• 2Q26 net profit came in at THB27.17bn (+101% y/y, +130% q/q), driven by oil price spike and hedging gain

• Resilient core performance where ASP and EBITDA came in at USD52.89/boe (+20% y/y, +15% q/q) and THB68.84bn (+37% y/y, +27% q/q)

• Oil price hike to support 3Q26F despite softer volume

• Maintain BUY with FY26F TP of THB174

As expected 2Q26. PTTEP reported 2Q26 net profit of THB27.17bn (+101% y/y, +130% q/q), in line with our estimate and Bloomberg consensus. 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 improved 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 were USD1.0/bbl premium over Dubai (versus the usual USD2–3/bbl discount to Dubai). Total EBITDA and normalized profit came in at THB68.84bn (+37% y/y, +27% q/q) and THB24.24bn (+76% y/y, +22% q/q), respectively.

PTTEP also announced 1H26 dividend payment of THB4.5/share, XD date on 14 Aug 2026.

PTTEP’s performance by quarter

Source: PTTEP, DBS

2Q26 performance 

1. Production volume: Production was at c.572kboed (+14% y/y, +3.5q/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 USD5.96/mmbtu (+3% 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 USD29.78/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 2Q26 include expected net oil hedging gain of c.THB4.07bn where total outstanding hedged volume stood at 14mn barrels.

 Outlook

Strong oil price to keep 3Q26F intact despite falling volume.  In late July 2026, global oil markets experienced a sharp upward correction, largely driven by renewed military escalation in the Middle East. After a brief pause in hostilities, joint US-Saudi strikes against Iran-backed militias in Iraq, coupled with retaliatory Iranian attacks, dashed hopes for an immediate diplomatic resolution. This surge in geopolitical risk, further compounded by ongoing threats to critical shipping lanes like the Strait of Hormuz and a multi-year low in US crude inventories that caused Brent crude to jump over 7% during the week, breaking back above the $90 per barrel threshold. Specifically, following the launch of a "heavy wave" of US strikes late on 29 Jul, front-month Brent crude futures advanced an additional 1.5%, settling at USD92/bbl as markets priced in the heightened threat of supply disruptions.

However, we expect PTTEP production volumes to edge down in 3Q26F (before normalizing in 4Q26), due to maintenance activities at gas fields in the Gulf of Thailand and lower demand resulting from PTT 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).

Based on the conference call on 31 Jul, we conservatively estimate 3Q26F net profit at THB21.19bn (+74% y/y, -13% q/q), assuming:
i) production volume of c.525kboed (+3% y/y, -8% q/q); ii) average Dubai crude price of USD85/bbl and average gas selling price of USD6.2/mmbtu; iii) ASP of USD50.02/boe (+16% y/y, -5% q/q); iv) unit cost of USD30/boe (-4% y/y, +6% q/q); and v) a corporate tax rate of 45%

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 6% dividend yield), providing downside protection even if the war premium fades.