Opportunity Day 3Q/2018 results One family Fueling the future of - - PowerPoint PPT Presentation

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Opportunity Day 3Q/2018 results One family Fueling the future of - - PowerPoint PPT Presentation

Opportunity Day 3Q/2018 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 that


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Opportunity Day

3Q/2018 results “One family… Fueling the future of Thailand”

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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 SPRC

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

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Contents

1 2 3 4

Highlights Market overview Operational review Financial performance

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1 2 3 4

Highlights Market overview Operational review Financial performance

Contents

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Highlights Market overview Operational review Financial performance

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3Q/2018 Updates

Temporary short term loan incurred during the maintenance has been fully paid in Oct 18. CSR-DIW Continuous Award 2018 for 3rd Consecutive Year. Interim dividend of US$78.2M was paid in Sep18. Minor maintenance on the Vacuum Distillation Unit (VDU) and Crude Distillation Unit (CDU) was executed during 1-15 August 2018 (15 days). All other units remained operational. The activity finished safely as planned with financial impact of US$11M (AT) and there was no supply disruption. All units are now running at full capacity.

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3Q/2018 Highlights

TOTAL DAYS AWAY FROM WORK RATE (‘DAFWR’)

97.2% 88.0%

UEDC* AVAILABILITY

  • EX. TURNAROUND

$2.63/bbl $5.05/bbl

MARKET GRM

* Utilization of Equivalent Distillation Capacity

BOTTOM LINE IMPROVEMENT PROGRAM OPEX PER BARREL

Highlights Market overview Operational review Financial performance

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$2.15/bbl

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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

Highlights Market overview Operational review Financial performance

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SAFETY

(Injuries per 200,000 man-hours)

▪ Achieved over 5 years without

  • DAFW. The last DAFW was 24

Jun 2013. ▪ Achieved 17.5 million man-hours without days away from work injury. PERFORMANCE UPLIFT FROM “BLIP”

US$/bbl

BLIP: Bottom Line Improvement Program

RELIABILITY OPTIMIZATION MARKET GRM

▪ Lower availability and EDC utilization from VDU and CDU shutdown. ▪ Despite the shutdown, our performance in availability, SPRC’s utilization remains top quartile among over 90 refineries in the Asia Pacific and India Ocean region. ▪ BLIP impacts from VDU and CDU shutdown. ▪ Stable operation post shutdown enables to capture good BLIP benefit. ▪ Stayed competitive over Singapore margin thru Bottom Line Improvement margin captured. ▪ Lower margins due to weaker crack spreads and VDU and CDU shutdown. 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 9M18 1Q18 2Q18 3Q18

97.3% 88.8% 93.8% 96.6% 97.1% 88.0%

2016 2017 9M18 1Q18 2Q18 3Q18

EDC UTILIZATION RATE

99.7% 96.4% 99.0% 99.9% 100.0% 97.2%

2016 2017 9M18 1Q18 2Q18 3Q18

2.69 2.59 2.91 3.15 2.93 2.63

2016 2017 9M18 1Q18 2Q18 3Q18 6.68 7.34 6.12 7.17 6.02 5.05 4.10 5.36 4.69 5.06 4.27 4.75

2016 2017 9M181Q182Q183Q18

SG GRM

Source: Company Data

SPRC’s Formula for success

Highlights Market overview Operational review Financial performance

9 No one gets hurt

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1 2 3 4

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Contents

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Overview of oil demand growth and GRM

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Highlights Market overview Operational review Financial performance

Source: IEA, IHS

OIL MARKET OUTLOOK

Million barrels/day ▪ Global oil demand growth estimates for 2019 is 1.4 mb/d. Demand in China and India combined pace slows to 640 kb/d in 2019. ▪ Estimate Asia refinery capacity increase 1.0-1.2 mb/d in 2019 and in 2020. Million barrels/day ASIA

(include Middle East)

NORTH AMERICA EUROPE LATIN AMERICA AFRICA INCREMENTAL OIL DEMAND FSU

2017 2018e 2019e

0.18 0.33 0.21 0.31

  • 0.05

0.09 0.06 0.12 0.08 0.02

  • 0.03

0.05 0.03 0.02 0.09 0.97 1.02 0.97

Source: Wood Mackenzie and HIS

SINGAPORE GRM 1 2 3 4 5 6 7 8 9 10

2009 2011 2013 2015 Q1 Q3 Q1 Q3 Q1 Q3

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

Strong gasoline demand & low crude oil premium

Subprime crisis

SPRC GRM

Singapore GRM 2017 2018 2019

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Overview of product cracks

DUBAI PRICE

50.5 72.1 74.3 3Q17 2Q18 3Q18

US$/bbl

16.1 12.1 11.5 3Q17 2Q18 3Q18

US$/bbl

GASOLINE CRACK

13.1 15.3 14.5 3Q17 2Q18 3Q18

US$/bbl

JET FUEL CRACK DIESEL CRACK

13.9 14.6 14.4 3Q17 2Q18 3Q18

US$/bbl

  • 1.3
  • 4.4
  • 2.5

3Q17 2Q18 3Q18

US$/bbl

FUEL OIL CRACK

Highlights Market overview Operational review Financial performance

DUBAI + Tight supply from concern ahead of U.S. sanctions against Iran and OPEC may not raise output to address shrinking supplies from Iran. + Demand ahead of winter, declining of US inventory. GASOLINE

  • Oversupplied in global market, high inventory in Europe, increase supply from Vietnam, and Middle East.

+ Supported by the peak summer driving demand from US. JET + Asian Jet and Kerosene market firmed as robust demand. DIESEL

  • The diesel market eased due to the monsoon season, particularly in South Asia and Southeast Asia among firmed supply.

+ Stronger demand from the Middle East for power generation as temperatures soar have resulted in falling diesel inventory levels across the region. FUEL OIL + Fuel oil market remained firm as Middle Eastern and East Asian power producers increased demand for electricity generation during summer.

KEY HIGHLIGHT 12

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112 99

DEMAND GROWTH 2017 (8 mths) – 2018 (8 mths) EXPECTED GROWTH 2018 COMMENTS

  • Auto LPG demand continue to

decline due to price differential

FUEL OIL AUTO LPG DIESEL JET GASOLINE

404 411 114 123 189 195 +3.1% 37 38 +1.7% +2.0% 2018 2017

  • 11.5%
  • Healthy demand growth keeps

track with GDP growth

  • Higher demand from electricity

sector supported domestic consumption

KBD

Source: EPPO

KBD KBD KBD

  • K. ton/month

Strong petroleum demand in Thailand

Highlights Market overview Operational review Financial performance

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+8.1%

  • Healthy demand growth for

gasoline

  • Continued growth due to

tourism growth and higher demand from airlines

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Heading Name

CRUDE INTAKE

  • 21 and 33 types of crude processed in 3Q18 and 9M18.
  • Favorable economic drives to maintain high percentage of Middle East crude processing.
  • Optimization of both Far East and Middle East generated good benefit to Bottom Line Improvement Program (BLIP).

Crude

Highlights Market overview Operational review Financial performance

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2% 2% 3% 2% 20% 19% 14% 16% 15% 12% 9% 10% 12% 13% 13% 70% 75% 70% 70% 55% 3Q17 2Q18 3Q18 9M18 Industry average 8M18* Middle East Far East Domestic Others

*Industry Average of 8M18 during Jan – August 2018 Source: Company data, EPPO

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Heading Name Products

SPRC Competitive Export Industry Average*

  • Higher than industry average of domestic demand with high portion in

almost all products.

PRODUCT YIELD DOMESTIC SALES

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  • Sustain high Gasoline and Diesel production to meet demand .

5% 7% 7% 5% 4% 3% 2% 1% 1% 13% 10% 10% 4% 35% 35% 35% 41% 6% 7% 7% 12% 24% 24% 25% 21% 4% 4% 4% 4% 4% 4% 22% 2% 2% 3% 3Q17 2Q18 3Q18 Country demand 3Q18* PGP LPG Light Naphtha Gasoline Jet Diesel Fuel Oil Asphalt Mix C4 Others 78% 81% 86% 84% 84% 78% 2.0% 0.8% 0.1% 3Q17 2Q18 3Q18

*Country Demand of 3Q18 during July-August 2018 Source: Company data, EPPO *Industry Average of 3Q18 during July-August 2018 Source: Company data, EPPO

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OPEX PER BARREL

Margin and OPEX

US$/bbl

  • Efficient in OPEX management.

Maintain NECC* at quartile 1/2 against Asia Pacific.

  • QoQ: OPEX per barrel of 3Q18 was higher from lower crude intake,

maintenance cost of VDU and CDU shutdown, Turnaround preparation and project cost.

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

GROSS REFINERY MARGIN

  • Accounting GRM:
  • QoQ: Decreased due to lower product crack spreads and lower stock

gain.

  • Market GRM:
  • Low product crack spreads and VDU and CDU shutdown.

Highlights Market overview Operational review Financial performance

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US$/bbl

9.7 10.5 6.3 8.9 6.0 5.1 3Q17 2Q18 3Q18 Accounting GRM Market GRM 2.15 1.86 1.77 0.01 0.08 0.09 0.05 0.16 0.20 1.27 1.21 1.43 0.43 0.41 0.43 3Q17 2Q18 3Q18 Variable Cost Fixed Cost Project Cost T&I Cost

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NET INCOME

EBITDA and profitability

US$/bbl

EBITDA

125 116 71 3Q17 2Q18 3Q18

US$ M

84 73 38 3Q17 2Q18 3Q18

US$ M

  • EBITDA and NET INCOME:
  • Lower EBITDA and NET INCOME from lower product crack spreads and impact from VDU/CDU shutdown.

Highlights Market overview Operational review Financial performance

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66.1 (82.6) (12.5) 29.5 0.8 1.3

(62.5)

Cash Flow

CASH FLOW

Dec-2017 CFO CFF CFI FX Adjustment 9M18

CFO:

  • Cash used in working capital from high crude price, temporary high inventory volume and advance excise tax payment..

CFI:

  • Projects spending to increase refinery reliability and efficiency.

CFF:

  • Temporary short term loan of US$263.8M has been fully paid in Oct 18.

Highlights Market overview Operational review Financial performance

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US$ M

240.4 (306.6) (74.9)

Profit before tax D&A and Non cash items Working capital Tax & Interest paid Loan Repayment

58.5 (171.8) Dividends 263.8

ST Loan Proceeds

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9.1 12.4 17.1 13.0 0.2638 1.1824 1.1427 0.5928 3.0% 10.8% 7.1% 4.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

  • 0.2000

0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 2H15 2016 2017 1H18 Dividend per share Dividend Yield* SETHD

Dividend Policy and Yield

  • SPRC’s dividend policy is to pay out at least 50% of net profits semi-annually.
  • 2018 Interim Dividend payout at 50% of 1H18 net profit.

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

DIVIDEND POLICY

Highlights Financial performance

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Market overview Operational review

Closing stock price as of the performance period

DIVIDEND PAYMENT

(Avg. 4.0%-4.2%)

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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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T&I Event and Capacity Expansion in 4Q19

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Appendices

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Heading Name Financial position

ASSET BREAKDOWN LIABILITIES & EQUITY

US$ M US$ M Net Debt was US$272.9M – with long and short term debt of US$274.3M and Net Debt/Equity ratio of 0.2

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1,821 1,926 1,821 1,926

10 9 937 885 434 563 373 469 66 1 Dec-17 Sep-18 Cash and cash equivalents Account receivables Inventories PP&E Other current & non current assets 1,282 1,300 26 22 513 605 Dec-17 Sep-18 Current liabilities Non current liabilities Total Equity

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Heading Name Income statement

Unit: US$ M 3Q17 2Q18 3Q18 YoY QoQ 9M17 9M18 9M % +/- % +/- % +/- Revenues 1,269.1 1,650.4 1,570.8 24%

  • 5%

3,639.1 4,781.0 31% OPEX (26.2) (27.9) (28.3) 8% 2% (74.7) (85.7) 15% EBITDA 124.5 116.2 71.4

  • 43%
  • 39%

289.6 304.9 5% Depreciation & Amortization (20.7) (21.1) (21.0) 1% 0% (62.2) (63.2) 2% Profit for the period 84.2 72.8 37.9

  • 55%
  • 48%

183.5 191.4 4% EPS (THB per share) 0.65 0.54 0.29

  • 55%
  • 46%

1.46 1.42

  • 3%

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Heading Name Sales by customers

SALES BY VOLUME

US$/bbl

SALES BY REVENUE

  • Chevron and PTT account for 87% of total sale in 3Q18 by revenue
  • Others are products sold as Petrochemical feedstock and intermediate product exchange

53% 34% 13% 56% 33% 11%

Others 3Q17 Others 3Q18

53% 31% 16%

Others 3Q17 Others

48% 36% 16%

Others 3Q18

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Heading Name

The SPRC competitive advantage

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

STRONG BALANCE SHEET

One of world’s leading oil and gas groups with over a century of 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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Heading Name Business overview

CUSTOMERS(1) DISTRIBUTION(1) REFINERY CRUDE SUPPLY

(1) Based on 3Q18 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 70% Far East 12% Domestic 16%

Others 3%

SOURCES OF CRUDE FOR 3Q18

84% 16% ▪ Pipeline connects Map Ta Phut, Sriracha & Bangkok ▪ Connections to petrochemical customers TRUCK

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38% 9% 53%

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Heading Name 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 operating 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 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 of 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)

165 KBD

Others 39% 61%

Installation of Mercury Removal Unit

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Heading Name

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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Heading Name Refinery complexity

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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Heading Name

BLIP (Bottom Line Improvement Program)

2.69 2.59 3.15 2.93 2.63 2016 2017 1Q18 2Q18 3Q18

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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Thank You

Any queries, please contact SPRC Investor Relations Email: ir@sprc.co.th Tel: +6638 699 887 Website: http://investor.sprc.co.th Presentation: http://investor.sprc.co.th/slides.html Please click here or scan QR code below to send us your feedback

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