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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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Tuesday, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case ...
Tuesday, 16 December 14
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
Tuesday, 16 December 14
SUB-BIT FOB INDONESIA COAL SWAP CONTINUES ITS FALL
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 1.7 ...
Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
Monday, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
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- Central Electricity Authority - India
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- PTC India Limited - India
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Posco Energy - South Korea
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Australian Coal Association
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
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