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Op Oppo portunit rtunity y Da Day 2Q/2019 results One family - - PowerPoint PPT Presentation

Op Oppo portunit rtunity y Da Day 2Q/2019 results One family Fueling the future of Thailand DISCLAIMER The information contained in this presentation is intended solely for your reference. This presentation contains forward -


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“One family… Fueling the future of Thailand”

Op Oppo portunit rtunity y Da Day

2Q/2019 results

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The information contained in this presentation is intended solely for your reference. This presentation contains “forward-looking” statements that relate to future events, which are, by their nature, subject to significant risks and uncertainties. All statements, other than statements of historical fact contained in this presentation including, without limitation, those regarding SPRC’s future financial position and results of operations, strategy, plans, objectives, goals and targets, future developments in the markets where SPRC participates or is seeking to participate and any statements preceded by, followed by or that include the words “believe”, “expect”, “aim”, “intend”, “will”, “may”, “project”, “estimate”, “anticipate”, “predict”, “seek”, “should” or similar words or expressions, are forward-looking statements. The future events referred to in these forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, which may cause the actual results, performance or achievements, or industry results to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which SPRC will

  • perate in the future and are not a guarantee of future performance. Such forward-looking statements speak only as of the date on which they are made. SPRC does

not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. The information set out herein is subject to change without notice, its accuracy is not guaranteed, has not been independently verified and it may not contain all material information concerning the Company. SPRC makes no representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one if many possible scenarios and should not be viewed as the most likely or standard scenario. No assurance given that future events will occur or our assumptions are correct. Actual results may materially differ from those provided in the forward-looking statements and indications of past performance are not indications of future performance. In no event shall SPRC be responsible or liable for the correctness of any such material or for any damage or lost opportunities resulting from use of this material. SPRC makes no representation whatsoever about the opinion or statements of any analyst or other third party. SPRC does not monitor or control the content of third party opinions or statements and does not endorse or accept any responsibility for the content or use of any such opinion or statement. SPRC’s securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state of the United States, and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements

  • f such act or such laws.

This presentation does not constitute an offer to sell or a solicitation of an offer to buy or sell SPRC’s securities in any jurisdiction.

DISCLAIMER

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Vision, Mission & Core Values

“One Family… Fueling the Future of Thailand”

“We are a highly engaged Family, dedicated to providing sustained superior returns to our shareholders through industry leading safe and reliable operations, producing quality products that exceed customer expectations, in harmony with our communities and the environment.”

Our Vision: Our Mission: Core Values:

Stars Leader / Outstanding / Role model Professional Integrity / Professionalism / Performance driven Reliable Accountable / Ready / Trustworthy Caring Responsible citizen / Compassion / Sincere

3 Investor Update

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4

CONTENTS 01

Highlights

02

Market overview

03

Operational review

04

Financial performance

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SLIDE 5

5

01

Highlights

02

Market overview

03

Operational review

04

Financial performance

CONTENTS

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SLIDE 6

Highlights

SPRC’s Winning formula

“At SPRC we believe that nothing is more important than being safe and reliable. We work together as one family to protect our employees, the environment, the community, and to be our customers partner

  • f choice.

All of which creates maximum value for SPRC’s shareholders.” Tim Potter, CEO

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2Q/2019 Highlights 97.1%

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Highlights

TOTAL DAYS AWAY FROM WORK RATE (‘DAFWR’)

99.8% 85.1%

91.0%*

UTILIZATION OF EQUIVALENT DISTILLATION CAPACITY (UEDC)** AVAILABILITY

  • EX. TURNAROUND

$2.39/bbl $2.57/bbl

MARKET GRM

* Normalized UEDC excluding economically concern for the best profitability. ** Lower UEDC to optimize economic returns and due to end of run plant conditions.

BOTTOM LINE IMPROVEMENT PROGRAM OPEX PER BARREL Excluding T&I and Project OPEX

$1.81/bbl

THB 0.1202 /share

INTERIM DIVIDEND Dividend payout of 50%

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SLIDE 8

Highlights

SPRC’s Formula for success

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SAFETY

(Injuries per 200,000 man-hours)

▪ Achieved over 6 years without Days Away From Work injury. The last DAFW was 24 Jun 2013. ▪ Achieved 20.2 million man-hours without Days Away From Work injury. PERFORMANCE UPLIFT FROM “BLIP”

US$/bbl

BLIP: Bottom Line Improvement Program

RELIABILITY OPTIMIZATION MARKET GRM

▪ Sustained high availability but lower EDC to optimize economic return during narrowed crack spread in 2Q19 and end of run plant conditions. ▪ Target top quartile performance in availability and utilization among

  • ver 90 refineries in the Asia

Pacific and India Ocean region. ▪ Captured BLIP benefit from good process and crude optimization. ▪ Maximized domestic placement for Gasoline and Diesel. ▪ Lower margins due to weaker crack spreads especially gasoline and higher crude costs relative to benchmarks. OPERATIONAL AVAILABILITY

  • EX. TURNAROUND

A strong foundation of personal safety … …exceptional reliability… …and maximizing GRM …driving optimization & cost efficiencies…

US$/bbl

TOTAL DAYS AWAY FROM WORK RATE

2016 2017 2018 1Q19 2Q19

97.3% 88.8% 94.2% 90.9% 85.1%

2016 2017 2018 1Q19 2Q19

EDC UTILIZATION RATE

99.7% 96.4% 99.1% 99.9% 99.8%

2016 2017 2018 1Q19 2Q19

2.69 2.59 2.93 2.34 2.39

2016 2017 2018 1Q19 2Q19

6.68 7.34 5.67 3.07 2.57 4.10 5.36 4.67 2.51 2.24

2016 2017 2018 1Q19 2Q19

SG GRM

No one gets hurt

*

*Adjusted 1Q19 BLIP number to reflect end of run plant conditions.

.

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2019 Event Project

($256M)

Turnaround & Inspection (T&I) Increase Capacity to 175 KBD Reliability Projects

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  • Schedule has been optimized through a multi-party approach with consultants and primary maintenance and construction contractor.
  • Shut down is scheduled for a period of 45 days (+/- 5 days), starting from 1 November 2019.
  • Operational planning in progress to capture benefits from reliability and capacity upgrades.
  • Lower future structure OPEX per barrel.
  • Looking for margin improvement opportunities post Event project.

Current Status of Event 2019

Highlights

2019 Event Project

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10

01

Highlights

02

Market overview

03

Operational review

04

Financial performance

CONTENTS

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Overview of oil demand growth and GRM

Source: Wood Mackenzie and IHS

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Market overview

Source: IEA, IHS

OIL MARKET OUTLOOK

Million barrels/day Million barrels/day ASIA

(include Middle East)

NORTH AMERICA EUROPE LATIN AMERICA AFRICA INCREMENTAL OIL DEMAND FSU

2018 2019e 2020e

0.48 0.18 0.36

  • 1.00
  • 0.80
  • 0.60
  • 0.40
  • 0.20
0.00 0.20 0.40 0.60 0.80 1.00
  • 0.03

0.07 0.01

  • 1.00
  • 0.80
  • 0.60
  • 0.40
  • 0.20
0.00 0.20 0.40 0.60 0.80 1.00

0.18 0.13 0.07

  • 0.06
  • 0.04

0.04

  • 0.01

0.08 0.06

0.01 0.14 0.70

  • 1.00
  • 0.80
  • 0.60
  • 0.40
  • 0.20
0.00 0.20 0.40 0.60 0.80 1.00

▪ Typical SPRC GRM is in range of US$5-7/bbl.

High product inventory globally

SINGAPORE GRM

US$/bbl

Strong gasoline demand & low crude oil premium

SPRC GRM

Singapore GRM

2018 2019 2020

▪ Global oil demand growth in 2019/2020 is 1.2/1.4 mb/d. Demand in the Middle East and parts of Asia was revised slightly upwards. ▪ Global refining capacity increase in 2019/2020 are 1.8/0.7 mb/d and Asia refinery capacity increase are 1.2/0.4 mb/d.

1 2 3 4 5 6 7 8 9 10 2010201220142016 Q1 Q3 Q1 Q3 Q1 Q3

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Market overview

Overview of product cracks

DUBAI PRICE

72 63 67 2Q18 1Q19 2Q19

US$/bbl

12 4 8 2Q18 1Q19 2Q19

US$/bbl

GASOLINE CRACK

15 13 12 2Q18 1Q19 2Q19

US$/bbl

JET FUEL CRACK DIESEL CRACK

15 13 12 2Q18 1Q19 2Q19

US$/bbl

  • 4

1

  • 2

2Q18 1Q19 2Q19

US$/bbl

FUEL OIL CRACK

DUBAI + U.S. attempts to drive Iranian oil exports down to zero come against the backdrop of a global market that is sufficiently well supplied to avoid price disruptions. + Crude oil prices firmed as supply cuts led by producer club OPEC and U.S. sanctions on Iran and Venezuela's fuel exports outweighed concerns about an economic slowdown.

  • U.S./China trade war brought a concern economic slowdown and as a result push down on demand growth.

GASOLINE + Gasoline prices have been supported by persistent reductions of FCC utilization rates, both within and outside the region. + Seasonal maintenance and refinery outage cause lower production in U.S., Middle East and Asia brought down gasoline stock in major part of the world.

  • Gasoline cracks fell after a three-month rally on increased Chinese exports and reduced imports by Vietnam yearly added to the regional gasoline overhang.

JET + The Asian jet fuel market would likely get some support from the upcoming refinery turnarounds in China, which should cut some of the excess supply in the market.

  • Jet cracks dipped as winter demand begins to bottom out, while arbitrage opportunities to the West have begun to narrow.

DIESEL + Lower export from China and a late start to India’s monsoon season has lent support to gasoil cracks and help soak up some of the excess diesel in the market.

  • Cracks remain under pressure due to ample regional supplies as refineries restart after the end of the maintenance season amidst limited arbitrage opportunities to the west.

FUEL OIL

  • The fuel oil market continued to languish, as bunker demand saw no sign of recovery due the escalating trade war between U.S. and China.

+ Higher consumption from Middle East for power generation. + Price jumped up in June from low western arbitrage flow coming to Singapore, but high M1/M2 spread kicked in at the same time.

KEY HIGHLIGHT 12

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Market overview

100 88

DEMAND GROWTH 2018 (5 mths) – 2019 (5 mths) EXPECTED GROWTH 2020 COMMENTS

▪ Auto LPG demand continue to decline due to price differential.

FUEL OIL AUTO LPG DIESEL JET GASOLINE

425 437 128 128 194 201 +3.9% 38 36 +2.9%

  • 4.0%

2019 2018

  • 12.0%

▪ Healthy demand growth keeps track with GDP growth. ▪ Seasonal import Diesel. ▪ Domestic Fuel oil consumption remains relatively constant.

KBD

Source: EPPO

KBD KBD KBD

  • K. ton/month

+0.4%

▪ Continued strong demand for gasoline. ▪ Import GB95 continue to increase YoY. ▪ Continued growth due to tourism growth and higher demand from airlines.

Strong petroleum demand in Thailand

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01

Highlights

02

Market overview

03

Operational review

04

Financial performance

CONTENTS

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CRUDE INTAKE

Crude

15

Operational review

  • 19 and 22 types of crude processed in 2Q19 and 6M19.
  • Market drives to process more Far East crude.

*Industry Average of 5M19 during January-May 2019 Source: Company data, EPPO

2% 1% 21% 14% 19% 21% 20% 11% 10% 11% 12% 11% 13% 75% 69% 67% 68% 55% 2Q18 1Q19 2Q19 6M19 Industry average 5M19* Middle East Far East Domestic Others

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Operational review

Products

SPRC Competitive Export Industry Average*

▪ Sustained industry average of domestic placement in almost all products. ▪ Export sales including Indochina sales at 5% in 2Q19.

PRODUCT YIELD DOMESTIC SALES

▪ Continued from Q1 optimization to reduce gasoline production and increase sales of high value cracker feed stock due to low crack spreads

  • ver Dubai.

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*Country Demand of 2Q19 during April-May 2019 Source: Company data, EPPO *Industry Average of 2Q19 during April-May 2019 Source: Company data, EPPO

7% 10% 10% 3% 2% 3% 1% 1% 2% 11% 9% 9% 3% 36% 36% 35% 44% 7% 8% 7% 12% 25% 23% 23% 20% 4% 4% 4% 4% 4% 4% 21% 2% 2% 2% 2Q18 1Q19 2Q19 Country demand 2Q19* PGP LPG Light Naphtha Gasoline Jet Diesel Fuel Oil Asphalt Mix C4 Others 86% 84% 90% 84% 86% 86% 4% 3% 5% 2Q18 1Q19 2Q19

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17

01

Highlights

02

Market overview

03

Operational review

04

Financial performance

CONTENTS

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Financial performance

OPEX PER BARREL

Margin and OPEX

▪ Efficient in OPEX management. Maintain NECC* at the breakpoint of quartile 1 and 2 against Asia Pacific. ▪ OPEX of 2Q19 increased due to Turnaround preparation and project OPEX cost.

* Non Energy Cash Cost: Operating expenses exclude energy cost US$/bbl

GROSS REFINERY MARGIN 18

▪ Accounting GRM: ➢ QoQ: Impacted from weak market margin with a slight stock loss of US$0.28/bbl. (Net from stock gain US$0.32/bbl. offset by LCM adjustment US$0.60/bbl.) ➢ YoY: Significantly decreased from low crack spread and stock loss in 2Q19. ▪ Market GRM: ➢ Lower from the continuing of poor crack spread over Dubai even better Gasoline crack but offset with lower Middle Distillates and Fuel oil cracks.

US$/bbl

6.02 3.07 2.57 10.51 7.87 2.29 2Q18 1Q19 2Q19 Market GRM Accounting GRM 1.62 1.97 1.81 0.24 0.79 2.08 2Q18 1Q19 2Q19 T&I and Project OPEX Normal OPEX 1.86 2.76 3.89

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NET INCOME

EBITDA and profitability

US$/bbl

EBITDA

US$ M US$ M

▪ EBITDA and profitability : ➢ 2Q19 EBITDA and Net income significantly decreased mainly from high increase T&I and Project OPEX and lower market refining margin included a slight stock loss of US$3.9M (net from stock gain US$4.4 M offset by LCM adjustment US$8.3 M). ➢ FX gain for 2Q19 increased due to stronger Baht appreciation relative to the U.S. dollar.

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Financial performance

116.2 85.7 (5.6) 233.5 80.2 2Q18 1Q19 2Q19 6M18 6M19 72.8 52.9 (18.9) 153.6 34.0 2Q18 1Q19 2Q19 6M18 6M19

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SLIDE 20

2.3 (82.7) (21.3) 102.6 0.3 1.2

Cash Flow

CASH FLOW

CFO: ➢ Cash generated from profit before tax of US$38.4M with cash used in working capital of US$101.4 due to temporary increase in inventories and LCM reversal of US$53.9M. CFI: ➢ Primarily on projects spending to increase refinery reliability and efficiency. CFF: ➢ Increased from Short term loan of US$102.6M.

US$ M

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Financial performance

Dec-2018 CFO CFF CFI FX Adjustment June-2019 38.4 (101.4) (0.6) Profit before tax D&A and Non cash items Working capital Tax & Interest paid (19.1)

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SLIDE 21

9.1 12.4 17.1 9.6 10.1

Dividend Policy and Yield

  • SPRC’s dividend policy is to pay out at least 50% of net profits semi-annually.
  • 1H19 Dividend payout at 50% of net profit

* Dividend yield based on closing stock price as of the performance period of dividend declaration

DIVIDEND POLICY DIVIDEND PAYMENT

(Avg. 4.2%-4.8%)

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Financial performance

0.2638 1.1824 1.1427 0.5928 0.1202 3.0% 10.8% 7.1% 4.6% 1.2%

  • 0.2000

0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 1.6000 2H15 2016 2017 2018 1H19 Dividend per share Dividend Yield* SETHD Closing stock price as of the performance period

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Looking ahead

No one gets hurt Operational excellence Bottom Line Improvement Program

Low gearing allows opportunities for growth

T&I Event and Capacity Expansion in 4Q19*

22 *The combined costs for the Capacity Increase Project, planned maintenance, and upgrades in 2019 are approximately $256M.

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Appendices

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ASSET BREAKDOWN LIABILITIES & EQUITY

US$ M US$ M

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Financial position

27 40 880 858 393 504 385 383 2 1 Dec-18 Jun-19 Cash and cash equivalents Account receivables Inventories PP&E Other current & non current assets

1,786 1,687

1,182 1,215 24 16 482 555 Dec-18 Jun-19 Current liabilities Non current liabilities Total Equity

1,786 1,687

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Unit: US$ M 2Q18 1Q19 2Q19 YoY QoQ % +/- % +/- Revenues 1,650.4 1,491.7 1,553.0

  • 6%

4% OPEX (27.9) (40.7) (53.6)

  • 92%
  • 32%

EBITDA 116.2 85.7 (5.6)

  • 105%
  • 107%

Depreciation & Amortization (21.1) (21.0) (20.4) 3% 3% Profit for the period 72.8 52.9 (18.9)

  • 126%
  • 136%

EPS (THB per share) 0.54 0.39 (0.14)

  • 126%
  • 135%

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Income statement

6M18 6M19 6M % +/- 3,210.1 3,044.7

  • 5%

(57.4) (94.3) 39% 233.5 80.2

  • 191%

(42.2) (41.4)

  • 2%

153.6 34.0

  • 352%

1.13 0.25

  • 349%
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SALES BY VOLUME

US$/bbl

SALES BY REVENUE

▪ Chevron and PTT account for 87% of total sale in 2Q19 by revenue. ▪ Others are products sold as Petrochemical feedstock and intermediate product exchange.

53% 34% 13% 55% 33% 12%

Others 2Q18 Others 2Q19

48% 35% 17%

Others 2Q18 Others

49% 33% 18%

Others 2Q19

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Sales by customers

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Low gearing means we are financially resilient and able to gear up to seize growth

  • pportunities

STRONG BALANCE SHEET

One of world’s leading oil and gas groups with over a century

  • f experience worldwide. The

Chevron connection brings bargaining power, crude supply,

  • fftake agreements and access

to proprietary technology and systems

CHEVRON RELATIONSHIP STRATEGIC LOCATION

Location in Map Ta Phut ensures low logistics costs with access to dedicated deep water jetty and an SPM for VLCCs. Puts us close to several important customers.

TECHNICAL CONFIGURATION

Our refinery configuration enables us to buy cheaper crudes and turn them into higher value products, including a higher gasoline yield than our competitors.

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The SPRC competitive advantage

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CUSTOMERS(1) DISTRIBUTION(1) REFINERY CRUDE SUPPLY

(1) Based on 2Q19 data

REFINERY Capacity: 165 KBD Single point mooring system 265,000 DWT Power Generation Facilities 41 MW

VLCC

Up to 265,000 DWT

PANAMAX

Up to 80,000 DWT Marine terminal CRUDE Capacity: 4.9 M barrels PRODUCT Capacity: 4.0 M barrels PIPELINE ▪ Supply to north, north east of Thailand and Indochina export market VESSEL ▪ Dispatch to both domestic and export markets at Main Pier ▪ LPG Pier DOMESTIC EXPORT

Middle East 64% Far East 12% Domestic 17% SOURCES OF CRUDE FOR 2Q19

86% 14% ▪ Pipeline connects Map Ta Phut, Sriracha & Bangkok ▪ Connections to petrochemical customers TRUCK 41% 10% 49%

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Business overview

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A brief history

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Key contractual arrangements

CRUDE OIL NATURAL GAS REFINERY POWER AND STEAM PRODUCTS SPMS MARINE TERMINAL 1 2 3 4 5 LPG JET GASOLINE DIESEL FUEL OIL ASPHALT HVGO

PROPYLENE

OTHERS 7 6 8

FEEDSTOCK TECHNICAL & OPERATING OFFTAKE

SPRC BUSINESS KEY AGREEMENTS

New Feedstock Supply Agreement(1) Single Point Mooring System Operating Agreement Natural Gas Sales Contract for Cogeneration and Natural Gas Sales Contract for Petroleum Product Manufacturing Process 1 2 3 Marine Services Transportation Agreement Technical Services Agreement and License Agreement 4 5 Amended Offtake Agreement(1) Propylene Sale Agreement Intermediate Products Exchange Agreement 6 7 8 COUNTERPARTIES COUNTERPARTIES COUNTERPARTIES

(1) Effective upon the first day of trading of SPRC’s shares on the SET

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SPRC Crude Capacity 165 KBD

Naphtha Hydrotreating Unit (NHTU) 19 KBD Crude Distillation Unit (CDU) 165 KBD Vacuum Distillation Unit (VDU) 63 KBD Continuous Catalytic Regeneration Reformer (CCR) 17 KBD Residue Fluidized Catalytic Cracking Unit (RFCCU) 41 KBD Heavy Vacuum Gas Oil Hydrotreating Unit (HVGO HTU) 35 KBD

Whole Cat Naphtha Hydrotreating

(WCN) 23 KBD Jet Merox Unit (JMU) 20 KBD Diesel Hydrotreating Unit (DHTU) 66 KBD Benzene Saturation Unit (BSU) 15 KBD

LPG

Chemical Naphtha

Mogas PGP Jet Diesel Fuel Oil Asphalt

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Refinery complexity

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Energy Management

  • Energy roadmap with

monthly and yearly targets

  • Energy AOS every 2 years
  • US$0.02-0.11 /bbl

Margin Improvement People Efficiency and Waste Management Oil Loss Control

  • Lean sigma
  • Cost leadership
  • US$1-6 MM/year
  • Data reconciliation
  • US$0.02-0.05 /bbl
  • Yearly Innovation Quest

(IQ) and Asset Optimization Studies (AOS)

  • Monthly core team meeting
  • Rigorous benefit tracking

BLIP

US$/bbl

Despite a challenging margin environment, SPRC continues to drive incremental margin improvement through BLIP Crude benefit over Benchmark crudes US$0.55-0.80/bbl Product yield and placement optimization US$0.20-0.90/bbl Process plant optimization US$0.60-0.80/bbl Cracker feed synergy US$0.10-0.40/bbl

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BLIP (Bottom Line Improvement Program)

2.69 2.59 2.93 2.34 2.39

2016 2017 2018 1Q19 2Q19

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Thank You

Any queries, please contact SPRC Investor Relations at email: ir@sprc.co.th Tel: +6638 699 887 Website: http://investor.sprc.co.th Please send us your feedback via QR code below:

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