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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, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
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- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Australian Coal Association
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- PTC India Limited - India
- Planning Commission, India
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
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