Bangkok--25 Nov--TRIS Rating
TRIS Rating said today that the company and issue ratings it assigned to PTT Exploration and Production PLC (PTTEP) would not have an immediate impact following the announcement of PTTEP to acquire a 40% interest in the Kai Kos Dehseh Oil Sands Project. The rating agency, however, will closely monitor the acquisition move and PTTEP’s credit profile when the transaction is completed. The ratings could be lowered if PTTEP’s leverage has been deteriorated on a sustainable basis.
TRIS Rating said, PTTEP stated on 23 November 2010 that PTTEP Netherland Holding Ltd., a subsidiary of PTTEP, plans to acquire 40% of the partnership units of Statoil Canada Partnership (SCP) for a total cost of US$2,280 million. SCP is the owner of Kai Kos Dehseh Oil Sands Project (KKD) in Canada. The transaction is expected to complete in the first quarter of 2011. Upon the completion, Statoil will hold a 60% stake in SCP and will remain as the operator of KKD. The acquisition of KKD is in line with PTTEP’s long-term growth strategy to increase production levels and to expand its international operations into Canada and the Americas. The investment will provide the opportunity to access potential bitumen resources.
This acquisition will be funded partly by cash on hand and borrowings. Substantial increase in leverage level could limit the company’s capacity to use debt financing for future acquisition.
In relation to the petroleum leak and fire incident in the Montara project, on 24 November 2010, the Minister for Resources and Energy publicly released Montara Commission of Inquiry’s final report and findings, which recommended the review of operating licenses for PTTEP Australasia (PTTEP AA), a subsidiary of PTTEP. PTTEP reported that PTTEP AA has developed and implemented the Action Plan over the past 12 months in consultation with the Australian Government. The company expected that PTTEP AA could continue its development of Montara. TRIS Rating will closely monitor the result of the review by the Australian Government, which is expected to be completed by the end of the year.
PTTEP is the leading petroleum exploration and production (E&P) company in Thailand. As of August 2010, PTT PLC (PTT), the national oil and gas company, held a 65.4% stake in PTTEP. As the E&P arm of PTT and the Thai government, PTTEP has leveraged its position to participate in high potential petroleum projects in Thailand and abroad. As of September 2010, the company had 43 projects on hand in 12 countries. Its current company and issue ratings assigned by TRIS Rating are “AAA” with “stable” outlook.