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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, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
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- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Australian Coal Association
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
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