Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q3 2014 Earnings Presentation
59 slides from Thai Oil Public's earnings presentation, Nov 10, 2014
Slide 1: Q3 & 9M/2014 Analyst Presentation
-1- Thai Oil Public Company Limited Q3 & 9M/2014 Analyst Presentation 10 November 2014 Time : 09.30 - 11.00 am. Venue : The Okura Prestige Hotel
Slide 2: Disclaimer
-2- Disclaimer The information contained in this presentation is intended solely for your personal reference. Please do not circulate this material. If you are not an intended recipient, you must not read, disclose, copy, retain, distribute or take any action in reliance upon it.
Slide 3: Corporate Vision, Mission and Values
-3- Corporate Vision, Mission and Values A LEADING FULLY INTEGRATED REFINING & PETROCHEMICAL VISION COMPANY IN ASIA PACIFIC • To be in top quartile on performance and return on investment • To create a high-performance organization that promotes MISSION teamwork, innovation and trust for sustainabil
Slide 4: Corporate Governance Policy
-4- Corporate Governance Policy Roles and Responsibilities for Corporate Governance Policy Stakeholders The board of directors, management • Truthfully report company’s situation and and all staff shall commit to moral future trends to all stakeholders equally principles, equitable treatment to all
Slide 5: Presentation Agenda
-5- Presentation Agenda Q3/14 KEY HIGHLIGHTS / ACTIVITIES UPDATE Q3 & 9M/14 PERFORMANCE ANALYSIS Q4/14 & 2015 MARKET OUTLOOK KEY TAKE AWAY MESSAGES
Slide 6: Q3/14 Key Highlights
-6- Q3/14 KEY HIGHLIGHTS
Slide 7: Q3/14 Key Highlights
-7- Q3/14 Key Highlights Macro-economies / Industry Highlights $11.5/bbl drop in Dubai crude price pressured by oversupply from 5.2 $/bbl inventory loss Middle East & US, while soften demand Improve market GRM Seasonally weak demand pressured margins BUT offset by (from 4.4 to 4.6 $/bbl) falling
Slide 8: Q3 & 9M/14: Inventory Loss…Amid Moderate Margins
-8- Q3 & 9M/14: Inventory Loss…Amid Moderate Margins TOP Group Net Profit Gross Refining Margin - GRM Unit : million THB NP w/o Stock G/L Stock G/(L) LCM Before tax $/bbl Q2/14 Q3/14 9M/14 Q2/14 Q3/14 9M/14 Marketing GRM 4.4 4.6 4.7 2,094* MB (2,175* MB) 2,453* MB Stock Gain/(Loss) 1.4 (5.2) (1.7) A
Slide 9: Look Back on Completed Projects, Key Project Update, New Project Approval
-9- LOOK BACK ON COMPLETED PROJECTS KEY PROJECT UPDATE APPROVAL OF NEW PROJECT IN Q3/14
Slide 10: Margin Contribution from completed projects in Q3/14
Look back on completed projects -10- Margin Contribution from completed projects in Q3/14 Project Project Details Actual Benefit Realization HVU Revamp: • Modify HVU-2 • Phase I: • Capable to produce more diesel/jet at Benefit Realization Benefit PSA-3 the expense of fuel oil (1-2%) ($/bbl) • Phase
Slide 11: Key Project Progress Update: LAB
Project Update -11- Key Project Progress Update : LAB Project Detail Progress • TPX JV with Mitsui (75% : 25%) 69% • Upgrade existing Benzene and Kerosene into higher (On Plan) Linear Alkyl valued product; LAB which is an intermediate feedstock Benzene in production of surfactant (detergent) (LAB) •
Slide 12: Key Project Progress Update: 2 SPPs
Project Update -12- Key Project Progress Update : 2 SPPs Project Detail Progress • Low risk power business enhance income stability 41% • Support reliability of electricity & steam supply for TOP (On Plan) Group TOP SPP • Develop 2 new SPP power plants; (2 blocks of SPP) • Total power capacity 239 M
Slide 13: Progress on Myanmar Project
Project Update -13- Progress on Myanmar Project Study Project Detail Progress • On mid-July, 2014, Myanmar Petrochemical PTT/TOP had Enterprise (MPE) issued Invitation to Tender, submitted proposal on specifying the proposal deadline by mid-Oct, 2014 Oct 13, 2014 Refinery Upgrading Project • Plann
Slide 14: New Project Approval in Q3/14: Lorry Expansion Project
New Project -14- New Project Approval in Q3/14 : Lorry Expansion Project Project Project Detail Lorry • Expand lorry loading capacity Expansion Existing Capacity Lorry Expansion Project Project Designed Capacity : 10 mml/day Planned Additional Capacity : +5 mml/day (10 gantries) (+ 5 gantries) • CAP
Slide 15: Q3 & 9M/14 Performance Analysis
-15- Q3 & 9M/14 PERFORMANCE ANALYSIS
Slide 16: Q3/14 Stable Refinery Margins…While Huge Inventory Loss
Refining -16- Q3/14 Stable Refinery Margins…While Huge Inventory Loss Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization Q2/14* Q3/14* 9M/14 2013 2014 94% 85% 95% $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M Q4TD* *CDU-3 MTA mid Jun to end Jul 14 DUBAI (DB) 108.1 100.8 106.3 106.8 104.4 106.1 1
Slide 17: Q3/14: Recovered PX Spread…Regained Aromatics Margins
Aromatics -17- Q3/14: Recovered PX Spread…Regained Aromatics Margins Aromatics Spreads and Margins Aromatics Production 2013 2014 Q2/14* Q3/14* 9M/14 79% 64% 79% $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M *Aromatics unit MTA mid Jun to end Jul 14 PX*-ULG95 559 462 476 445 273 220 371 288 BZ-ULG95 303 305 249 297
Slide 18: Q3/14: Soften Feedstock Cost…Maintained Lube Margins
Lube Base Oil -18- Q3/14: Soften Feedstock Cost…Maintained Lube Margins Base Oil & Bitumen Spreads & Margins Base oil Production 2013 2014 Q2/14* Q3/14* 9M/14 $/ton Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M 99% 88% 96% *Base oil unit T/A in end-Sep 14 500SN-HSFO 419 494 519 509 486 501 500 496 BITUMEN- Lube Base Oil
Slide 19: Beauty of Integration…Sustainable GIM
Performance Breakdown -19- Beauty of Integration…Sustainable GIM (Unit: US$/bbl) 21.6 20.3 16.5 18.6 18.5 8.2 4.8 8.7 7.2 Product to Feed Q1/13 Q2 Q3 Q4 Q1/14 Q2 Q3 9M/13 9M/14 6.6 5.0 5.1 5.1 4.7 3.6 4.4 4.6 Crude 1.9 Marketing GRM (excluded stock gain / loss) Q1/13 Q2 Q3 Q4 Q1/14 Q2 Q3 9M/13 9M/14
Slide 20: Q3/14: Performance Breakdown
Performance Breakdown -20- Q3/14: Performance Breakdown ** 32.39% ***74% holding holding Key Points • TOP/ TPX/ TLB: lower intake due to CDU-3 and aromatics complex planned MTA (15 Jun-end July 14) Sriracha and Lube plant planned S/D end Sep Refinery Aromatic Lube Base Power TP Plant Ship SAKC Ethan
Slide 21: Consolidated Financial Performance
Financial -21- Consolidated Financial Performance (US$/bbl) Q3/14 Q2/14 Q3/13R QoQ+/(-) 9M/14 9M/13R YoY+/(-) Marketing GRM 4.6 4.4 5.0 0.2 4.7 5.1 (0.4) Marketing GIM 5.5 5.1 7.9 0.4 5.6 7.4 (1.8) Accounting GIM 0.5 6.4 11.7 (5.9) 3.9 8.0 (4.1) (million THB) Sales Revenue 88,254 101,063 108,500 (12
Slide 22: Strong Financial Performance
Financial -22- Strong Financial Performance Statements of Financial Position Consolidated Long-Term Debt as at 30 Sep 14 1) (Unit: million THB) Total Long-Term Debt Net Debt 208,662 208,414 77,449 million THB 40,665 million THB Trade Payable Cash & ST 43,815 39,482 37,273 37,563 / Others (US$ 2,382
Slide 23: Q4/14 & 2015 Market Outlook
-23- Q4/14 & 2015 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen
Slide 24: Crude Oil
-24- CRUDE OIL
Slide 25: Why Crude Price Slumped in Q3 and Oct'14?
Macroeconomics & Crude Prices -25- Why Crude Price Slumped in Q3 and Oct’14? Crude Supply/Demand Dubai Price MBD 95 $/BBL 120 94 Supply 93 110 106.2 101.7 Demand 92 96.5 100 91 Jul'14 Aug'14 Sep'14 90 Avg. Oct’14 86.6 OPEC Supply Sep/Aug : +0.46 MBD 4 80 Iraq Jul’14 Aug’14 Sep’14 +0.20 Jul-14 Sep-14
Slide 26: Production Costs Set Crude Price
Macroeconomics & Crude Prices -26- Production Costs Set Crude Price Fiscal Breakeven Price Cost of Oil Production $/BBL 2015 Demand is 93.5 MBD Cumulative Production (MMBD) Source: IEA Oil Market Report Saudi can stay in comfort zone at $80-90/BBL Lower floor price should cause delay for high pr
Slide 27: 2015 Crude Outlook
Macroeconomics & Crude Prices -27- 2015 Crude Outlook $/BBL $/BBL 120 2014 Dubai 99 $/BBL 120 $109 110 $106 $105 $106 110 $104 $101 100 100 $92 90 90 $82-86 80 80 70 70 2011 2012 2013 1Q14 2Q14 3Q14 4Q14 2015 Latest Forecast Actual Estimate as of 6 Nov’14 Factor to watch + Improved crude demand in Q
Slide 28: Petroleum Products
& ~ Group PETROLEUM PRODUCTS -28-
Slide 29: 2014-15 Additional Refinery Capacity
Refinery -29- 2014-15 Additional Refinery Capacity “New barrel from Middle East &China’s additional refinery is likely to flood oil product market” CDU Addition VS Additional Demand – AP & ME AP Additional Demand ME Additional Demand Addition Nameplate Company Country Other AP India (start-up period
Slide 30: High Supply Pressures GRM
Refinery -30- High Supply Pressures GRM ($/bbl) 2013 Q3-14 Oct’14 Q4-141 20142 20153 ULG95-DB 13.5 13.2 14.5 JET-DB 17.4 14.5 14.9 GO-DB 17.8 14.4 13.6 HSFO-DB (8.0) (8.3) (7.5) SG Reuters Cracking GRM 6.2 4.7 5.2 Remark : 1 Compared to Q3-14 2 Compared to 2013 3 Compared to 2014 Overall Market in Q
Slide 31: Thailand Oil Demand Outlook
Refinery -31- Thailand Oil Demand Outlook Year on Year 2013 2014E 2015F LPG +2% +2% +3% Mogas1 +7% +2% +2% Jet/Kero +9% +1% +4% Diesel1 +2% +1% +2% Fuel Oil -8% -18% -4% Total +3.0% +0.6% +2.2% GDP Growth +2.9% +1.5%2 +4.8%2 Remarks : 1. Mogas and diesel have included ethanol and biodiesel, respecti
Slide 32: Aromatics
& ~ Group AROMATICS -32-
Slide 33: 2015 PX and PTA Capacity Update
Aromatics -33- 2015 PX and PTA Capacity Update Global Nameplate PX Additional/Closure Capacity Country Plan KTA Company MTA 3.0 Korea Q1’15 -200 Lotte Chemical1 2.0 Kazakhstan Q2’15 469 JSC KazMunaiGas 1.0 India Q3’15 2,250 Reliance Industries 4 0.0 Thailand Q3’15 120 PTTGC -1.0 Q1 Q2 Q3 Q4 Total 2,
Slide 34: PX Demand/Supply Outlook
Aromatics -34- PX Demand/Supply Outlook AP/ME PX Capacity* and Demand Chinese GDP Growth (%YOY) Forecast Forecast Growth (%YoY) MTA 2010-2013 2014 2015-2019 Dem: 8.1% Dem: 5.7% Dem: 5.9% 12 60 Cap: 6.8% Cap: 14.8% Cap: 6.3% 50 10 10.4 48 51 40 46 9.2 9.3 41 44 42 8 30 38 37 40 33 35 7.7 7.7 20 29 27
Slide 35: BZ Demand/Supply Outlook
Aromatics -35- BZ Demand/Supply Outlook AP/ME BZ Capacity* and Demand “BZ Imports by North America” Forecast Forecast MTA 2010-2013 2014 2015-2019 MT Dem: 5.4% Dem: 5.5% Dem: 4.7% 50 3.0 Cap: 5.3% Cap: 7.5% Cap: 4.3% 45 40 46 44 39 41 2.0 35 37 39 2.1 2.0 2.0 1.9 2.0 1.9 1.9 30 33 33 35 1.7 31 30 32
Slide 36: Bearish PX Market due to Weak Downstream Demand
Aromatics -36- Bearish PX Market due to Weak Downstream Demand ($/t) 2013 Q3-14 Oct’14 Q4-141 20142 20153 PX-ULG95 485 371 244 BZ-ULG95 289 327 273 Note: PX = Paraxylene, BZ = Benzene Remark : 1Compared to Q3-14 2Compared to 2013 3Compared to 2014 Overall Market in Q4-14 Factor to Watch for 2015… PX
Slide 37: Base Oil & Bitumen
& ~ Group BASE OIL & BITUMEN -37-
Slide 38: Depressed Base Oil Price on Thin Demand
Base Oil & Bitumen -38- Depressed Base Oil Price on Thin Demand Stronger Gr.I margin mainly driven by soft FO price $/t 2013 YTD-14 Key Factors 500SN-HSFO 485 499 • Rise of 150SN and 500SN spread due to weak fuel oil price especially in Q3-14 150SN-HSFO 402 478 • Depressed absolute Gr.I prices since
Slide 39: Bitumen Outlook
Base Oil & Bitumen -39- Bitumen Outlook Weak bitumen margin mainly driven by weak Chinese $/t 2013 YTD-14 Key Factors Bit-HSFO (13) (60) • Depressed spread in first half of the year due to weak Chinese • Improved spread since Q3 as a result of healthy regional demand and sharp drop in fuel oil price
Slide 40: Soft Demand & Abundant Supply Pressure Base Oil Prices
Base Oil & Bitumen -40- Soft Demand & Abundant Supply Pressure Base Oil Prices ($/t) 2013 Q3-14 Oct’14 Q4-141 20142 20153 500SN-HSFO 485 500 534 Bitumen-HSFO (14) (66) 32 Remark : 1Compared to Q3-14 2Compared to 2013 3Compared to 2014 Overall Market in Q4-14 Factor to Watch for 2015… Base oil: + Inc
Slide 41: Conclusion
& ~ Group CONCLUSION -41-
Slide 42: 2015 Market Conclusion
Conclusion -42- 2015 Market Conclusion Refinery • Soft crude price due to ample supply • New additional supply to pressure next-year margin Aromatics • Weak PX spread due to supply surplus • Firm BZ spread supported by US import Base Oil & Bitumen • Weak base oil spread due to Gr.II supply surplus •
Slide 43: Key Take Away Messages
-43- KEY TAKE AWAY MESSAGES
Slide 44: Key Take Away Messages
-44- Key Take Away Messages Paradigm Shift in Oil Prices to below $100/bbl Era Implementation of Short-term Mitigation Minimum crude oil / product stocks Company-Wide Benefit Recovery Program Source : www.mining.com Fully run after maintenance & utilize completed margin improvement projects to
Slide 45: Appendix
-45- APPENDIX
Slide 46: Strategic Investment Plan
-46- Strategic Investment Plan CAPEX Plan (Unit US$ million) Remaining capital investment Projects COD Total Project Cost 2017- 2014 2015 2016 2019 Refinery upgrading 2014 137 29 Our CAPEX investments Reliability, efficiency and flexibility - 353 91 56 13 34 will cover improvements improvement in pl
Slide 47: Q3/14: Abundant Supply…Fallen Dubai Crude Price
-47- Q3/14: Abundant Supply…Fallen Dubai Crude Price Dubai Crude Price Average Y2013 = 105 $/bbl Y2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4TD* $/bbl 108 101 106 107 104 106 101 85.6 125 111 115 108 107 108 107 106 108 108 106 106 102 100 100 104 104 105 104 105 106 102 105 96 95 87 85 80 75 Jan Feb Mar Apr May J
Slide 48: Q3/14: Lower Crude Cost as Fallen Price Supports MKT GRM
-48- Q3/14: Lower Crude Cost as Fallen Price Supports MKT GRM LPG - DB (Unit: $/bbl) Diesel - DB - Slow regional demand i.e. fishing ban in China Q4TD 6 Nov leading to high stock in Singapore - High export from Indo and China (28.0) - Ample supply in the region (38.9)(41.6)(43.5) (35.0)(33.3) (44.0)
Slide 49: Asian Margin Vs. US-EU margin
-49- Asian Margin Vs. US-EU margin $/bbl SINGAPORE GRM 86.5% 58.3% 67.6% Total Capacity: 17.0 MBD Total Capacity: 4.9 MBD Total Capacity: 17.5 MBD Source: EIA, Norwegian Energy, Thai Oil
Slide 50: Crude Inventory
-50- Crude Inventory Source: Norwegian Energy
Slide 51: Global Distillate Inventory
-51- Global Distillate Inventory Source: Norwegian Energy
Slide 52: Fuel Oil Inventory
-52- Fuel Oil Inventory Source: Norwegian Energy
Slide 53: China's Product Export
-53- China’s Product Export Source: Norwegian Energy
Slide 54: Domestic LPG Demand
-54- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • LPG demand in Q2/14 augmented by 1.9% YoY thanks to incremental usage in petrochemical and auto sectors. However, demand expansion was capped by lower usage in cooking and industrial sectors, as a result of economic slowdown and pol
Slide 55: Domestic Gasoline Demand
-55- Domestic Gasoline Demand Thailand Gasoline Demand GASOLINE Demand Highlight • Mogas demand in Q3-14 significantly increased by 5.8% YoY to 23.57 mml/day. This was mainly due to new registered car. Recorded gasohol portion at 94.4% of total gasoline was thanks to higher usages of E20 and E85 whi
Slide 56: Domestic Jet Demand
-56- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In Q3-14 Jet consumption considerably dropped by 6.0% YoY mainly due to low international aircraft movement. Declining international arrivals resulted from softening economic condition in EU, China and Russia. Moreover, more than
Slide 57: Domestic Gasoil Demand
-57- Domestic Gasoil Demand Thailand Gasoil Demand Diesel Demand Highlight • Diesel consumption in Q3-14 rose by 2.1% YoY supported by more transportation activities. Moreover, the strong consumption in diesel was also supported by capped retail price no more than 30 baht per liter. • In Sep-14 Gaso
Slide 58: Domestic Fuel Oil Demand
-58- Domestic Fuel Oil Demand Thailand Fuel Oil Demand FUEL OIL Demand Highlight • In Q3-14 Fuel Oil consumption intensely fell by 10.7% YoY, due to lower usages in transportation and industrial sectors. The lack of demand was impacted by lower shipping activities and price attractiveness of NG over
Slide 59: Thank You
-59- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Thai Oil Public Company — Q3 2014 Earnings Presentation on 6ix