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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, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
...
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Showing 36 to 40 news of total 6871 |
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- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- PTC India Limited - India
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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