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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, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
Sunday, 18 January 15
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN WEAK NEXT WEEK
COALspot.com: The BDI was up 4.51 pct week on week on Friday 16, January 2015. The BDI closed at 741 points on this Friday after gaining arou ...
Friday, 16 January 15
U.S. WEEKLY COAL PRODUCTION UP 7.3% W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 15 January 15
PANAMAX : MARKET CONTINUE ON LOW PACE - FEARNLEYS
Handy
On a general basis we can say that rates are softening in both hemispheres. Although for some specific trades we can see premiums being ach ...
Wednesday, 14 January 15
DRY BULK MARKET NOTED ANOTHER WEEKLY DECLINE - INTERMODAL
COALspot.com: The Dry bulk market noted another weekly decline on Friday, with the performance of the Capesize market still weighing down on the re ...
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- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
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