4Q24: In line, with QoQ higher sales volume
Lining up with market and INVX estimates, PTTEP reported net profit of Bt18.3bn in 4Q24, flat YoY and up 2.4% QoQ on higher sales volume and lower unit cost that beat off a decline in average selling price (ASP) brought by weaker oil price. Non-recurring items were marginal, with no asset impairment recorded in the quarter. Net profit for 2024 came to Bt78.8bn, growing 2.8% on higher sales volume (+6% YoY), backed by full production at Block G1/61 (Erawan) since late March 2024 while ASP softened 3% YoY. PTTEP announced a final dividend of Bt5.125/share, bringing full-year dividend to Bt9.625/share (49% payout ratio). Although we expect profit to weaken YoY in 2025 due to lower oil price, our Outperform rating is intact, backed by a healthy balance sheet (IBD/E <0.3x) and attractive upside to DCF-based TP of Bt164/share, based on LT Brent price of US$65 from 2027 onwards.
Sales volume up QoQ after maintenance shutdown in 3Q24. Sales volume grew 5.4% YoY and 5.3% QoQ to 500kBOED as several gas fields in Thailand resumed normal operations after planned shutdowns in 3Q24 plus greater loading of oil products in Oman and Algeria. This was, however, lower than expected since gas production at Block G1/61 (Erawan) was lower than the daily contracted quantity (DCQ) on extended maintenance and lower gas nomination by PTT. This was partly offset by higher production at Bongkot to fill the combined DCQ of 1,500mmcfd. Average 2024 sales volume was 489kBOED, up 5.8% YoY but lower than the initially projected 505kBOED.
Lower oil price pulls down ASP. PTTEP’s ASP fell 5.3% YoY and 2.6% QoQ to US$45.8/BOE as expected, on a lower oil price (-12.1% YoY, -6.2% QoQ for Dubai), but support was provided by a more stable gas price at US$5.9/mmcfd (flat YoY, -1.2% QoQ). This reflects the lag before gas price is adjusted for producing fields in the Gulf of Thailand. ASP for 2024 was US$46.8/BOE, down 3% YoY, in line with average Dubai oil price. This also reflects a higher proportion of gas sales from Block G1/61, whose selling price under PSC is much lower than other fields under concessionaires.
Unit cost down QoQ on volume effect. Unit cost in 4Q24 declined 7.8% QoQ to US$29.3/BOE due to volume effect but increased 1.1% YoY on higher sales from high-cost production at Malaysian assets. This lined up with its guidance of US$28-29/BOE. The company’s EBITDA margin of 69% in 4Q24 was slightly below guidance of 70-75% but the average EBITDA margin for 2024 was 73%, still in the target range.
1Q25F and 2025F outlook. Target sales volume for 2025F was guided at 500-510kBOED, up 2-4% YoY, but sales volume in 1Q25 is expected to fall QoQ to 475-480kBOED on further maintenance shutdown of G1/61 (Erawan). This means 1Q25F profit is likely to soften QoQ, assuming stable average oil price QoQ. We maintain our projected 12% weakening in 2025F net profit to Bt69bn from lower average oil price, although EBITDA margin should remain in line with the company’s target of 70-75%.
TP is Bt164, based on DCF (end-2025). We maintain our end-2025 TP of Bt164, based on L/T Dubai of US$63/bbl and Brent of US$65/bbl from 2027F. We continue to keep our volume assumption at 3% below guidance to provide a margin of safety.
Risk factors: 1) Volatile crude oil price, 2) higher unit cost, 3) asset impairment and
4) regulatory change on GHG emissions. Key ESG risk factors are the environmental impact of its business and adapting to transition to clean energy.
