thai oil public company limited presentation to investors · • top’s new gas turbine q2/07 43...
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Presentation to InvestorsThai Oil Public Company Limited
Arranged by SCB Securities Co., Ltd.15 January 2007
www.thaioil.co.th
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DisclaimerDisclaimer
The information contained in this presentation is
intended solely for your personal reference. Please
do not circulate this material. If you are not an
intended recipient, you must not read, disclose, copy,
retain, distribute or take any action in reliance upon it.
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Corporate Vision, Mission and ValueCorporate Vision, Mission and ValueCorporate Vision, Mission and Value
TOP seeks to be one of the leading fully integratedrefining and petrochemical companies in the region
recognized for our sustainable growth, optimum stakeholder value, and commitment to environmental
and social well-being.
Vision
• To be PTT’s flagship refinery through optimized management of the group’s refining portfolio
• To expand facilities to better meet domestic demandgrowth
• To enhance the competitive advantage of our power generation operations to further solidify the core refining business
• To create a high-performance organization that promotes teamwork, innovation and trust
Mission
P = ProfessionalismO = Ownership & CommitmentS = Social ResponsibilityI = Integrity
T = Teamwork and CollaborationI = Initiative
V = Vision FocusE = Excellent Striving
Value
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ContentsContentsContents
Business OutlookBusiness Outlook
Investment Project UpdatesInvestment Project Updates
Operational & Business UpdatesOperational & Business Updates
Q3/06 Performance Q3/06 Performance
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Thai Lube Base
(TLB)
TOP’s Group StructureTOPTOP’’ss Group StructureGroup Structure
9%55%
SPP program3-on-1 Combined cycleElectricity 118 MWSteam 168 T/hrUtility Supply to Group
IPP program2-on-1 Gas-fired,Combined cycleElectricity 700 MW
Related Business & Earnings Stability
Thai Paraxylene
(TPX)
Capacity: Current: 348 KTA (PX)
72 KTA (MX)
2007: 900 KTA (Total)489 KTA (PX)177 KTA (Bz)144 KTA (To) 90 KTA (MX)
Value Enhancement
Capacity: Lube Base oil: 270 KTA
A fleet of 5 oil & petrochemical vessels with int’l classifications
Total capacity: approx 30,000 DWT
Multi-product Pipeline Capacity: 26,000 mn. Litres/Y.
PTT 20% TOP 24%
100%
56%
100% 100%
Capacity: Current: 225 Kbd
Refinery Petrochem/Lube Base Oil
Power/Renewable Energy Transportation / Others
PTT 26% J-Power 19%
2007: 275 kbd
20%
PTT Group 80%
Thaioil
(TOP)
Independent Power
(Thailand) (IPT)
Thaioil Power
(TP)
Thaioil Marine
(TM)
Thappline
PTT ICT Solutions
(PTT ICT)
PTT 31% Others 60%
30% Maesod Clean
Energy
Mitr Phol Group 35% Padaeng 35%
Sugar Cane Based Ethanol
2009: 0.1 mn. L/D
Core Refining Operations Product Marketing / IT Support
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Regional Oil Demand, Refinery Utilization and GRMRegional Oil Demand, Refinery Utilization and GRM
90% 90%91%86%
81%82%83%82%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2005 2006F50%55%60%65%70%75%80%85%90%95%
China S. Korea Japan India Others Utilization
0
2
4
6
8
1999 2000 2001 2002 2003 2004 2005 2006F
Singapore Complex*
TOP adj. for MX margin
Gross Refining MarginUS$/bbl
Source: *Singapore Complex GRM from Bloomberg
Oil Demand (Kbd) Refinery Utilization
19,813 20,369 20,429 20,676 21,478 22,604 23,048
Source: FACTS, Spring2006 Preliminary
*Exclude feeds to petrochemical plants
23,689
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Regional Oil Demand/Supply OutlookRegional Oil Demand/Supply Outlook
26,90725,293
23,157 23,689 24,51226,364 27,316
22,964 24,221 24,826
2005A 2006F 2007F 2008F 2010F
Total Demand Total Supply
China1) 6,791 416 386 666 550 Japan 4,445 - - 56 - India 2,771 210 64 751 256 Taiwan 1,265 28 - - - Thailand 1,042 - 50 65 - Pakistan 282 - 17 - - Vietnam 5 - - - 121 Others 6,966 - 88 - 25 Total 23,567 654 605 1,538 952
2009-10FKbd Jul'06A 2006F 2007F 2008F
In the past few years, the regional demand growth has been primarily driven by China (account for two-thirds of the regional growth), followed by India.
On the other hand, the bulk of expansions will also come from China and India from 2006-1010.
However, most of China’s refining additions are driven by domestic demand while most of the high quality products from new refineries and expansion in India will be targeted for exported to Western markets.
In Thailand, capacity additions in 2007-2008 will come from TOP (+50 kbd) in Q4/07 and RRC (+65 kbd) in Q3/08.
Regional oil demand & supply are forecasted to be balanced with the annual growth rate from 2006-2010 at slightly above 3%.
Based on the assumptions that refineries in the region are operated at 90% utilization rate, total demand will exceed total supply, in which expansions in the Middle East will help to fulfill the gap.
Kbd
Source: FACTS, Fall 2006
1)Include Monkolia 20 kbd in 2007 2)The Company
Regional Oil Demand Asia Pacific Refining Capacity Additions
Asia-Pacific Demand/Supply Balance
90%
China 6,492 4.3% 6,903 8,634 5.8%Japan 5,102 0.5% 5,073 5,018 (0.3%)India 2,333 1.3% 2,524 2,858 +4.1%South Korea 2,237 0.9% 2,212 2,314 +1.1%Thailand 970 2.3% 1,009 1,112 +2.5%Singapore 816 5.0% 866 1,105 +6.3%Others 5,207 1.1% 5,102 5,866 +3.6%Total Demand 23,157 2.0% 23,689 26,907 +3.2%Total Supply 22,964 0.8% 24,221 27,316 +3.1%
ME Sur/Def 1,305 1,502 1,786
2006F 2010F% Annual Growth
(2006-10F)Kbd 2005A % Growth
2)
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ParaxyleneParaxylene Business OutlookBusiness Outlook
Domestic PX Demand & SupplyStrong Demand for PX Imports to China
Net Imports % of Region Imports00 01 02 03 04 05 06 07 08 09 10
KTA % of Regional Imports
0
1,000
2,000
3,000
4,000
5,000
0%
15%
30%
45%
60%
75%
• Chinese PX imports will continue to grow given that hugh PTA effective capacity will be on-stream in 2007-2008, therefore, creating a vacuum of demand for PX.
• Chinese PX import is expected to increase to 5.5 mn. tons in 2008 and China will become the biggest importer for PX with import accounting for three-quarters of total Asian imports.
Source: CMAI, Mar’06
0
400
800
1,200
1,600
2,000
2004 2005 2006 2007 2008 2009 2010
ATC Exxon TPX DemandKTA
• In 2006, domestic PX demand will increase to 1,796 KTA after completion of the new Indorama’s PTA plant (+429 KTA) in Mar and expansion of Siam Mitsui’s PTA plant (+233 KTA) in Oct.
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-4,000
1,000
6,000
11,000
16,000
21,000
26,000
Group I GroupII/II+
GroupIII/III+
Group I GroupII/II+
GroupIII/III+
Supply Demand
• Lube consumption, mainly on greases, marine and industrial applications, has been closed related to economic growth of the country.
• 2010 Chinese lube requirement is expected be around 5.3 mn. T., causing lube base oil supplies around the region to be shipped to China.
• Demand for Group II/II+ and Group III/III+ is expected to grow with CAGR of 9% and 27% during 2004-1015, respectively.
• Global Group I capacity has fallen steadily following permanent shut-down of some lube base oil plants in Asia due to inefficiency and environmental concerns.
• Therefore, supply of Group I base oil is likely to remain tight in the future as there will be new base oil capacities on Group II&III, but none on Group I.
0
1,000
2,000
3,000
4,000
5,000
6,000
China Japan India S. Korea Indonesia
2000 2005 2010
8.0%6.9% 6.9%
5.8% 5.4% 5.2% 4.9% 4.9% 4.6% 4.5% 4.4%3.4% 3.1%
1.5%
Chi
na
Indi
a
Viet
nam
Paki
stan
Mal
aysi
a
Sing
apor
e
Taiw
an
Thai
land
Indo
nesi
a
S. K
orea
Phili
ppin
es
Aus
tralia
N. Z
eala
nd
Japa
n
Lube Base Oil Business OutlookLube Base Oil Business Outlook
% p.a.
Source: Kline and Company, Inc., Feb’05
Source: The 9th ICIS-Lor World Base Oils Conference, Feb’05
KTA
2004 2015KTA
Forecasted Asian GDP Growth (2004-2008) Global Lube Base Oil Demand & Supply Balance
Major Asia’s Lube Base Oil Demand
Source: The 9th ICIS-Lor World Base Oils Conference, Feb’05
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ContentsContentsContents
Business OutlookBusiness Outlook
Investment Project UpdatesInvestment Project Updates
Operational & Business UpdatesOperational & Business Updates
Q3/06 Performance Q3/06 Performance
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Key Project UpdatesKey Project UpdatesKey Project Updates
• CDU-3 Debottlenecking Q4/07 218 35 148 183 - Overall work progress 48%
- Installation of new KMT unit scheduled to complete in Apr’07.
- Substation, cooling tower and underground drainage system of new crude furnace construction work is in progress.
• SBM Expansion Q3/07 150 70 78 148 - Overall work progress 45%
- Major equipment and 52” concrete coated steel pipe are scheduled to deliver to site according to plan.
- Construction work planned to start in Jan’07
• TOP’s New Gas Turbine Q2/07 43 22 15 37 - Overall work progress 90%
- Gas Turbine, Generator and Heat Recovery Steam Generator installed.
• TPX Expansion Q4/07 282 61 211 272 - Overall work progress 34%
- Foundation work for new units was completed.
- Erection of storage tanks has started since Dec’06.
• Other Projects 79 16 40 56
Projects COD Cost ($ mn.) 2006 2007 06-07 Work Progress as of end’06
Total 772 204 492 696• Other projects include synergy projects with TLB and on going CAPEX for TOP and subsidiaries, but exclude Ethanol project and new IPP bidding.
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Ethanol Project RationaleEthanol Project RationaleEthanol Project Rationale
• Global ethanol for fuel blending in 2005 was nearly 40 bn. L/Y. whereas about 75% of production came from US & Brazil.
• Supply of ethanol is expected to grow at 7-8% p.a. from 2000-2012, to match with increasing ethanol demand for fuel blending.
Global Ethanol Production by Type
(Mn. L.)
Annual Growth Rate
(2000-2012) ~ 7-8% p.a.
• Government plans to phase out MTBE and replace ULG 95 with gasohol (10% ethanol) in 2007, and ULG 91 thereafter.
• Given that Thailand is an agricultural country with abundant supply of tapioca & sugar cane, it provides opportunity to develop a competitive tapioca & sugar cane ethanol plant.
• Insufficient domestic ethanol supply due to high production cost and insufficient ethanol plant capacity.
Justification for Ethanol Business in Thailand Domestic Demand & Supply of Ethanol in 2006
Demand
(Mn. L/D) ULG 95 ULG 91 Total
ULG Consumption ~8 ~12 ~20.0
-Ethanol required (10%) ~0.8 ~1.2 ~.2.0
Supply
Current operated ethanol plant capacity ~0.6
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Economic Justifications
Implementation Plan
• Jul’06 : Board approval to proceed with technology selection, basic engineering design and bid package preparation for the project with capacity of 0.5 mn. L/D
• Sep’06 : Selected Volgelbusch, Austria as technology provider
• Q4//06 : Prepare Project Specification and final cost estimate with Shedden Uhde
• Early-07 : Final board approval and commence construction
• Mid-08 : Commercial operation
TOP’s Ethanol Projects UpdateTOPTOP’’ss Ethanol Projects UpdateEthanol Projects Update
• Ethanol Capacity : 0.5 mn. L/D
• Feedstock-Tapioca Chips : Approx. 0.5 mn. T/Y
• Est. Investment Cost : US$ 120-150 mn.
• Location : Central, Thailand
• IRR : > 15%
Economic Justifications
• Ethanol Capacity : 0.1 mn. L/D (expand to 0.2 mn. L/D 4 years after 1st phase’s COD)
• Feedstock-Sugar Canes : Approx. 0.5 mn. T/Y
• Est. Investment Cost : US$ 40-50 mn.
• Location : Maesod, Tak, Thailand
• IRR : > 15%
Implementation Plan
• Nov’06 : Set up the joint venture company under “ Maesod Clean Energy Co., Ltd.”-Investment partners comprise of TOP (30%), Padaeng Industry (35%) and Mitr Phol Sugar Group (35%).
• Early’07 : Finalize detailed feasibility study• Early-09 : Commercial operation
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Investment Project under study Investment Project under study --Opportunity for New IPP Bidding Opportunity for New IPP Bidding
Possible new IPP Project
Key policies :
• State-owned enterprise (SOE) and any bidder that is directly or indirectly owned by SOE more than 50% is not allowed to bid.
• US$ indexation of Availability Payment is partially allowed if FX moves more than +/- 2 Baht around the reference rate.
• Due to limited natural gas supply, MOE may offer additional incentives for coal-fired project.
• Many Community Development Programs are required. Additionally EIA approval must be obtained prior to PPA execution.
Further to the IPP Bid Solicitation Conference held by EPPO on 15/12/06:
• schedule will be as follows:RFP Issued Apr 2007 Bid Submission Oct 2007Preferred Bidders Named Apr 2008PPA Signed Oct 2008COD - Gas plant Oct 2011COD - Coal Plant Oct 2012
• Expected 3,000-4,000 MW capacity during 2011-2013
• Unit and Plant Size Restriction: 800 and 1,600 MW, respectively
• Annual capacity will be announced following finalization of the new load forecast and power development plan in early 2007.
Opportunity for Thaioil
TOP is in advantageous position given infrastructure available for additional 2x700MW power plants: • Land of 100 Rais (40 acres)• 28” natural gas / raw water pipeline• 230 KV transmission line and available diesel oil storage facilities for back up • EIA approval obtained
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Recent Energy Policy Development Recent Energy Policy Development Recent Energy Policy Development
• Delay the phasing out of ULG 95 from 1 Jan’07 due to insufficient domestic supply of ethanol and lack of choice for high-performance & old-model vehicles.
Ethanol Impact
• Certain local ethanol projects are likely to delay or cancel.
• No impact on TOP, as both of our projects are planned to be commissioning from mid-08 and products are partially targeted for export to China & Japan.
• Plan to implement Euro 4 Standards by 1 Jan’12 to limit Sulfur and Aromatic contents in gasoline and diesel.
Current Euro IV
Sulphur (ppm)- Gasoline 500 50- Diesel 350 50
Benzene (% vol)- Gasoline 3.5 1.0
Euro 4 Standards
• TOP is in advantageous position vis-à-vis all local refineries to meet Euro 4 Standards.
• After TPX expansion, TOP will be able to produce low benzene gasoline according to Euro 4 Standards.
• Minimal further investment is required.
Impact
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TOP TOP -- Strategic RoadmapStrategic Roadmap
600
700
800
900
2004 2005 2006 2007 2008 2009 2010
CAGR(2004-05) 5.5% p.a.
Domestic Oil Demand Outlook (kbd)
Project Completion Ethanol Ethanol New IPP
Capacity 0.5 mn. L/day 0.1 mn. L/day 700 MW
Project Completion TPX Expansion
Capacity (KTA) +480 to 900
Project Completion MRU/Hot Oil CDU-3/SBM/GT
Capacity (kbd) +5 to 225 (Q3) +50 to 275
Power / Other
Petrochemical
Refinery/Lube
2006 2007 2008 2009 2010+
CAGR (2006-10) approx. 2 - 3 % p.a.
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ContentsContentsContents
Business OutlookBusiness Outlook
Investment Project UpdatesInvestment Project Updates
Operational & Business UpdatesOperational & Business Updates
Q3/06 Performance Q3/06 Performance
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Key Highlights for Q3/06Key Highlights for Q3/06
OperationOperation• Maintained high utilization of 108% following completion of hot-oil synergy project which allows TOP
to increase throughput by 5 kbd to 225 kbd since end-Q2/06. • Attained increased lube base production through i) hydrocracker bottom processing and ii) catalyst
change since Apr’06.• Resumed IPT’s 700 MW operation. Insurance compensation partially received Bt. 163 mn. The
remainder of Bt. 262 mn. is expected in Q4/06.
BusinessBusiness• Minimized impact from decline in domestic diesel demand due to flooding by increasing jet export. • Signed JV Agreement with PDI and Mitr Phol Group to study development of 0.1 mn. L/D ethanol plant
(based on sugar cane) at Tak province.
Finance• Declared interim dividend of Bt. 1.50/share for 1H/06 result (29% payout).• Obtained AA- (Long-Term) & F1+ (Short-Term) ratings from Fitch for the issuance of THB debenture
of Bt. 5,500 mn., saving interest ~ US$ 0.7 mn. p.a.
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Improved Operations in Q3/06Improved Operations in Q3/06
79
53
91 9497 94 98 9790
104 97
71 77
92 9299
108108
20051H/06Q3/06
Refinery Utilization PX Production Lube Production Availability Utilization Utilization
Utilization (%)
TOP TPX TLB IPT TP TMTOPTOP TPXTPX TLBTLB IPTIPT TPTP TMTM
• TOP’s utilization was maintained at 108%, thanks to continuous product demand, effective operational management
and well-experienced management and staff.
• TPX operated at nearly full capacity, as a result of strong domestic demand and rising PX price.
• TLB’s production increased to 94% (+15% from 1H/06) following the 1st major turnaround in Apr’06 and through
operational synergy with TOP Refinery through Area Production Unit (APU) concept.
• After CT-1 transformer was repaired and reinstalled on 20 Jun’06, IPT has resumed its plant operation at full 700 MW.
Q3/06, therefore, has seen its availability significantly improved to 98% (from 53% during 1H/06).
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Q3/06 Q3/06 -- Weaken Global & Regional Oil PricesWeaken Global & Regional Oil Prices
20
30
40
50
60
70
80
90
26%
Q1/05 Q2 Q3 Q4 Q1/06 Q2 Q3 Q4
• Crude oil prices continued to rise during the first half of Q3/06 before quickly turning to a sharp decline, due principally to:-
• high US & OECD crude stocks while the impact from US hurricane season was unexpectedly limited,
• removed concern on geopolitical tension in the Middle East.
• Average refined product prices plummeted in Q3/06, resulted from:-
• unexpected rise in US gasoline stock (8-years high) following the end of driving season,
• poor demand from China (fuel oil) & Indonesia (diesel & fuel oil) due to high inventory and hefty Western & Indian cargoes.
• Weaker-than-expected demand & higher-than-expected stock caused product spreads to decline in Q3/06.
• Supported by demand, jet-dubai spread reduced only modestly. Jet margin was still US$ 3.0/bbl & US$ 8.3/bbl over diesel & gasoline margins.
• Product Spread recovered early Jan’07 due to strong demand in Gasoline and Fuel Oil from Australia and China
Crude & Product Price Movement - MOPS
Diesel Gasoline
Dubai
Fuel Oil
US$/bbl
Jet
Dubai (M/E)
Q2/06 63.8 19.8 21.7 20.6 -11.4
Q3/06 65.9 11.7 20.0 17.0 -16.8
Q4/06 57.2 7.0 17.7 13.1 -14.6
ULG 95 -Dubai
Jet -Dubai
Diesel -Dubai
Fuel Oil -Dubai
Oil Prices / Spreads – MOPS (US$/bbl)
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Soften Domestic Demand during JanSoften Domestic Demand during Jan--OctOct’’ 0606
121 118 97 107 108
341 323291
339 315
82 7574
74 77
124 125121
125 123
97 98106
93 101
10166 160 90 109
55 135 95 81 107
0
200
400
600
800
1,000
1Q/06 2Q/06 Q3/06 FY05 10M/06
Source: DOEB, Ministry of Energy and Company *RRC 145 kbd from its Offering Memorandum
Remark: Exclude LR exchange between TOP/BCP in intake data, Domestic oil demand excluded bitumen
(Kbd)
Domestic Oil Demand / Refinery Intake 10M/06 Intake / Utilization by Major Refineries
• Domestic demand during Jan-Oct’06 was down to 724 kbd (-2% you), caused mainly by the higher oil price and decrease in demand of diesel (-7%) due to flooding and slowdown in industrial & transportation sectors.
• On the other hand, Thailand had a record export during Jan-Oct’06 of 150 kbd (+16% yoy), as refineries increased diesel and jet exports.
• Average refinery’s utilization remained strong at about 91%.
• TOP continued to operate at high level of utilization (105%).
TOP RRC SPRC ESSO BCP
149 60
5088
Intake (Kbd) 229 157 157 180
IRPC
Utilization (%) 104103 108 84
(Intake)921 940 909 939944
10M/06Chg. vs FY05
LPG +8%Gasoline -1%Jet/Kero +4%Diesel -7%FO +1%
Total Demand -2%
Total Export +16%
765 739 689 738 724
Domestic Oil Demand
Net Export
PetrochemFeeds
Domestic Oil Demand Growth in 10M/06
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Highly Complex & Flexible Configuration Allows for Highly Complex & Flexible Configuration Allows for Profit MaximizationProfit Maximization
81% 81%
17%2%
11% 11%
43% 36%
14% 22%
25% 25%
7% 6%17%2%
TOP’s Crude Mix and Oil Product Yield
Middle
Heavy
LightLPGGasoline
Jet/KeroseneDiesel
Fuel Oil
F/ELocal
M/E
Q2/06 Q3/06
TOP’s Export Sales
Q2/06 : 38 kbd Q3/06 : 71 kbd
+87%Gasoline
49%
LPG 28%
Diesel 23%
Gasoline 38%
LPG 4%
Diesel 27%
Jet32%
• With multiple cracking facilities, TOP has capitalized on its flexibility to process up to 81% of Middle East crude, allowing the company to optimize its refinery economic operations.
• TOP produced more jet for export at the expense of diesel in Q3/06 to capture higher jet margin and to compensate for lower diesel demand in the country.
• TOP is a refinery which can produce largest jet production among local refineries.
• TOP’s export grew to 71 kbd in Q3/06, (from 38 kbdin Q2/06), which represented about 39% of total country’s exports.
• TOP captured higher margin by focusing on jet exports (32% of its export in Q3/06) as jet commanded approx. US$ 3.0/bbl over diesel.
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30
40
50
60
70
80
GRM & TOP’s PerformanceGRM & GRM & TOPTOP’’ss PerformancePerformance
• With soften product prices & weak domestic demand, marketing GRM dropped from US$ 8.0/bbl in Q2/06 to US$ 4.35/bbl in Q3/06.
• Plunging crude oil price in Q3/06 has caused a stock loss of US$ 1.65/bbl, though LIFO inventory method means volatility of crude prices have less impact on TOP’s stock gain/loss.
• TOP’s accounting GRM declined to US$ 2.70/bbl in Q3/06 and US$ 5.98/bbl for 9M/06.
• Net profit in Q3/06 declined to Bt. 783 mn. (-83% YoY & -84% QoQ) and for 9M/06 of Bt. 7,923 mn. (-16% YoY).
6.52 8.005.21 5.39
2.00
(1.65)
0.59
4.35
2.62
2.69
Marketing GRM Stock Gain/Loss
7,252 7,825
2,056
17,942
12,096
4,503 4,999
783
9,4327,923
EBITDA Net Profit(Bt. mn.)TOP’s Performance
Q3/06 9M/06
%YoY %QoQ %YoY
EBITDA -72% -74% -28%Net Profit -83% -84% -16%
TOP’s Gross Refining Margin - LIFO
8.5210.62
2.70
7.905.98
(US$/bbl)
Q3/05 Q2/06 Q3/06 9M/05 9M/06
Dubai Spot Prices
US$/bbl
44.3 49.8 55.7 54.3 59.9 64.8 65.9 57.362.051.0
Q1/05 Q2 Q3 Q4 Q1/06 Q2 Q3 Q4
Q3/05 Q2/06 Q3/06 9M/05 9M/06
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-
200
400
600
800
1,000
1,200
1,400
1,600
(US$/Ton)
PX
MX
ULG 95
PX, MX and ULG 95 Spot Prices / Margins
Q1/05 Q2 Q3 Q4 Q1/06 Q2 Q3 Q4
513 331 262 378 403 404 732 575 PX-ULG 95529371
• Spot PX price reached US$1,400/T and PX-ULG 95 margin jumped to $732/T in Q3/06, as a result of:-
• strong PX demand from PTA plants,
• less supply inflow from the US as there is more demand for Aromatics as gasoline blending to replace MTBE, while supply limited - BP plant in Texas only partially resumed its operation,
• strong PX demand in China as many new Chinese PX plants could not start commissioning as planned,
• ULG 95 price weakened as driving season’s ending in the US and there are heavy flooding in some Asian countries, e.g. Thailand & Korea.
• TPX’s net profit hit a record high of Bt. 1,965 mn. in Q3/06 and Bt. 4,343 mn. for 9M/06.
• Refinancing & repayment helped reduce interest to Bt. 93 mn. for 9M/06 vs. Bt. 179 mn. for 9M/05.
1,021 1,235
3,021
4,706
2,110 2,371
4,343
1,965
1,094852
EBITDA Net Profit(Bt. mn.)TPX’s Performance
Q3/06 9M/06
%YoY %QoQ %YoY
EBITDA +107% +71% +56%Net Profit +131% +80% +83%
PX Margin & TPX’s PerformancePX Margin & PX Margin & TPXTPX’’ss PerformancePerformance
Q3/05 Q2/06 Q3/06 9M/05 9M/06
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Lube Base Margin & TLB’s PerformanceLube Base Margin & Lube Base Margin & TLBTLB’’ss PerformancePerformance
-
200
400
600
800
1,000
1,200
• Spot base oil margin increased due to:-
• regional supply tightness as total demand (11.7 mn. MT) outpaced total supply (11.2 mn. MT) in the region,
• production problems at some integrated lube base & refinery plants, i.e. Shell (Singapore) Refinery & Pertamina’s Cilacap Refinery (Indonesia),
• oversupply of regional HSFO from Western & Indian cargoes suppressed feedstock costs.
• In Q3/06, TLB’s net profit increased slightly QoQ to Bt. 697 mn., as a result of:-
• gradual increase in lube base margin,
• improved production yield by 15% from 1H/06 to 94%, following its 1st major turnaround in Apr’06.
• Although TLB had to start paying corporate income tax of Bt. 66 mn. (after fully utilized loss carried forward of Bt. 2,011 mn. in Jul’06), net profit for 9M/06 increased to Bt. 1,750 mn. (+29% YoY).
HSFO
500 SN
500 SN & HSFO Spot Prices / Margins(US$/Ton)
297 283 319 429 483 526 622 687 500 SN–HSFO
Q1/05 Q2 Q3 Q4 Q1/06 Q2 Q3 Q4
580332
528748 843
1,435
2,052
501 674 697
1,352
1,750
Q3/05 Q2/06 Q3/06 9M/05 9M/06
EBITDA Net Profit(Bt. mn.)
Q3/06 9M/06
%YoY %QoQ %YoY
EBITDA +60% +13% +38%Net Profit +39% +3% +29%
TLB’s Performance
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TOP’s Integrated Operations Reduce Earnings VolatilityTOPTOP’’ss Integrated Operations Reduce Earnings VolatilityIntegrated Operations Reduce Earnings Volatility
9.591H/06
7.65
1.630.31
TOP TPX TLB
Integrated Gross Margins
+ +
(US$/bbl)
2.70
2.860.81
TOP TPX TLB
• Forward integration with petrochemical and lube base production allows TOP to capture higher value from the hydrocarbon value chain and reduce earnings volatility.
6.37+
+
Q3/06
-34%
Crude
-65%
7.654.65 2.70
10.62
2.70
Q1/06 Q2/06 Q3/06 1H/06 Q3/06
GRM
(US$/bbl)
403 404
732
403
732
Q1/06 Q2/06 Q3/06 1H/06 Q3/06
+82%
PX - ULG 95
(US$/T)
483 526622
514622
Q1/06 Q2/06 Q3/06 1H/06 Q3/06
+21%
LB - HSFO
(US$/T)
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ContentsContentsContents
Business OutlookBusiness Outlook
Investment Project UpdatesInvestment Project Updates
Operational & Business UpdatesOperational & Business Updates
Q3/06 Performance Q3/06 Performance
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9,737 10,232
24,20121,576
13,47614,754
5,9936,8856,2543,783
Q3/05 Q2/06 Q3/06 9M/05 9M/06
EBITDA Net Profit
Financial HighlightsFinancial Highlights
(Bt. mn.)
Power & Transport4%
9M/05 NP - Bt. 13,476 mn.
+9%
9M/06 NP- Bt. 14,754 mn.
Q3/06 NP - Bt. 3,783 mn.Q3/05 NP - Bt. 6,254 mn.
-40%Refinery
69%
PX13%
LB8%
Power & Transport10%
Refinery69%
PX17%
LB10%
Q3/06 9M/06
%YoY %QoQ %YoY
EBITDA -38% -41% -11%Net Profit -40% -45% +9%
PX48%
Refinery 19%
LB17%
Power & Transport16%
PX28%
Refinery 52%
LB11%
Power & Transport9%
• Group’s EBITDA and net profit declined in Q3/06 mainly due to weak refinery business.
• However, thanks to robust PX and lube base markets, net profits from subsidiaries rose significantly, which helped compensating for the decline contribution from the refinery.
• TPX and TLB contributed as much as 65% to the Group’s consolidated net profits in Q3/06 and 39% for 9M/06.
*Percentages were based on total amount before deducting inter-company transactions.
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Consolidated Income StatementsConsolidated Income Statements
(Bt. mn.) Q3/05 Q2/06 Q3/06 % YoY % QoQ 9M/05 9M/06 % YoY
Sales Revenue 70,723 74,720 77,807 +10 +4 182,030 217,386 +19
EBITDA 9,737 10,232 5,993 (38) (-41) 24,201 21,576 (11)
EBIT 7,883 8,592 4,054 (49) (53) 19,317 16,232 (16)
Interest Expenses 546 477 481 (12) +1 1,614 1,420 (12)
EBT 7,753 8,570 4,084 (47) (52) 16,633 17,451 +5
FX Gain/(Loss) 416 455 511 +23 +12 (1,070) 2,639 (347)
Tax Expense 1,499 1,685 301 (80) (82) 3,157 2,697 (15)
Net Profit 6,254 6,885 3,783 (40) (45) 13,476 14,754 +9
Thaioil 4,503 4,999 783 (83) (84) 9,432 7,922 (16)
Subsidiaries 1,751 1,886 3,000 +71 +59 4,044 6,832 +69
EPS (Bt/share) 3.07 3.37 1.85 (40) (45) 6.61 7.23 +9
Bt/US$ - ending 41.11 38.33 37.79
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Financial Highlight Financial Highlight -- Net ProfitNet Profit
Total TOP TPX TLB IPT TP TM
6,254
4,5033,783
697 56384 30131499501
8527837
1,965
Q3/05 Q3/06 Q3/05 Q3/06 Q3/05 Q3/06 Q3/05 Q3/06 Q3/05 Q3/06 Q3/05 Q3/06 Q3/05 Q3/06
(Bt. mn.)Q3/06 Net ProfitBt. 3,783 mn.
-40%
PX48%
Refinery 19%
LB17%
Power & Transport16%
995 274
9,432
13,476
843531691,3522,371 1,750
7,923
14,754
28
4,343
(Bt. mn.)+9%
9M/06 Net ProfitBt. 14,754 mn.
PX28%
Refinery 52%
LB11%
Power & Transport9%
9M/05 9M/06 9M/05 9M/06 9M/05 9M/06 9M/05 9M/06 9M/05 9M/06 9M/05 9M/06 9M/05 9M/06
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Financial StrengthsFinancial Strengths
Balance Sheet
Dividend
Long-Term Debt Profile
40,28435,869
74,004
57,045
70,967
33,018
27,064
Non-currentAssets
OtherLiabilities
TotalEquities
LT DebtTotal Assets 115,427124,169
(Bt. mn.)
Current Assets
Treasury Policy
Net Debt / Equity <= 1.0x
Net Debt / EBITDA <= 2.0x
131,049
2004 2005 Q3/06
12.513.5
11.1
1.30.70.8
0.30.6
0.42004 2005 Q3/06
Financial Ratio Highlights
ICR
Net Debt / EBITDA
Net Debt / Equity
7.829.19
5.38
1.803.50
1.50
25%40%
29%
2004 2005 1H/06
EPS Dividend Dividend Payout
25% Minimum Dividend Payout
14,395 13,159
29,099
10,015 5,894
5,630
8,274
15,580
1,170
2004 2005 Q3/06
JPY Loan
THB Loan
US$ Loan
US$ Bond
US$ / Bt. ~ 79 / 21
Fixed / Float Interest ~ 57 / 43
Capital Market / Bank ~ 49 / 51
Avg. Cost of Debts ~ 6.4 % p.a.
Q3/0640,284
35,869
27,064
*Adjusted to full year EBITDA
(Bt./Sh.)
(Bt. mn.)
(49%)
(30%)
(21%)
(Times)
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Recent Financial DevelopmentRecent Financial Development -- TOPTOP
• Successfully launched 3-Year & 7-Year Baht 5,500 mn. debenture to local institutional investors at 2.2 oversubscribed in end-Oct’06.
Bond Details
Type : THB Unsubordinated Unsecured
Debenture
Issue Amount : Tranch 1 - Bt. 2,750 mn. (3 Years)
Tranch 2 - Bt. 2,750 mn. (7 Years)
Coupon : Fixed Rate – Semi-Annually Payment
3-Year Bond @ 5.39% p.a.
7-Year Bond @ 5.70% p.a.
Issue Date : 31 October 2006
Redemption : Bullet at Maturity
Issue Rating
• AA- (tha) from Fitch Ratings (Thailand)
Benefits
• Fund investment projects and increased
working capital requirement
• Diversify sources of funds
• Increase financial flexibility
• Spread-out repayment profile by
matching bond maturities with existing
long-term debt repayment
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SummarySummary
• Refinery margins have proven to be quite volatile from quarter to quarter, influenced by
• unstable geopolitical situations
• seasonality (or the lack of it) – hurricane, flooding, cold winter
• level of inventories, which tends to overshoot or undershoot.
• Fundamental of the refining industry however has not changed, as the global/regional refining capacity additions are still
lagging demand growth.
• TOP’s complex configuration and highly-efficient operations allow for profit maximization, amid volatile demand & prices.
• TOP’s forward integration into petrochemical & lube base production allows TOP to capture higher value-added from the
hydrocarbon value chain and reduce earnings volatility.
• Temporary weakness in refinery margin was compensated by robust aromatics and lube base oil business. Both PX &
lube base oil margins have registered their record levels. TPX &TLB combined contributed as much as 65% of Group’s
net profit in Q3/06.
• Our refinery debottlenecking & TPX’s expansion will further enhance our competitiveness (economy of scale, low-cost
operations & meeting stringent product specs) & allow us to captive added value (BZ & TO).
• Investment in ethanol & new IPP will further improve the quality & stability of our earnings.
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THANK YOU
Any further questions, please contact Investor Relations Dept.
Tel: (662) 299-0124
Fax: (662) 617-8295
Email: [email protected]
Website: www.thaioil.co.th
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AppendicesAppendices
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• 2nd largest in Thailand in terms of total revenue ~ US$ 6.3 bn. in 2005.
• 8th largest market cap. ~ US$ 3.5 bn. (3% of SET) & 3rd most liquidly traded on SET ~ US$ 21 mn. daily (5% of SET).
• Ranked in Forbes’ global survey 2006 among 2,000 leading companies (one of 13 Thai companies).
• Largest and most successful IPO / listing on SET (US$ 830 mn.) since PTT’s in 2001.
• Best Newly Listed Company & Most Improved Companies in Asia – 2005
• Best Newly Listed Company in Thailand – 2004
• Best IPO and Equity Deal – 2004
• One of 61 companies from 402 Thai listed companies in SET to receive Best Corporate Governance Report Award 2006
• Highest credit-rated amongst pure-play refineries in the region.
• Fitch’s LT: AA-(tha) & ST: F1+(tha)
• Moody’s Baa1
• S&P’s BBB
• Strong shareholder base
PTT 49.54%
Free Float (Thai) 19.81%
Free Float (Foreign) 23.47%
Others 7.18%
TOP TOP –– One of Thailand Premier CompaniesOne of Thailand Premier Companies
Note: As of 30 March 2006
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TOP – One of Region’s Leading RefineriesTOP TOP –– One of RegionOne of Region’’s Leading Refineriess Leading Refineries
• Nationally: • Largest, most complex & highly integrated. • The flagship refinery of the PTT group. • Advantageous site location (120 km east of Bangkok) –
Close to the market.• Highly capable and experienced management / staff.
• Regionally: • One of the most complex in the region with TCU, HCU, FCCU,
CCR and ISOM.• High operational flexibility from multiple-unit configuration.• High complexity ratios (Oil & Gas Journal / Nelson Index – 8.6).• Top-ranked performance according to Shell’s and Solomon’s
benchmarking exercise: • High efficiency / utilization• Low cash operating cost
• Well diversified earnings through significantly increase in subsidiaries’ contributions.
Gulf of Thailand
Total Refining Capacity = 1,042 kbd
ESSO (170 kbd)
IRPC (150+65 kbd)
BCP (120 kbd)
SPRC (150 kbd)RRC (145 kbd)
TOP (225 kbd) (275 kbd) PTT’s Flagship Refinery
Bangkok
RPC (17 kbd)
Source: PTIT Focus Special Annual Report 2004, except for capacity figure for RRC (based on RRC Offering Memorandum)
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TOP RefineryTOP Refinery’’s Simplified Process Diagrams Simplified Process Diagram
CDU-1
CDU-2
CDU-3
TCU19,300
HCU-1
FCCU10,300
CCR-1
HDT-1
KMT2,400
HDS-1
LPG
ULG 95
JET
KEROSENE
GAS OIL
ULG 91
HCU-247,600
CCR-250,000
HVU-1
HVU-2
HVU-395,000
HDT-2
HDT-374,900
210,000
FUEL OIL
HDS-2HDS-374,000
MXMX*34,300
Crude
Distillation/SeparationConversion/UpgradingTreating
Long Residue
LVGO
Gas Oil
Kerosene
CDU Overhead
Short Residue
TC Residue
TC Waxy
Heavy Cycle Oil
HC Gas Oil
HeavyNaphtha
Platformate
LPG
Light Plat
Light Cycle Oil
HC
Ker
o
Waxy
CC Gasoline
ADIP
Isomerate
NGL72 RON
Mixed Xylene
50 RON
70 RONISOM21,500
Waxy
IN-LINE
BLEND
BATCH
BLEND
LightNaphtha
Imported LR
TC Kero/GO
95 RON
103 RON
89 RON
91 RON
*Sold to TPX in Apr’05 34
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One of the Most Complex Refineries in Asia PacificOne of the Most Complex Refineries in Asia Pacific-- Oil & Gas JournalOil & Gas Journal
72% 48% 44% 33% 32% 32% 29% 22% 18% 16%
TOP Zhenhai Reliance S-Oil Formosa BPCL SingaporePetroleum
Esso Malaysia Indian Oil SK Corp
(%)
Higher conversion ratios result in higher refining margins+50 kbd after debottleneck in ‘07
Hydrotreating-to-Refining Ratio2)
90% 80% 71% 63% 44% 42% 42% 28% 15% 10%
TOP* Reliance Formosa S-Oil SingaporePetroleum
Esso Malaysia SK Corp BPCL Zhenhai Indian Oil
Ability to meet more stringent product specifications at lower costs
Source: 2006 Oil and Gas Journal and *the Company1) Hydrocracking, catalytic cracking, thermal cracking, catalytic reforming and isomerization capacities divided by total crude distillation capacity2) Hydrocracking, hydrotreating and hydrodesulfurization capacities divided by total crude distillation capacity
Upgrading-to-Refining Ratio1)
56%
*
+50 kbd after debottleneck in ‘07
(%)
70%
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Consistently Outstanding Performance Consistently Outstanding Performance -- SGSI Worldwide Annual BenchmarkingSGSI Worldwide Annual Benchmarking
2004Peer group comparisions
1st Tercile2nd Tercile3rd Tercile
• TOP performed very strongly when benchmarked against the global peers.• The company ranked in the first tercile for five out of eight benchmarks, evidenced of its highly efficient operations.• High Maintenance Effort and Personal Indices were offset by low labor costs.
Operating Cost Index
Shell Personnel Index (Based on Headcounts)
2005
CELCorrected Energy Loss
Maintenance Effort(Based on Headcounts)
Avg. Personnel Cost
Utilization
OperationalAvailability
AnnualizedMaintenance
Costs
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Excellent Position with Respect Excellent Position with Respect to Domestic Competitionto Domestic Competition
Thai Refinery Product Mix & Configuration vs. Thailand Demand
Source: PTIT Focus Special Annual Issue 2004, *RRC’s Offering Circular Note: 1) 9M/06 Thailand demand 2) BCP long residue sent for upgrading at TOP
16% 10% 14% 21% 21% 11%34%
54%57% 41%
56% 56%47%
30% 33%45%
23% 23% 14% 18%
45%
• TOP is the largest and most sophisticated refinery in Thailand.• The various conversion units enable TOP to maximize middle distillate production, the majority of Thai market demand,
while minimizing fuel oil production.• They also provide significant flexibility in feedstock selections.
Middle HeavyLight
TOP Esso RRC SPRC IRPC BCP
225 kbd (22%) 170 kbd (17%) 145 kbd (14%)* 150** kbd (14%)* 215 kbd (21%) 120 kbd (12%)
ISOM2 CCR
2 HCU3 HDSFCCTCU
3 CDU
CCR
HCUHDSTCU
CDU
PUCCR
HDSFCC
2 CDU
CCR
RFCC
CDU
ISOM
DCC
Cond.SplitterCDU
PENEXPU
HDS
2 CDU
12%2)
30%
1)
Petrochemical Feed
31%
54%
15%
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Q3/05 Q3/06 YoY
Utilization 95% 97% +2%
EBITDA 212 203 (4%)
Net Profit 131 84 (36%)
TLB100%
Performance Breakdown by CompanyPerformance Breakdown by CompanyPerformance Breakdown by Company
(Bt. mn.)
100%
TPX
Q3/05 Q3/06 YoYProduction 101% 97% (4%)PX-ULG95 ($/t) 262 732+179%EBITDA 1,021 2,110+107%Net Profit 852 1,965+131%
Q3/05 Q3/06 YoYProduction 85% 94% +9%500SN-HSFO ($/t) 319 622 +95% EBITDA 528 843 +60%Net Profit 501 697 +39%
Q3/05 Q3/06 YoY
Utilization 97% 90% (7%)
EBITDA 30 20 (33%)
Net Profit 30 7 (77%)
100%
TM
Q3/05 Q3/06 YoY
Avail. 97% 98% 1%
EBITDA 698 763 +9%
Net Profit 499 563 +13%
55%
56%24%
TP
IPT
Q3/05 Q3/06 YoYUtilization 107% 108% +1%GRM ($/bbl) 8.52 2.70 (68%)EBITDA 7,252 2,056 (72%)Net Profit 4,503 783 (83%)
TOP ConsolidatedThaioil’s Group
Q3/05 Q3/06 YoY
9,737 5,993 (38%)6,254 3,783 (40%)
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Cash Flow 2005 & 9M/06Cash Flow 2005 & 9M/06
(Bt. mn.) 2005 / 9M/06
Operating Cash Flow 20,404 18,041
Net income & non-cash adj. 28,946
(8,542)
22,465
Change in assets & liabilities (4,424)+
Financing (12,113) (15,854)
Repayment of LT loans (31,799)
25,597
(3,799)
(2,112)
(8,334)
Proceed from LT Loan & Notes 1,479
Dividend payment (7,298)
Interest (1,701)
+
Free Cash Flow
16,697 12,531 +
=
CAPEX & Investment (3,707) (5,510)
CAPEX (PP&E) (4,377)
670Other investment
(5,723)
213
Beginning Cash
6,667 11,252
Net Increase in Cash
4,584 (3,323)
Ending Cash
11,251 7,929
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Effect of accounting standard changeEffect of accounting standard change
Equity to Cost Method(Investment Account in F/S “Thaioil only”)• Implementation in FY 2007
• 2006 and 2007 F/S (Thaioil only) :
- Decrease in Retained Earning (Bt18,000 mn)
- Decrease in Net Profit (Bt7,400 mn)
LIFO to Weighted Average (Crude Inventory)
• Implementation in FY 2007
• Impact to 2006 F/S (Thaioil only):
+ Increase in inventory (Bt300 mn)
+ Increase in net profit after tax (Bt300 mn)
No effect to cash flow position and dividend payment.
Summary