Opportunity Day 2Q/2017 results One family fueling the future of - - PowerPoint PPT Presentation

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Opportunity Day 2Q/2017 results One family fueling the future of - - PowerPoint PPT Presentation

Opportunity Day 2Q/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

2Q/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 safe and reliable operations, producing quality products that exceed customer expectations, in harmony with

  • ur communities and the environment.”

Our Vision: Our Mission: Core Values:

Stars Professional Reliable Caring

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Contents

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Highlights Market overview Operational review Financial performance

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Contents

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2Q/2017 Highlights

TOTAL DAYS AWAY FROM WORK RATE (‘DAFWR’)

97.3% 84.7%

UEDC*

AVAILABILITY

  • EX. TURNAROUND

$2.46/bbl $6.85/bbl

MARKET GRM

* Utilization of Equivalent Distillation Capacity

BOTTOM LINE IMPROVEMENT PROGRAM

Market overview Highlights Operational review Financial performance

0.4621

INTERIM DIVIDEND PAYMENT ON 8 SEP 2017

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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 7

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(67) 21 (6) (5) 11 54 70 Normalized EBITDA CDU Maintenance Activity FX (gain)/loss Stock (gain)/loss net NRV (44) 4 (13) (25) 11 153 154 Normalized EBITDA Pit stop FX (gain)/loss Stock (gain)/loss net NRV 209 165 127 42

Summary of 2Q/2017 Event

Market overview Highlights Operational review Financial performance

2Q17 vs 2Q16 6M17 vs 6M16

US$ M

2Q16 2Q17 6M16 6M17

US$ M

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CDU Maintenance Activity

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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 14.2 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 top quartile performance in availability and utilization among over 90 refineries in the Asia Pacific and India Ocean region ▪ Lower utilization from the Crude Distillation Unit (CDU) maintenance activity for 10 days in June for internal inspection and cleaning ▪ Lower crude optimization benefit from favorable benchmark crude ▪ Favorable benchmark crude drove to run more benchmark crude which generated positive margin of 0.31 $/bbl YTD ▪ Increased Gasoline production capability by 5% ▪ Reduced synergy benefit as economics did not support unequal transfers ▪ Stay competitive over Singapore margin thru Bottom Line Improvement margin captured ▪ Lower margins due to weaker product crack spreads 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

0.0 2014 2015 2016 1Q17 2Q17 91.9% 97.8% 97.3% 95.2% 84.7% 2014 2015 2016 1Q17 2Q17

EDC UTILIZATION RATE

99.7% 99.8% 99.7% 99.0% 97.3% 2014 2015 2016 1Q17 2Q17 2.29 2.95 2.69 2.81 3.11 2.46 2014 2015 2016 6M17 1Q17 2Q17 6.15 10.40 6.68 7.98 6.85 3.32 5.63 4.10 4.99 4.63 2014 2015 2016 1Q17 2Q17 SG GRM

Source: Company Data

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

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 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

Source: Wood Mackenzie and IHS

2017 2018

▪ 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

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Overview of product cracks in 2Q/2017

DUBAI PRICE

43 53 50 2Q16 1Q17 2Q17 US$/bbl

Market overview Highlights Operational review Financial performance

14 15 14 2Q16 1Q17 2Q17 US$/bbl

GASOLINE CRACK

11 11 11 2Q16 1Q17 2Q17 US$/bbl

JET FUEL CRACK DIESEL CRACK

11 12 11 2Q16 1Q17 2Q17 US$/bbl

  • 9
  • 3
  • 2

2Q16 1Q17 2Q17 US$/bbl

FUEL OIL CRACK

DUBAI

  • Supply increased from US Shale oil & Libya/Nigeria

+ OPEC and non-OPEC decided to extend the oil output reduction by 1.8 million barrels until the end of Mar’18. GASOLINE + Abu Dhabi National Oil Company (ADNOC) postponed restart of upgrading unit at its Ruwais refinery to 1Q/2018

  • US gasoline demand was weaker than expect.

FUEL OIL + Healthy Singapore bunker demand. + Less supply from more refinery upgrading such as China and Russia cut supply. +Lower fuel oil arbitrage coming to Asia Pacific

KEY HIGHLIGHT

Source: Platts

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Strong petroleum demand in Thailand

126 113

DEMAND GROWTH 2016 (5 mths) – 2017 (5 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

405 413 114 116 +2.3% 180 186 +3.5% 42 37 +1.9%

  • 11.6%

2017 2016

  • 9.7%
  • Maintain good demand in

Diesel with expected GDP around 3.5%

  • 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

  • 19 and 27 types of crude processed in 2Q17 and 1H17
  • Far East portion included Domestic crude 22% in 2Q17
  • Less favorable economic to Far East drives to lower Far East processing

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*Thailand information during Apr – May, 2017 ** Include both domestic and Far East crude

16% 41% 39% 34% 21% 59% 61% 66% 63% SPRC 2Q16 SPRC 1Q17 SPRC 2Q17 Industry average 2Q17* Middle East Far East* Others

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SPRC Competitive Export Industry Average*

Products

Market overview Highlights Operational review Financial performance

  • Strong domestic sale and increasing

Indo-China sale volume

  • Export sales including Indochina

sales at 1.4% and Mix C4 at 1.9% in 2Q17

  • Continue to find way to increase

gasoline production capability to fill domestic gasoline demand

DOMESTIC SALES

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*Thailand information during Apr – May, 2017 Source: Company data, EPPO

2% 6% 6% 4% 4% 6% 2% 2% 2% 13% 10% 11% 4% 36% 35% 34% 43% 7% 6% 5% 12% 25% 25% 26% 20% 4% 4% 4% 4% 5% 4% 22% 2% 3% 3% 2Q16 1Q17 2Q17 Country demand 2Q17* PGP LPG Light Naphtha Gasoline Jet Diesel Fuel Oil Asphalt Mix C4 Others 2Q16 1Q17 2Q17 90% 86% 87% 87% 85% 82% 1% 3%

1 2 3 4 5 6 7 8

PRODUCT YIELD

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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 of 2Q17 was higher from lower

crude intake. However when compared USD amount, 2Q17 decreased to US$ 23.6 M from US$ 24.9 M in 1Q17

* Non Energy Cash Cost: Operating expenses exclude energy cost

  • Accounting GRM:
  • QoQ: Decreased margin due to stock loss net NRV of US$1.8/bbl from declining

market price and lower sale as a consequence of the CDU maintenance activity.

  • YoY: stock gain of US$4.6/bbl in 2Q16 as crude price rose by US$13/bbl
  • Market GRM:
  • QoQ: Decreased from weaker crack spreads and minor impact from CDU maintenance

activity.

  • YoY: Increased due to healthy fuel oil demand

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9.9 8.9 5.1 5.3 8.0 6.9 2Q16 1Q17 2Q17 Accounting GRM Market GRM

US$/bbl

1.57 1.74 1.99 2Q16 1Q17 2Q17

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85 82 17 133 99 2Q16 1Q17 2Q17 6M16 6M17 127 123 42 209 165 2Q16 1Q17 2Q17 6M16 6M17

EBITDA and profitability

EBITDA NET INCOME

US$ M US$ M

  • EBITDA and profitability :
  • 2Q17 EBITDA and Net income decreased from 1Q/17 from lower accounting gross refining margin due to stock loss net NRV of US$21M in declining

market price in this quarter and lower sale as a consequence of the CDU maintenance activity.

  • FX gain for 2Q17 decreased to US$5M from US$20 M in 1Q17 due to the lower appreciation of the Baht relative to the U.S. dollar.

Market overview Highlights Operational review Financial performance 19

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Financial position

Market overview Highlights Operational review Financial performance

US$ M US$ M

ASSET BREAKDOWN LIABILITIES & EQUITY

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Net Debt was US$119M – with long and short term debt of US$125M and Net Debt/Equity ratio of 0.10

1,672.2 1,626.5 1,672.2 1,626.5

1,159.2 1,179.8 116.0 51.6 397.0 395.1 ธ.ค.-16 มิ.ย.-17 Current liabilities Non current liabilities Total Equity 10.0 9.5 1,004.7 969.6 327.1 439.1 324.0 202.5 6.5 5.8 ธ.ค.-16 มิ.ย.-17 Cash and cash equivalents Account receivables Inventories PP&E Other current & non current assets

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Cash Flow

Market overview Highlights Operational review Financial performance

US$ M

CASH FLOW

2016 CFO CFF CFI FX Adjustment 1H17 CFO:

  • Cash generated from profit before tax of US$122M, working capital of US$11 M, add back non-cash items of US$37 M.

CFI:

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

CFF:

  • Long-term loan repayment of US$53M and dividend payment of US$79 M for 2016 net profit.

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6.5 138.9 (6.3 ) (132.1) ( 1.3 ) 5.7 Loan Repayment (53.3) Dividends (78.8) Profit before tax 122.2

D&A and Non cash items

37.0

Working capital

11.1

Tax & Interest paid

(31.4)

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Dividend Policy and Yield

Market overview Highlights Operational review Financial performance

  • 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 PAYMENT DIVIDEND POLICY

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

0.26 0.54 0.64 0.46 3.0% 5.6% 5.2% 3.2% 2H15 1H16 2H16 1H17 Dividend per share Dividend Yield

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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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Income statement

Unit: US$ M 2Q16 1Q17 2Q17 YoY QoQ 6M16 6M17 6M % +/- % +/- % +/- Revenues 1,083.4 1,275.7 1,094.3 1%

  • 14% 2,016.0 2,370.0

18% OPEX (21.4) (24.9) (23.1) 8%

  • 7%

47.8 247.2 417% EBITDA 127.2 123.3 41.8

  • 67%
  • 66%

208.5 165.1

  • 21%

Depreciation & Amortization (20.5) (20.8) (20.7) 1% 0% (41.0) (41.5) 1% Profit for the period 84.7 82.3 17.1

  • 80%
  • 79%

132.7 99.3

  • 25%

EPS (THB per share) 0.69 0.67 0.14

  • 80%
  • 79%

1.09 0.81

  • 26%
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Sales by customers

58% 30% 12%

SALES BY REVENUE

  • Chevron and PTT account for 91% of total sale in 2Q17 by revenue
  • Others are products sold as Petrochemical feedstock and intermediate product exchange

53% 38% 9% Others 2Q16 Others 2Q17

SALES BY VOLUME

51% 37% 12% Others 2Q16 Others 55% 28% 17% Others 2Q17

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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 FY2016 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 64% Far East 13% Thailand 23%

0%

SOURCES OF CRUDE IN 2016

88% 12%

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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 2014 2015 2016 1Q17 2Q17

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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