Thailand: Banpu to shell out B17.3bn overseas

Thailand: Banpu to shell out B17.3bn overseas

SET-listed Banpu Plc, Thailand's biggest coal producer, will spend US$513
million (17.3 billion baht) from this year to 2020 on increased production
of existing upstream shale gas in the US and development of coal resources
in Indonesia, says chief executive Somrudee Chaimongkol.

For the shale gas operation, the company will set aside $293 million for
capital expenditure to increase gas production in the Northeast Pennsylvania
Area (Nepa) by 70% to 78 million British thermal units by 2020 from the
current 46 million, Ms Somrudee said.

Over the past two years, Banpu has bought shares in the Nepa project, to the
point that the company now holds a 29.4% stake, or about a $207-million
holding in the project that runs a low-cost unconventional operation in
Nepa's Marcellus Shale. The Marcellus area is the largest source of natural
gas in the US.

Ms Somrudee said the Nepa project earns almost $40 million a year for Banpu.
In Indonesia, the company has started drilling a thermal mine to seek coal
resources deeper in the ground. The move is aimed at increasing Banpu's coal
reserves in Indonesia to 15 years' worth from the current 11-year supply.
The cost of digging deeper in the ground for additional coal production is
about $9 a tonne, Ms Somrudee said.

Banpu's Indonesian coal mines have combined reserves of 375 million tonnes
and an additional amount under the ground of roughly 100 million tonnes.
Banpu invests in Indonesia's coal market through a subsidiary, PT Indo
Tambangraya Megah Tbk. The company, listed on the Indonesia Stock Exchange,
manages six coal mines in Kalimantan. The mines produce about 30 million
tonnes of thermal coal a year.

Ms Somrudee said Banpu also plans mergers and acquisitions, with one deal to
be finalised this year.

She said the move to increase reserve gas and coal production is part of a
company strategy to adjust to a changing world. For the midstream energy
business, Banpu is cutting the logistics costs of coal supply to enhance its
competitiveness. In the power-generating business, Banpu is revising its
long-term plan and is likely to expand its renewable capacity.

The company spun off its power business by setting up a subsidiary, Banpu
Power Plc, which listed on the Stock Exchange of Thailand last October.
Banpu forecasts total revenue this year to grow by 20% from $2.26 billion in
2016, owing to a surge in global coal prices.

According to the company's forecast, demand for thermal coal will grow
steadily over the next two years, with selling prices averaging $63 a tonne
this year, up 20% from last year's $51.50. Total sales volume for coal this
year is estimated at 45 million tonnes, on a par with last year.

BANPU shares closed yesterday on the SET at 15.80 baht, down 10 satang, in
trade worth 357 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1289195/banpu-to-shell-out-b17-3bn-
overseas

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com