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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, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
Sunday, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
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- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Australian Coal Association
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
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