• Expect 2Q26F net profit at THB25.61bn (+90% y/y, +116% q/q), driven by oil price spike and hedging gain
• Resilient core performance where ASP and EBITDA expected at USD52.8/boe (+20% y/y, +15% q/q) and THB67.15bn (+34% y/y, +24% q/q)
• 3Q26F to be hit by softer sales volume and oil price normalisation
• Maintain BUY with FY26F TP of THB174

Best-in-class 2Q26F. We expect PTTEP to report a 2Q26F net profit of THB25.61bn (+90% y/y, +116% q/q). The outstanding performance is driven by: i) a 20% y/y and 15% q/q increase in ASP, supported by the oil price spike since Mar 2026; and ii) a net oil hedging gain of THB3.47bn (vs. a THB8.84bn loss in 1Q26).

Core performance is expected to improve both y/y and q/q as ASP fully reflects the sharp increase in oil prices (both Brent and Dubai). Liquid selling prices this quarter are expected to be on par with Dubai (versus the usual USD2–3/bbl discount to Dubai). Total EBITDA and normalized profit are expected to come in at THB67.15bn (+34% y/y, +24% q/q) and THB22.13bn (+61% y/y, +11% q/q), respectively.


PTTEP’s performance by quarter

Source: PTTEP, DBS

2Q26F performance 

1. Production volume: Production is expected at c.555kboed (+10% y/y, flat q/q). The y/y increase was driven by high gas nomination from PTT after LNG price spike from US-Iran war. Moreover, there are more crude loads in this quarter from Algeria Touat project (via equity method).
2.  Realised prices: Dubai crude prices averaged at c.USD96/bbl (+43% y/y, +9% q/q), supported by a sharp spike in Mar after the war broke out in the Middle East. We expect average selling price (ASP) at USD52.8/boe (+20% y/y, +15% q/q). Gas selling prices averaged USD6.0/mmbtu (+4% y/y, +3% q/q), as gas fields projects in Thailand are re-contracted at higher price, 6-12 months lagged time.
3. Unit cost: Unit cost is expected at USD30/boe (-4% y/y, +7% q/q), from higher write off and exploration expenses, royalty fee, and depreciation expenses.
4. Extraordinary items: Extraordinary items in 2Q26F include expected net oil hedging gain of c.THB3.47bn where total outstanding hedged volume stood at 14mn barrels.

Outlook

Lower volume and ASP to weigh on 3Q26F. Oil prices have fallen more than 22% in less than one month, following a significant sell-off driven by: i) de-escalation of the conflict in the Middle East; ii) an OPEC+ production increase of 188kbd in Aug, marking the fifth consecutive month the group has agreed to ease production cuts; and iii) a 1.1mbd downward revision to the global oil demand forecast by the IEA. As a result, the downtrend in oil prices is expected to weigh on PTTEP’s earnings outlook in 2H26F.

Moreover, we expect production volumes to edge down in 3Q26 (before normalizing in 4Q26), due to maintenance activities at gas fields in the Gulf of Thailand and lower demand resulting from GSP maintenance activities. However, PTTEP maintained its 2026 full-year production guidance at c.560kboed (including c.14–15kboed from JV projects such as SK408 and Algeria Touat).

Attractive valuation and robust yield. PTTEP remains our top pick. Maintain BUY. We maintain our 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 highest-conviction re-escalation long, supported by attractive valuations across key metrics, including P/E, EV/EBITDA, and sector-leading dividend yield (7.5x P/E, 3.0x EV/EBITDA, and 6.9% dividend yield vs. the sector average of 11.9x P/E, 8.3x EV/EBITDA, and 3.1% dividend yield), providing downside protection even if the war premium fades.