PTTEP expects a 166% growth in 2Q22 earnings on boost from Erawan project

PTT Exploration and Production Pcl (SET: PTTEP) sees a net profit of THB19 billion in 2Q22, an increase of 166% year-over-year due to higher oil prices and larger sales volume. Additionally, PTTEP is now the sole operator of the Erawan field.

KGI Securities (Thailand) anticipates PTTEP to announce 2Q22F earnings of THB19 billion (+166% YoY, +80% QoQ). The jump YoY and QoQ would be driven by higher crude price and larger sales volume. PTTEP’s average selling price (ASP) is likely to improve 32% YoY and 9% QoQ to US$55.9/BOE, primarily due to a higher Dubai crude price of US$108/bbl (+61% YoY, +13% QoQ). 

In addition, the company’s sales volume is expected to grow by 6% YoY and by 10% QoQ to 470KBOED mainly thanks to the start-up for production sharing contract (PSC) of the G1/61 project (Erawan) since April 24. 

Despite projections for improved earnings in 2Q22, KGI forecasts a decline in oil prices in 2H22 as a result of an increase in crude production from OPEC+ and rising concerns regarding the growth of petroleum demand as the Fed raises interest rates.

KGI reiterates a rating of Neutral on the counter with a 2022 target price of THB173, based on DCF methodology with WACC of 8.7% and terminal growth of 1.0%.

As of 12.13 hrs. local time in Thailand, the share price of PTTEP dropped THB1.50/share or 0.96% to THB154.00/share, with a trading value of THB1,265 million.