• Expect 1Q26F net profit at THB7.27bn (-56% y/y, -58% q/q), hit by a large hedging loss of THB8.62bn
• Resilient core performance where ASP and EBITDA projected at USD44.69/boe (-2% y/y, +5% q/q) and THB48.22bn (-6% y/y, +5% q/q)
• 2Q-3Q26F ASP to reflect oil price hike with less hedging impact due to less backwardation Brent curve, in our vie
• Maintain BUY with FY26F TP of THB174
  
  

1Q26F weighed down by large inventory loss. We expect PTTEP to report 1Q26F net profit of THB7.27bn (-56% y/y, -58% q/q). Earnings were hit by: i) expected net oil hedging loss of THB8.62bn, and ii) expected forex loss of THB328mn. This is caused by a spike in oil prices after the breakout of Isarel/US-Iran war in Mar 2026..

However, core performance is expected to remain resilient even though ASP is not fully reflected the sharp rise increase in oil prices (both Brent and Dubai) due to 1-2 month lagged time adjustment. Sales volume and ASP are projected at c.534kboed (+10% y/y, -1% q/q) and USD44.69/boe (-2% y/y, +5% q/q). Total EBITDA and normal profit are estimated at THB48.22bn (-6% y/y, +5% q/q) and THB16.22bn (-3% y/y, +1% q/q).

PTTEP’s performance by quarter

Source: PTTEP, DBS

1Q26F performance 

1. Production volume: Production is expected c.534kboed (+10% y/y, -1% q/q). The q/q drop was driven by lower crude from the Middle East and Africa. However, this is partly offset by higher gas nominations from PTT and higher contribution from the MTJDA projects.

2.  Realised prices: Dubai crude prices averaged at c.USD84/bbl (+9% y/y, +32% q/q), supported by a sharp spike in Mar after the war broke out in the Middle East. However, we expect greater liquid selling price to Dubai due to lagged time adjustment by 1-2 months. Hence, average selling price (ASP) is projected at USD44.69/boe (-2% y/y, +5% q/q). Gas selling prices averaged USD5.85/mmbtu (-2% y/y, -2% q/q), reflecting the contractual price lag of up to 12 months.

3. Unit cost: Unit cost is expected USD30/boe (-3% y/y, -5q/q). This is supported by normallising SG&A expenses, lower write off and exploration expenses, and less maintenance activities.

4. Extraordinary items: Extraordinary items in 1Q26F included a) net oil hedging loss of c.USD263mn (c.USD35mn from realised loss of 4.5mn barrel settled at end of 1Q26, c.USD60mn reversal of 2025 net gain, and c.USD168mn unrealised hedging loss of outstanding volume of 21mn barrels at end of 1Q26), and b) expected a forex loss of THB328mn from the depreciation of THB against US dollar by c.THB1.25.

2Q-3Q26F to see full impact of oil price hike in ASP. As mentioned in the previous section, low 1Q26F ASP is due to 1-2 month lagged time adjustment to oil prices. We expect liquid to fully reflect higher oil prices in 2Q26F where we expect USD6-7/bbl discount of liquid price (vs USD11-12/bbl in 1Q26F, and USD2-3/bbl in normal situation). For gas price, we expect average gas price to remain flattish in 2Q26F and rise to c.USD5.90-5.95/mmbtu (up 1-2% q/q).

On the hedging impact, we expect less hedging impact in 2Q26 onward after PTTEP will have a one-time reversal booking of 2025 net gain position of USD60mn in 1Q26F. Even though, forward Brent curve remains in backwardation pattern, reflecting immediate supply disruptions/scarcity, we deem forward curve to be less backwardated in 2Q26 onward. Our view is lifted by i) oil demand destruction at oil price above USD100/bbl. EIA has already cut global oil demand growth by 210kbd for 2026, and ii) uptrend of crude supply from non-OPEC producers such as US and Brazil. Thus, hedging impact to PTTEP will be less in following quarters in our view.

Our top pick. Maintain BUY. We maintain a BUY rating with an FY26F TP of THB174, based on a DCF valuation using a WACC of 11.69% and a terminal growth rate of 1%. We continue to favour PTTEP as our top pick in the energy sector, as it is a direct beneficiary of the oil price spike stemming from escalating tensions in the Middle East, while having limited exposure to regulatory risks such as electricity tariff cuts or the potential adoption of a new pooled gas pricing mechanism. In addition, PTTEP’s medium-term outlook remains solid, underpinned by resilient production growth of c.3.5% CAGR over 2026–2030F, stable gas selling prices, and an attractive expected dividend yield of around 5%.

Access more at DBS Insights Direct