.23 ( ...
Monday, 26 January 15
OVERSUPPLY, AMPLE STOCKPILES, AND LACKLUSTER UNDERLYING STEEL DEMAND KEPT COKING COAL PRICES LOW IN 2014
COALspot.com: Coking coal prices (FOB & CFR) fell 15% and 18% respectively during the year, amidst persistent oversupply, ample inventory and s ...
Monday, 26 January 15
FOB RICHARDS BAY Q2 COAL SWAP CLOSED LOWER THAN Q1 CLOSING
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 fell ...
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- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
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