Opportunity Day 3Q/2017 results One family fueling the future of - - PowerPoint PPT Presentation

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Opportunity Day 3Q/2017 results One family fueling the future of - - PowerPoint PPT Presentation

Opportunity Day 3Q/2017 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 - looking statements


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“One family … fueling the future of Thailand”

Opportunity Day

3Q/2017 results

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DISCLAIMER

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,

  • ther 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 operate 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

  • r 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 of 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.

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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

  • ur communities and the environment.”

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

Our Mission: Our Vision: Core Values:

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Contents

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Highlights Market overview Operational review Financial performance

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Highlights Market overview Operational review Financial performance

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Contents

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Update RFCCU Shutdown

Market overview Highlights Operational review Financial performance 6

Residue Fluidized Catalytic Cracking Unit (RFCCU) 41 KBD

  • What happen on RFCCU in Oct?
  • There were issues on reliability of equipment

and products quality.

  • How long of maintenance period?
  • 20 days during 10 – 30 Oct.
  • What impact to utilization rate?
  • It will impact only October’s rate. We shut

down only RFCCU whereas others continued to operate.

  • What impact to margin?
  • It’s approximately US$18M (AT).
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3Q/2017 Highlights

TOTAL DAYS AWAY FROM WORK RATE (‘DAFWR’)

98.9% 94.0%

UEDC*

AVAILABILITY

  • EX. TURNAROUND

$2.27/bbl

$8.91/bbl

MARKET GRM

* Utilization of Equivalent Distillation Capacity

BOTTOM LINE IMPROVEMENT PROGRAM

Market overview Highlights Operational review Financial performance

$ 1.77/bbl

OPEX PER BARREL

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SPRC’s winning formula

“At SPRC our safety

  • bjective is simple:

No incidents No injuries We do whatever it takes to make sure our people go home safely and in good health to their families each and every day”

Bill Stone, CEO

Market overview Highlights Operational review Financial performance 8

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SPRC’s formula for success

SAFETY

(Injuries per 200,000 man hours)

▪ Last DAFWR over 4 years ago (24 Jun 2013) ▪ Achieved 14.9 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 top quartile YTD performance in availability and utilization among over 90 refineries in the Asia Pacific and India Ocean region ▪ Lower utilization from low RFCCU throughput resulted in low CDU and downstream unit throughput ▪ Lower benefit from opportunity crude as favorable benchmark crude generated more positive on margin ▪ Low seasonal domestic demand ▪ No synergy benefit as economics did not support unequal transfers ▪ High CDU throughput and crude

  • ptimization benefit from high

crude selection flexibility post CDU pit stop ▪ Higher margins due to strong product crack spreads ▪ Stay competitive over Singapore margin thru Bottom Line Improvement margin captured 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

Market overview Highlights Operational review Financial performance

2014 2015 2016 1Q17 2Q17 3Q17

91.9% 97.8% 97.3% 95.2% 84.7% 94.0%

2014 2015 2016 1Q17 2Q17 3Q17 EDC UTILIZATION RATE

99.7% 99.8% 99.7% 99.0% 97.3% 98.9%

2014 2015 2016 1Q17 2Q17 3Q17

2.29 2.95 2.69 3.11 2.46 2.27 2.62

2014 2015 2016 1Q17 2Q17 3Q17 9M17

6.15 10.40 6.68 7.98 6.85 8.91 3.32 5.63 4.10 4.99 4.63 6.36

2014 2015 2016 1Q17 2Q17 3Q17

SG GRM

Source: Company Data

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Overview of oil demand growth and GRM

OIL MARKET OUTLOOK SINGAPORE GRM

Market overview Highlights Operational review Financial performance

Source: IEA

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Million barrels/day

Source: Wood Mackenzie and IHS

▪ Asia is the global demand driver with highest demand growth ▪ Expected CDU growth between year 2017 - 2022 is 300-500 KBD/ year in Asia and ME Million barrels/day ASIA

2015 2016e 2017e

NORTH AMERICA EUROPE LATIN AMERICA AFRICA INCREMENTAL OIL DEMAND

0.39 0.14 0.14 0.29 0.22 0.14

  • 0.04

0.15 0.09 0.23 0.10 0.13

  • 0.06
  • 0.12

0.00 1.22 1.02 0.87

FSU

1 2 3 4 5 6 7 8 9 10 2010 2012 2014 2016 Q2 Q4 Q2 Q4

US$/bbl Strong gasoline demand & low crude oil premium Subprime crisis ▪ Typical SPRC GRM is in the range of $5-7/bbl ▪ 2015 SPRC GRM vs. Singapore GRM was aided by very low crude premiums and high domestic product placement

SPRC GRM Singapore FCC GRM 2017 2018

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Contents

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Overview of product cracks

DUBAI PRICE

43 50 50 3Q16 2Q17 3Q17

US$/bbl

Market overview Highlights Operational review Financial performance

12 14 16 3Q16 2Q17 3Q17

US$/bbl

GASOLINE CRACK

11 11 13 3Q16 2Q17 3Q17

US$/bbl

JET FUEL CRACK DIESEL CRACK

11 11 14 3Q16 2Q17 3Q17

US$/bbl

  • 4
  • 2
  • 1

3Q16 2Q17 3Q17

US$/bbl

FUEL OIL CRACK

DUBAI + High demand after refineries back from Hurricane GASOLINE + Refineries shutdowns in U.S. from Hurricane Harvey and in Japan and Mexico DIESEL + Lower supplies due to Hurricane Harvey + GS Caltex had shut a heavy oil upgrading after a fire JET + Robust demand as peak travel season & winter demand FUEL OIL + Peaking demand in summer season for power generation

KEY HIGHLIGHT

Source: Platts

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Strong petroleum demand in Thailand

125 112

DEMAND GROWTH 2016 (8 mths) – 2017 (8 mths) EXPECTED GROWTH 2017 COMMENTS

  • Low Gasoline price will continue

to replace demand for Auto LPG

FUEL OIL AUTO LPG DIESEL JET

  • Continued growth due to

tourism growth and higher demand from airlines

MOGAS

  • Continued strong demand for

gasoline

393 404 111 114 +2.7% 182 189 +3.8% 40 37 +2.8%

  • 8.5%

2017 2016

  • 10.0%
  • Maintain good demand in Diesel

with expected GDP around 3.6%

  • Lower demand from electricity

sector and Bunker fuel

KBD

Source: EPPO

KBD KBD KBD

  • K. ton/month

Market overview Highlights Operational review Financial performance 13

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Crude

Market overview Highlights Operational review Financial performance

CRUDE INTAKE

  • 16 types of crude processed in 3Q17 and 35 types of crude (including 2 new crudes) processed in 9M17
  • Far East portion included Domestic crude 19% in 3Q17
  • Less favorable economic to Far East drives to lower Far East processing

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*Thailand information during July-August, 2017 ** Include both domestic and Far East crude

1% 2% 23% 34% 34% 28% 19% 65% 66% 70% 59% SPRC 3Q16 SPRC 2Q17 SPRC 3Q17 Industry average 3Q17* Middle East Far East** Others

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90% 83% 85% 83% 78% 81% 3% 2% SPRC Competitive Export Industry Average*

Products

Market overview Highlights Operational review Financial performance

  • Seasonal demand impacts domestic sale
  • High portion of Fuel Oil export from stock carry across the quarter
  • Export sales including Indochina sales at 0.7% and Mix C4 at 1.3% in 3Q17
  • Maximize utilization post CDU pit stop to capture high margin
  • Lower gasoline yield due to lower RFCCU throughput in 3Q17

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*Thailand information during July-August, 2017 Source: Company data, EPPO

2Q17 3Q17 6% 6% 5% 3% 6% 5% 2% 2% 2% 12% 11% 13% 4% 36% 34% 35% 41% 6% 5% 6% 12% 25% 26% 24% 21% 4% 4% 4% 4% 4% 4% 22% 2% 3% 2% 3Q16 2Q17 3Q17 Country demand 3Q17* PGP LPG Light Naphtha Gasoline Jet Diesel Fuel Oil Asphalt Mix C4 Others

PRODUCT YIELD DOMESTIC SALES

3Q16

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Highlights Market overview Operational review Financial performance

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Contents

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Margin and OPEX

Market overview Highlights Operational review Financial performance

US$/bbl

GROSS REFINERY MARGIN OPEX PER BARREL

  • Efficient in OPEX management.

Maintain NECC* at quartile 1/2 against Asia Pacific

  • QoQ: OPEX per barrel improved from Q2 due to

higher crude intake at 161 KBD in Q3.

* Non Energy Cash Cost: Operating expenses exclude energy cost

  • Accounting GRM:
  • QoQ: Increased due to stock gain of US$0.8/bbl as crude price continually rose

from US$48/bbl in Jul to US$54/bbl in Sep vs stock loss US$1.8/bbl in 2Q17

  • YoY: Stock loss of US$0.4/bbl in 3Q16 as crude price not changed much during

quarter

  • Market GRM:
  • Significantly increased both QoQ and YoY from stronger crack spreads, especially

in diesel, gasoline and jet

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US$/bbl 5.2 5.1 9.7 5.6 6.9 8.9

3Q16 2Q17 3Q17

Accounting GRM Market GRM 1.50 1.99 1.77

3Q16 2Q17 3Q17

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33 17 84 166 183 3Q16 2Q17 3Q17 9M16 9M17 64 42 125 272 290 3Q16 2Q17 3Q17 9M16 9M17

EBITDA and profitability

EBITDA NET INCOME

US$ M US$ M

  • EBITDA and profitability :
  • 3Q17 EBITDA and Net income significantly increased from improving on accounting GRM supported by strong market and stock gain of

US$13M in this quarter

  • FX gain of US$ 7 M in 3Q17 due to appreciation of the Baht relative to the U.S. dollar about 0.9 Baht/USD compared to 2Q17

Market overview Highlights Operational review Financial performance 19

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Cash Flow

Market overview Highlights Operational review Financial performance

US$ M

CASH FLOW

2016 CFO CFF CFI FX Adjustment 9M17

CFO:

  • Cash generated from profit before tax of US$225M due to strong GRM, especially in 3Q17 and working capital of US$41M which mainly from increasing in

AP of US$63M due to timing of crude payment CFI:

  • Primarily on projects spending to increase refinery reliability and efficiency.

CFF:

  • Long-term loan repayment of US$80M with expected debt free by 2018 and dividend payment of US$138.4 M.

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6.5 266.1 (10.6) (218.4 ) ( 1.5 ) 42.1

55 225 41 (55.1) (80.0) (138.4) Profit before tax D&A and Non cash items Working capital Tax & Interest paid Loan Repayment Dividends

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Dividend Policy and Yield

Market overview Highlights Operational review Financial performance 21

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

DIVIDEND PAYMENT

  • SPRC’s dividend policy is to pay out at least 50% of net profits semi-annually
  • 1H17 Dividend payout at 60% of net profit

DIVIDEND POLICY

0.26 1.18 0.46 3.0% 10.8% 6.3%

  • Avg. 4.0% - 4.3%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

  • 0.20

0.40 0.60 0.80 1.00 1.20 1.40 2H15 2016 2017* Dividend per share Dividend Yield SETHD

* 2017 SPRC dividend yield is annualized

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Looking ahead

No one gets hurt Operational excellence Bottom Line Improvement Program Low gearing allows opportunities for growth

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Appendices

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US$ M US$ M

ASSET BREAKDOWN LIABILITIES & EQUITY

Net Debt was US$56M – with long and short term debt of US$98M and Net Debt/Equity ratio of 0.05

1,672 1,677

1,159 1,204 116 40 397 433 Dec-16 Sep-17 Current liabilities Non current liabilities Total Equity

1,672 1,677

10 9 1,005 954 327 382 324 289 6 42

Dec-16 Sep-17

Cash and cash equivalents Account receivables Inventories PP&E Other current & non current assets

Financial position

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Income statement

Unit: US$ M 3Q16 2Q17 3Q17 YoY QoQ 9M16 9M17 9M % +/- % +/- % +/- Revenues 1,112.8 1,094.3 1,269.1 14% 16% 3,128.8 3,639.1 16% OPEX (22.6) (23.6) (26.2) 16% 11% (70.5) (74.7) 6% EBITDA 63.5 41.8 124.5 96% 198% 272.1 289.6 6% Depreciation & Amortization (20.6) (20.7) (20.7) 0% 0% (61.7) (62.2) 1% Profit for the period 33.5 17.1 84.2 152% 393% 166.1 183.5 10% EPS (THB per share) 0.27 0.14 0.65 141% 364% 1.36 1.46 7%

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Sales by customers

56% 33% 11%

SALES BY REVENUE

  • Chevron and PTT account for 89% of total sale in 3Q17 by revenue
  • Others are products sold as Petrochemical feedstock and intermediate product exchange

58% 31% 11%

Others 3Q16 Others 3Q17

SALES BY VOLUME

55% 29% 16%

Others 3Q16 Others

53% 31% 16%

Others 3Q17

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The SPRC competitive advantage

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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Business overview

CUSTOMERS(1) DISTRIBUTION(1) REFINERY CRUDE SUPPLY

(1) Based on 9M17 sales volume

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 TRUCK ▪ Pipeline connects Map Ta Phut, Sriracha, & Bangkok ▪ Connections to petrochemical customers ▪ Supply to north and 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 66% Far East 33% Others 1% SOURCES OF CRUDE FOR 9M/17

83% 17%

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A brief history

PRE-IPO

KEY MILESTONES OPERATIONAL INITIATIVES

SPRC founded by Chevron holding 64% and PTT holding 36%

1992

Oil refinery completed construction and commenced production (US$ 1.7 billion invested) SPRC entered into an

  • perating alliance

with Rayong Refinery

  • Co. (RRC) and

formed Alliance Refining Co. (ARC) COD with designed capacity of

1996 1999 130 KBD

Capacity increase through improvements and upgrades Installation of Mercury Removal Unit Installation of Jet Merox Unit

2008 2009

Converted into a public limited company

2012

Clean Fuels Project for Euro IV fuels production Completed 5 year maintenance turnaround for entire refinery

2014

Major refinery upgrade

  • f the RFCCU, PGP

Recovery Project & Air Pre-heater project Listed on Stock Exchange of Thailand on Dec, 8th, 2015

2015

Continuous improvement through “Bottom Line Improvement Program” (BLIP)

Others

165 KBD

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CRUDE OIL NATURAL GAS REFINERY POWER AND STEAM PRODUCTS SPM S 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

Key contractual arrangements

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Refinery complexity

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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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BLIP (Bottom Line Improvement Program)

2.29 2.95 2.69 3.11 2.46 2.27 2014 2015 2016 1Q17 2Q17 3Q17

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

Crude benefit over Benchmark crudes US$0.55-0.80/bbl Product yield and placement optimization US$0.20-0.90/bbl Process plant

  • ptimization

US$0.60-0.80/bbl Cracker feed synergy US$0.10-0.40/bbl

BLIP

US$/bbl

Despite a challenging margin environment, SPRC continues to drive incremental margin improvement through BLIP

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Utilization of All the Assets

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INCREASING REFINERY UTILIZATION INCREASING REFINERY UTILIZATION

▪ Overall process utilization has increased over the years ▪ Clean Fuels Project added about 75 EDC in 2012, small increase in 2014 Event ▪ Better reliability leads to higher utilization and steadier operations post 2014 Event ▪ Fully utilizing all of the Process units maximizes profitability ▪ Utilization of key upgrading units is most critical – CDU, RFCCU and PLF account for 62% of EDC 2 1 4 E v e n t

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CRUDE PRICE RANGE

▪ Crude prices determined by the market ▪ Effective management of crude sourcing allows for better margins ▪ Flexibility in managing product yield, allows for higher value products ▪ Crude prices impact refineries significantly when the transients are quick and tend to be short term

ILLUSTRATIVE ONLY GASOLINE YIELD DIESEL YIELD JET YIELD FUEL OIL YIELD

PRODUCT PRICE

DIESEL CRACK JET CRACK FUEL OIL CRACK Crude discount GASOLINE CRACK Crude premium

GRM drivers

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