[PDF] - Q1/2008 Results Analyst Presentation May 14, 2008 Thai Oil Public PDF Document

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May 14, 2008

Q1/2008 Results Analyst Presentation

Thai Oil Public Company Limited

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Disclaimer Disclaimer

The information contained in this presentation is intended solely for your personal reference. Please do not circulate this material. If you are not an intended recipient, you must not read, disclose, copy, retain, distribute or take any action in reliance upon it.

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Corporate Vision, Mission & Value Corporate Vision, Mission & Value

TOP seeks to be one of the leading fully integrated refining and petrochemical companies in the region recognized for our sustainable growth, optimum stakeholder value, and commitment to environmental and social well-being.

VISION

To be PTT’s flagship refinery through optimized

management of the group’s refining portfolio

To expand facilities to better meet domestic

demand growth

To enhance the competitive advantage of our

power generation operations to further solidify the core refining business

To create a high-performance organization that

promotes teamwork, innovation and trust

MISSION

P = Professionalism O = Ownership & Commitment S = Social Responsibility I = Integrity T = Teamwork and Collaboration I = Initiative V = Vision Focus E = Excellent Striving

CORPORATE VALUE

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Presentation Outline Presentation Outline

Business Outlook Progress of Investment Projects Market Conditions & Financial Performance Q1/2008 Key Highlights

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Q1/08 Key Highlights Q1/08 Key Highlights

TOP operated at optimum levels with refinery intake of 276 kbd, bringing

integrated intake to 288 kbd. On the back drop of high product spreads, TOP run at 285 kbd in March 2008.

Successful completion of TPX expansion project. Total aromatics complex

capacity increases from 420 to 900 KMTA as from May 2008.

Construction of MCE project (Sugarcane based Ethanol) progressed as

plan (>50%). Expected COD by end 2008.

GRM registered at 6.8 US$/bbl, reflecting rising crude price as well as

temporarily high VLCC freight during Dec 07 – Jan 08.

Benefits of strong middle distillate products can be fully capitalized in Q2.
Integrated Margin registered at $ 7.3 US$/bbl. Due to TPX shutdown for

expansion tie-in from 14 Jan, the group reported a net profit of Bt. 3.8 bln.

2007 dividend payment of Baht 4.50/share was made, equivalent to 48%
f payout ratio

Overall Operation & Business Finance

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Financial Highlights Financial Highlights

Consolidated EBITDA Consolidated Net Profit

(Unit: MB) (Unit: MB)

5,805 8,372 6,043 Q1/07 Q4/07 Q1/08

Q1/07 Q4/07 Q1/08 Q1/07 Q4/07 Q1/08

3,874 5,943 4,621 Q1/07 Q4/07 Q1/08 83% 4% 5% 8% 92% 2% 3% 3%

5,943 MB 4,621 MB 3,874 MB

64% 8% 5% 23%

8,372 MB 6,043 MB 5,805 MB Δ YoY Δ QoQ

4%
31%

Δ YoY Δ QoQ

16%
35%

Q1/08 Q1/08

80% 5% 9% 6% 86% 4% 8% 2% 65% 9% 8% 18%

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Presentation Outline Presentation Outline

Business Outlook Progress of Investment Projects Market Conditions & Financial Performance Q1/2008 Key Highlights

8 30 60 90 120 150

03-Jan-07 14-Feb-07 30- M ar-07 15- M ay-07 27-Jun-07 08-Aug-07 20-Sep-07 01-N

v-07

14-D ec-07 01-Feb-08 18- M ar-08 30-Apr-08

Oil Product/Crude Prices & Spreads Oil Product/Crude Prices & Spreads

Oil Product & Crude Prices Product - Dubai Spreads

25
15
5

5 15 25 35

Q1/07 Q2 Q3 Q4

Jet GO ULG95 Dubai HSFO Dubai

(US$/bbl)

55.4 64.8 70.1 83.2 91.4 14.6 16.5 16.4 19.4 23.0

Jet-DB GO-DB ULG95-DB HSFO-DB GO-DB

68.4

High crude prices supported by

–

Low crude stock in early-Q1

–

Capital inflows into commodity to hedge against USD weakness

Refineries cut run in early-Q1 due

to high freight cost/negative hydro skimming margins

Robust demand in developing

countries due to subsidized retail price

Strong Chinese GO imports amid

lower domestic supply as a result

f capped retail price
Middle distillate inventory in mid-

Q1 and late winter pushed distillate spread to record high

High absolute FO price encouraged

to move away to cheaper coal and NG for power generation, pressuring FO crack to record low

(US$/bbl)

Q1/08 Q1/07 Q2 Q3 Q4 Q1/08

16.7

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Oil Demand for Q1/2008 Oil Demand for Q1/2008

738 724 704 730 740 724 733 110 120 104 140 160 117 117 87% 89% 91% 77% 91% 91% 86%

200 400 600 800 1,000 1,200 1,400

Q1/07 Q2 Q3 Q4 Q1/08 FY/06 FY/07

0% 20% 40% 60% 80% 100% Domestic Demand/Sales Net Export Petrochem & Others Utilization Rate

Domestic Oil Demand / Refinery Intake

103 126 77 316 102 128 84 323 73 118 124 125 91 338 65

Domestic Oil Demand

Source: DOEB, Ministry of Energy. (KBD) (KBD)

TOP’s Domestic & Export Sales

LPG Jet/Kero Diesel FO Gasoline

82% 88% 78% 18% 12% 22%

FY/06 FY/07 Q1/08 Export Domestic

FY/06 FY/07

44% 13% 9% 9% 16% Domestic Jobbers Q1/2008 Sales Breakdown 6% Export = 22% 4%

Q1/08

Q1/08 Q1/08

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Q1/08 2.06 7.31 11.36 Jan'08 Feb'08 Mar'08 2 4 6

Jan-07 A pr-07 Jul -07 O ct-07 Jan-08

80 160 240 320

Gross Refinery Margins Gross Refinery Margins

TOP’s Crude Mix & Oil Product Yield

18% 16% 10% 9% 10% 42% 37% 45% 19% 25% 12% 22% 23% 17% 7% 6% 16% 82% 83% 1% 0% LPG ULG Jet Diesel FO F/E Local M/E 2007 Thailand’s Oil Demand

M/E Freight Rate

Freight (US$/bbl) Freight (World Scale)

TOP’s Accounting GRM (US$/bbl)

8.28 10.56 6.00 11.67 6.76 4.84 8.97

Q1/07 Q2 Q3 Q4 Q1/08 FY06 FY07

Market GRM Stock Gain/(Loss) Q1/08 Q1/07 Q2 Q3 Q4 Q1/08

Q1/08 GRM (US$/bbl)

14.4

18.5 16.7

14.4

14.5

17.4

22.8 23.0

17.8

13.7

(US$/bbl) (US$/bbl) Product-DB Spreads

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PX and LB Margins PX and LB Margins

PX, MX and ULG 95 Spot Prices / Margins 500 SN & HSFO Spot Prices / Margins

400 600 800 1,000 1,200 1,400 ม.ค.-07 เม.ย.-07 ก.ค.-07 ต.ค.-07 ม.ค.-08 200 400 600 800 1,000 1,200

ม.ค.-07 เม.ย.-07 ก.ค.-07 ต.ค.-07 ม.ค.-08

(US$/Ton) (US$/Ton)

PX MX ULG95 500SN HSFO

PX-ULG 95 500SN-HSFO 542 473 395 268 637 538 466 380 257 434 420

The SABIC MEG was back to
peration in late Q1, relieving

feedstock cost for polyester and hence resuming downstream operation and adding more demand

Margin is still poor due to high

feedstock cost and high MX supply from TPX

500 SN - HSFO spread in

Q1/08 gradually spiked up as a result of: – Tight supply availability

f lube base as refiners

maximized gasoil production

Q1/07 Q2 Q3 Q4 Q1/08

BZ TL

Q1/07 Q2 Q3 Q4 Q1/08 505

12 542 473 395 268 420 257 Q1/07 Q2 Q3 Q4 Q1/08 FY07

Integrated Margins Integrated Margins

8.97 11.67 6.00 10.56 8.28 6.76 Q1/07 Q2 Q3 Q4 Q1/08 FY07

Crude PX - ULG 95 GRM LB - HSFO

(US$/Ton) (US$/bbl) (US$/Ton)

1.85 1.40 1.28 1.25 1.15 0.87 0.71 0.86 0.30 0.10 0.52 0.64

7.28 10.80 12.32 7.67 11.34 10.52

Q1/07 Q2 Q3 Q4 Q1/08 FY07

TOP Group’s integrated margin decreased to

7.28 US$/bbl (-33% YoY or -36% QoQ), mainly affected by higher VLCC freight cost by 2 US$/bbl in Jan-Feb

1) calculated from integrated intake 434 637 538 466 380 505 Q1/07 Q2 Q3 Q4 Q1/08 FY07 Q1/08 Q1/08 Q1/08 Q1/08

Integrated Margin 1) (US$/bbl)

MX S/D PX S/D

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106 99 90 99 94 91 71 74 87 100 70 95 100 57 100 98 86 95

Q1/07 Q4/07 Q1/08

Ship Utilization Plant Utilization Plant Availability Lube Base Production PX Production Refinery Utilization Q4/07 Q1/08 Q1/07

11.7 6.8 8.3 PX-ULG95 GRM 500SN-HSFO 268 257 542 380 434 637

Q1/2008 Net Profit Breakdown

450%
33%
1%
71%
77%
16%

Δ YoY

40%

+51% +54% +44% +153%*

25%

Δ QoQ

(14) 53 335 140 314 3,210 Net Profit

* * Only MX Production * Increase MX sales volume following MX expansion completed since Dec 2007 1,370 314 3,826 4,261 3,210 124 490 140 97 257 210 139 Q1/07 Q4/07 Q1/08 IPT/TP/TM TLB TPX TOP

5,943 3,874 4,621

Performance Performance Breakdown Breakdown by

by Company

Company

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7.28 6.76 Q1/08 11.67 8.28 TOP’s GRM 11.34 10.80 Integrated Margin Q1/07 Q4/07 (US$/bbl) 664 3,210 3,874 (1,154) 1,122 (389) 5,805 96,314 (MB) 4,261 3,826 TOP 2,117 5,943 (1,530) 854 (471) 8,372 64,428 360 Subsidiaries (342) Financial Charges 4,621 Net Profit (1,482) Tax Expense 339 FX G/L & CCS 6,043 EBITDA 61,241 Sales Revenue 23% 31.62 1.90 20% 35.14 2.91 33.89 THB/US$ - ending 25% Effective Tax Rate (%) 2.26 EPS (THB/Share)

* Restated P&L regarding to the change of accounting policy

36%
42%

% QoQ

33%
18%

% YoY +84%

25%
16%
22%

+231% +14%

4%

+57%

69%
16%
35%
25%

+31%

17%
31%

+49%

8%
7%
16%

+15%

10%
35%

Consolidated Financial Performance Consolidated Financial Performance

*

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Solid Financial Position Solid Financial Position

76,257 71,837 60,166 41,815 32,891 19,706 30,336 31,842 30,452

(Unit: MB) Current Assets Non-Current Assets Other Liabilities LT Debt

136,570 110,324 148,409 FY/06 FY/07

Equities 1.0 0.9 0.9 0.4 0.4 0.3

FY/06 FY/07 Q1/08

Net Debt / EBITDA Net Debt / Equity

Treasury Policy

Bt. 30,336 mn.

(US$ 959 mn.)

70% 18% 11% 1%

Currencies

As of 31 March 2008(31.62 THB/US$)

Interest Rate

US$ 51% THB 49%

*Figures shown are unauditted from the company’s Certified Public Accountants Net Debt / EBITDA ≤ 2.0x Net Debt / Equity ≤ 1.0x

Balance Sheet Financial Ratios

Floated 42% Fixed 58%

Q1/08

THB Loan 30% US$ Loan 15% THB Bond 19% US$ Bond 36% Q1/08

Consolidated Long-Term Debt

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Presentation Outline Presentation Outline

Business Outlook Progress of Investment Projects Market Conditions & Financial Performance Q1/2008 Key Highlights

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TPX Expansion Project TPX Expansion Project

TPX Process (after Expansion)

BTX : +480 KTA Aromatics +PX 141 KTA +MX 18 KTA +BZ 177 KTA +Tol 144 KTA Cost : US$ 282 mn. EPC : Bechtel PMC : Foster Wheeler

Project Details

Total Aromatics 900 KTA

TPX Production

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Capability Driven Strategy Capability Driven Strategy

COMPETITIVE ADVANTAGE REPUTATION EMPLOYEE ENGAGEMENT

Capabilities

Strong

technological, engineering &

perational

expertise

Good

relationship with municipal & surrounding community

Ability to

produce Euro IV products at low cost prior to others

Networking

within PTT group

Enablers Strategic Program

Alternative Energy Diversification Strategy

Leading Fully Integrated Refining and Petrochemical Companies in Asia-Pacific

Organic Growth Value Chain Enhancement M&A

Inter. Invest.
Experience in
il business
Partnership

with feedstock & technology suppliers

Experience in

power business (SPP&IPP)

Knowledge &

expertise in refining and petrochemical industry

Strong

balance sheet (low gearing ratio)

Strategic fit

with PTT group aspiration

A B C D E

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2008 2009 2010 2011 2012 2013 2014 2015 A1 Residue Upgrading COD A2 PX Capacity Expansion COD A3 New IPP (735 MW x 2) 2 blocks A4 New SPP (79 MW) PPA COD A5 Marine Fleet Expansion Phase II B1 EURO IV Product Phase I Phase II B2 Synergy with PTT & Other Refineries B3 Downstream Aromatics COD B4 TLB Specialty Products C1 Municipal Waste Power Plant COD C2 Ethanol Plant (500 lpd x 3) Phase I Phase II D1 Thaioil Energy Solutions D2 MFC Energy Funds E1 M&A E2 International Investment Phase III Phase I Phase I Phase II ALTERNATIVE ENERGY DIVERSIFICATION M&A / INTERNATIONAL INVESTMENT ORGANIC GROWTH VALUE CHAIN ENHANCEMENT

Projects Under Development

Road Map Road Map-

Key Strategic Initiative projects

Key Strategic Initiative projects

A B C D E

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Residue Upgrading Residue Upgrading

Surplus domestic fuel oil
Higher differential price between distillates vs. fuel oil

Driving Forces

Add residue upgrading facilities to process heavy residue and

allow processing more heavy/sour crudes Description

4.8 6.5 17.5 23.4 27.8 27.1 43.4 10 20 30 40 50 2002 2003 2004 2005 2006 2007 Jan- Apr'08 $/bbl

10 20 30 40 50 60 2002 2003 2004 2005 2006 2007 2008 kbd

Gasoil - HSFO Spread

Thailand Fuel Oil Export

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PX Capacity Expansion PX Capacity Expansion

Driving Forces Description

Surplus domestic Toluene
Higher differential price between Toluene and other Aromatics
Upgrade Toluene to PX and BZ
Increase total PX capacity by 110 KTA to 600 KTA

400 800 1200 2002 2003 2004 2005 2006 2007 2008 US$/Ton

Paraxylene Benzene Toluene Paraxylene - Toluene

PX/BZ/TL Price Comparison Thailand Toluene Demand & Supply

Source: Dewitt company, PTIT, Samsung presentation 200 400 600 2007 2008 2009 2010 2011 KTPA

ATC No. 1 ROC IRPC TPX ATC No.2 MOC Demand

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Presentation Outline Presentation Outline

Business Outlook Progress of Investment Projects Market Conditions & Financial Performance Q1/2008 Key Highlights

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Current Crude Oil Forward Price Current Crude Oil Forward Price

30 40 50 60 70 80 90 100 110 120 130

WTI

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg 05: 57.18 Avg 07: 72.46 Avg 06: 66.99 Month ago 14 May 08 Apr 08: 112.46 Mar 08: 105.16 Year ago May 08: 121.54

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Relationship - USD and Oil Prices NYMEX - Net Long Position

1 Position = 1,000 bbl 1 Position = 100 Tons

82% 85% 97% 11%

66%

Jan- May’08 Jan- Mar’08 2007 2006 2005 WTI vs. USD Valuation 78% 87% 97% 26%

75%

Jan- May’08 Jan- Mar’08 2007 2006 2005 Dubai vs. USD Valuation

Key Key Factors Factors Support Support High High Crude Crude Oil Oil Prices Prices

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Crude Reserve Outlook Crude Reserve Outlook

US Crude Stock OECD Europe Stock Japan Crude Stock China Crude Stock

Capacity 19 mbbl Capacity 19 mbbl Capacity 73 mbbl Capacity 15 mbbl Capacity 31 mbbl Capacity 33 mbbl Capacity 73 mbbl Capacity 44 mbbl Phase I: 2006-2007 Phase II: 2008-2010

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1

Impact of Higher Crude Oil Price Impact of Higher Crude Oil Price

n Product Spreads
n Product Spreads

250 500 750 1,000 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

Coal Coal HSFO HSFO Dubai Dubai

Higher Crude Price => Higher Crude Price => Higher Spread FO Higher Spread FO-

Crude Prices

Crude Prices Much Higher Spread Coal Much Higher Spread Coal-

FO Prices

FO Prices

(US$/Ton)

GO GO

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Reuters Singapore GRM Reuters Singapore GRM

1

4
2

2 4 6 8 10 12 14

REUTERS SINGAPORE GRM

DB Cracking DB Skimming

0.96 5.80 1.79

0.68

7.81 6.58 6.55

1.02

6.20 0.95 10.13 0.64 8.43 2.01 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY 6.96

0.79

Hydroskimming Margin Hydroskimming Margin Complex Margin Complex Margin

(US$/bbl)

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China's Utilization Rates