Singapore NDR meeting held with PTTEP top executives. During 7-8 Aug 2024, we held an NDR group meeting for institutional investors in Singapore with PTT Exploration and Production Plc (PTTEP TB). The members of the executive management who joined our meeting were as follows:

1. Ms. Chanamas Sasnannand, EVP – Finance & Accounting Group.
2. Ms. Vanruedee Chariyapisuthi, SVP – Corporate Strategy Division.
3. Mr. Nattapol Tachavaraporn, Manager – Investor Relations

Meeting takeaway

Organic growth with a 50% stake acquisition from HESS in MTJDA. On 25 Jul 2025, PTTEP acquired a 50% interest in Block A-18 of the Malaysia-Thailand Joint Development Area (MTJDA) from Hess (Bahamas) Limited and Hess Asia Holdings Inc., both now wholly owned subsidiaries of Chevron following its merger with Hess Corporation.

This UDS450mn acquisition, completed on 25 July 2025, significantly expands PTTEP's gas portfolio in Southeast Asia and enhances Thailand's energy security, as Block A-18 is a key natural gas and condensate production project delivering c.600mmscfd, equally to both Thailand and Malaysia. This deal increases PTTEP's investment in the MTJDA, complementing its existing 50% stake in Block B-17-01 which currently produces and exports c.300mmscfd of gas to Thailand and Malaysia, respectively.

Such a project is expected to contribute c.83mboe of 2P reserves. Planned operating expenditures will be around USD80-100mn per annum, based on PTTEP’s participating interest of 50%. Moreover, Block A-18 holds substantial remaining resources of c.2tcf, representing high potential for further development. While the current PSC will expire in 2029, we plan to pursue a new PSC re-award to extend the production period, which is under discussion with the authorities.

In terms of synergy, PTTEP foresees synergy not only within the A-18 areas but also with nearby block i.e. B-17-01 in terms of shared facilities, logistics, and manpower, where operating cost could be lower.

In terms of financial impact, PTTEP expects additional volume from Block A18 at c.7/kboed for 2025F and c.17kboed for 2026F respectively.

Aims to achieve sales volume growth CAGR of 3.6% during 2024-2029F with total five-year capex of USD21.2bn. PTTEP has a long-term investment plan with total capex of USD21.2bn and production volume of 507-581kboed for 2025-2029F. In 2025F, PTTEP aims to boost national securities in terms of energy resources as well as ongoing oversea exploration activities for long-term growth as follows:

1. Increase domestic production – PTTEP targets a capex of USD3.85bn for maintaining production volume in the Erawan (G1/61), Bongkot (G2/61), S1, Contract 4, and MTJDA projects, key projects for national energy securities in the long term.
   
   
2. Accelerate development phase – PTTEP set USD1.46bn in capex aside for projects in the development phase for a timely startup schedule such as Abu Dhabi, Mozambique Area 1, SK405B, SK417, and SK438. Note that the Ghasha (DGD) field is expected to start up in 2H25F with a gas flow volume of c.340mmsfd.

Arthit field to be the first nation E&P with CCS equipment where FID will be made in 2H25F. PTTEP is an operator in Arthitproject with a c.80% stake (remaining of 16%/4% owned by Chevron and Mistui Oil Exploration-MOECO respectively). Current gas production stands at c.330mmsfd (up from c.250mmsfd in 2023), accounting for c.10% of total gas from the Gulf of Thailand.

PTTEP will take on Arthit project as a pilot project for Carbon Capture Storage (CCS). Arthit is feasible for investment as the current production process can reduce CO2 from c.32% to c.23% as required by the offtaker (PTT Plc). As a result, the Arthit project would require less investment capex than other projects (generally 60% of total investment in CCS would be the equipment such as CO2 membrane removal system while the rest 40% is storage and pipeline transmission investment).

Thus, management expects Arthit’s FID by end-2025F as its startup of CCS will be in 2028F, with a CO2 capture target from 70k-1.0mn tonnes.

However, PTTEP awaits the clarity of tax incentive from the government. Note that Thailand is still ongoing development via national CCUS committee that involves many parties such as the Department of Mineral Fuel (DMF), Office of Natural Resources and Environmental Policy and Planning (ONEP), and the Thailand Greenhouse Gas Management Organisation (TGO). Some time would be needed until there are supporting laws and regulations for CCS/CCUS.

Strong financial health with c.USD3.5bn cash on hand. As of end-2Q25, PTTEP reported cash on hand at USD3.48bn where financial health of the company can withstand the fluctuation of oil prices ahead. Moreover, the leverage utilisation rate is relatively lower-than-peers, where IBD-to-equity and IBD-to-EBITDA stood at 0.24x and 0.61x, significantly less than the internal policy of 0.5x and 1.0x respectively.

Q&A

Q: Would PTTEP’s business performance be affected from potential LNG import from the US? Would it pose any risk to PTTEP?

A: Natural gas from domestic sources and Myanmar continues to serve as a cornerstone of Thailand’s energy security, supported by long-term gas sales agreements with clearly defined Daily Contract Quantities (DCQ).

At present, the combined supply from domestic production and existing imports from Myanmar remain insufficient (c.80% of total domestic natural gas demand) to meet the country’s overall energy demand. Consequently, LNG imports are necessary to bridge the supply gap and support Thailand’s growing natural gas requirements. However, LNG is significantly more expensive than pipeline or domestic gas, which could result in higher national energy prices. As such, maintaining domestic gas production remains a strategic priority to safeguard both energy security and price stability.

As the national oil company, PTTEP is committed to sustaining domestic gas output. Nevertheless, without new concessions or access to additional resources, domestic production may continue to decline. In this context, PTTEP’s overseas production is expected to play an increasingly important role in the company’s portfolio moving forward.

Q: What is PTTEP’s current view on the Overlapping Claims Area between Thailand and Cambodia (OCA)?

A: Regarding the OCA between Thailand and Cambodia, the petroleum resources potentially present in this area are considered strategically important for Thailand’s energy security, particularly at a time when the country is increasingly reliant on LNG imports. Nonetheless, any progress will ultimately depend on the formal agreement between the two governments.

Q: Are there potential M&As in the next 6-12 months?

A: There are always opportunities in our pipeline. However, we will be able to disclose once concluded. We will cautiously consider and make decisions on M&A and balance organic growth from exploration opportunities to ensure long-term sustainable growth.

Q: What is the company’s dividend payout policy in 2025?

A: The dividend policy is to pay not less than 30% of the net profit after tax, taking into consideration other factors, which include:

• The required amount of cash on hand to support investment plan and foster future growth of the company.
  
  
• Market expectations on shareholders’ return, dividend yield compared to peers, and absolute amount of dividend per share

During the last five years, the company’s payout ratio was consistently above 50% of net profit.

Our take

(+) Expect stronger core earnings from oil price uptrend ahead. We expect stronger core performance in 2H25F, supported by oil price uptrend. We expect oil prices to be supported by i) tight global inventory despite the full winding of the production cut by OPEC+, ii) seasonal demand for gasoil during the driving season in the US, and iii) restocking of heating oil ahead of upcoming winter.

We conservatively estimate PTTEP’s 3Q25F net profit at THB15.31bn (-14% y/y, +13% q/q), based on i) a production volume of c.505kboed (+6% y/y, flat q/q), ii) average Dubai price of USD70/bbl (-11% y/y, +5% q/q) and an average gas selling price of USD5.8/mmbtu (-2% y/y, flat q/q), iii) ASP of USD44.76/boe (-5% y/y, +2% q/q), iv) a unit cost of USD30/boe (-6% y/y, -4
% q/q), and v) a corporate tax rate of 45%.

Maintain BUY with our FY25F TP of THB169, based on a DCF valuation, with a WACC of 11.69% and terminal growth rate of 1%. Despite weaker oil prices, we still like PTTEP, given its minimal exposure to regulatory risks, even with government efforts to reduce domestic energy prices through measures like i) the single pooled gas price, ii) retail oil price caps (both diesel and gasoline), and iii) a potential electricity tariff cut. On the other hand, PTTEP’s business outlook remains intact, supported by resilient volume growth and resilient selling gas prices.