Thailand: PTT resolute on M&A after oil output cut

Thailand: PTT resolute on M&A after oil output cut

PTT Plc, the national oil and gas conglomerate, says it will continue with
plans for mergers and acquisitions (M&A) in Asia-Pacific after Opec and
non-Opec nations' recent agreement to cut production.

PTT will proceed according to plan, though acquisitions will be harder
because the value of petroleum assets is likely to rise, said Wirat
Uanarumit, chief operating officer for upstream petroleum and gas business.

He said PTT is keeping its estimate of average global oil prices at
US$50-$55 a barrel next year despite the world's major oil producers
insisting they will remove a huge amount of supply from the market.

"The surplus of global oil inventory remains high and it may take almost
three years to reach a balance as global oil demand is not that high," Mr
Wirat said.

He said the movement of oil prices would be more clear in the second half of
next year, when demand and supply should be evaluated.

However, oil prices are unlikely to revisit the highs of $100-120 a barrel
because the production areas are scattered around the world and they are
unlikely to be completely controlled by the agreement as they were in the
past.

Mr Wirat said PTT has held several talks with operators of petroleum
resources, but no deal has been finalised although the group has cash on
hand of about 400 billion baht, which is more than enough for M&A.

PTT Exploration and Production Plc accounts for the lion's share of the
total 400 billion baht.

During the time that global oil prices collapsed, many petroleum projects
have suspended development and production. However, these projects are
expected to resume once prices rise above $50 a barrel, compared with an
average of $40 when they were forced to halt development.

Chief executive Tevin Vongvanich said it would take some time for global oil
prices to rise since demand is not very high as the global economy remains
fragile.

"A price of $50 per barrel would be a balance point because over a decade
ago the price was too high at $120 and dropped to a low of $20," Mr Tevin
said. "Now, it is neither too high nor too low."

He said the company is preparing to develop technology to match changing
demand as the energy sector shifts from fuel to electrical power.

In 2014 PTT acquired a 17% share in Massachusetts-based startup 24-M
Technologies Inc to start research and development for lithium batteries
through GPSC Plc, its subsidiary.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1160677/ptt-resolute-on-ma-after-oi
l-output-cut

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com