Thailand: Banpu strives to boost efficiency and speed up investments

Thailand: Banpu strives to boost efficiency and speed up investments

ENERGY company Banpu will focus on business development for stable growth
this year, as well as boosting management efficiency and speeding up
potential investments from upstream to downstream.

Banpu has invested in a second shale gas resource in northeast Pennsylvania,
near its first shale gas resource in the United States.

This new investment is expected to generate revenue this quarter.

Banpu continues to explore any potential added-value investment, from the
upstream business, and to balance the company's future growth of integrated
energy.

For the power business, Banpu believes that Banpu Power, its subsidiary, has
strong potential to grow and expand its power generating capacity to 4.3GW
by the end of 2025, of which at least 20 per cent will be renewable energy
sources.

Banpu is also ready to provide supply chain management services and energy
solutions management to contribute long-term benefits to all stakeholders,
CEO Somruedee Chaimongkol told a press conference. yesterday.

The company's 2016 operating result saw a considerable improvement in net
profit to US$47 million (Bt1.67 billion) from the $43 million net loss in
the previous year, largely due to a better balance in coal demand and
supply.

This reflected a higher average selling price, especially when the average
selling price in Indonesia rose from $51.4 per tonne in the third quarter to
$62.9 per tonne in the fourth quarter of last year.

Banpu is moving towards its strategic plan to develop from the upstream coal
and gas businesses to the downstream business of power plants, including
both conventional and renewable.

This strategic approach is to chart a course of sustainable and balanced
growth.

"We continue to maintain the company's cashflow from the success of Banpu
warrant (Banpu-W3) and Banpu Power's IPO, which will extend the group's
growth from upstream to downstream," Somruedee saud.

"In addition, Banpu's net profit in the fourth quarter stands out, due to
the coal price adjustment from a more proportional balance of demand and
supply of coal in the market."

In 2016, Banpu's sales fell 9 per cent to $2.25 billion, of which 91 per
cent was coal sales of $2.06 billion. Power, steam and other businesses
generated sales of $181 million.

The Marcellus shale gas business in Pennsylvania has begun to generate sales
of $15 million in the first quarter.

In 2016, Banpu's coal sales dropped 3 per cent 40.0 million tonnes, as the
average selling price in Indonesia slid 10 per cent $52.4 per tonne and in
Australia edged up 2 per cent to $67.3 per tonne.

The company's cost-saving programme resulted in an increase in gross profit.


The power business has recognised revenue after all three units of the
Hongsa power plant were operating fully commercially.

In 2016, earnings before interest, tax, depreciation and amortisation
improved 15 per cent to US$540 million.

Banpu's board has declared an annual dividend of Bt0.50, 50 satang, of which
Bt0.25 25 satang will be paid as an interim dividend.

The ex-dividend date is April 10. Warrant holders submitting a notification
to convert their existing Banpu-W3 warrants into Banpu shares by March 3
will also be eligible for this dividend.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com