The share price of PTT Exploration and Production Public Company Limited (SET: PTTEP) closed slightly lower by 2.36% in today’s session at Bt124 per share after the company published a statement of the withdrawal of TotalEnergies EP Myanmar from Yadana Project, Myanmar, last Friday.
Yadana project is aproducing gas field located in the Gulf of Moattama, Myanmar. The consortium of Yadana project and MGTC consists of TotalEnergies EP Myanmar (as the Operator) with 31.2375% participating interest, Unocal Myanmar Offshore Company Limited (UMOCL) 28.2625%, PTTEPI 25.5%, and Myanma Oil and Gas Enterprise (MOGE) 15%.
Credit Suisse has maintained its “Outperform” rating on PTTEP with a target price at Bt135 per share, giving little concerns on the withdrawal of TotalEnergies in the Yadana project.
The global investment bank wrote that in 11M21, the Yadana field accounted for 9% of Thailand’s gas supply out of 15% in total gas supply from Myanmar. The Tadana project is estimated to account for 1.8% of PTTEP’s volume, 3% of revenue and 6% of profit in 2022.
PTTEP still has three projects under operation in Myanmar, namely, Yadana, Yetagun and Zawtika as the company holds an interest of 25%, 19% and 80%, respectively, on these projects.
Credit Suisse expected the operation to continue with PTTEP taking over operatorship. The Yadana project is significant to Myanmar’s gas supply and also to Thailand. Meanwhile, the project requires minimal reinvestment capex to sustain operation, which is $1 million under PTTEP’s five-year plan.
In the worst case, PTTEP’s stake should be maintained at 25% if not pro-rated to include the stakes of existing partners to 62%. In the meantime, in the case that the project is discontinued, which Credit Suisse believes is unlikely, the impact to PTTEP’s profit would be 6%. The project accounted for Bt4.5 per share (3%) of Credit Suisse’s DCF-valuation. However, the investment bank noted that PTTEP’s operations in Myanmar have never been interrupted in the past.
In this regard, Credit Suisse has maintained its Outperform on PTTEP and believes that oil price movements would have a bigger impact on the share price than this issue in Myanmar.
Aside from Credit Suisse, Trinity Securities also believes that this would not have a significant impact on PTTEP due to 1) the stake that PTTEP holds is 25.5%, representing 9KBOED or 2% of its total sales volume, 2) PTTEP is still able operate in the field without impact on sales volume, and 3) there could be an upside on an increase sales volume form the withdrawal as Total would sell its stake to other joint venture companies.
In addition, Trinity Securities has maintained its “BUY” recommendation with a target price at Bt138 per share, giving the momentum of oil prices to remain at a higher level, coupled with an increase in profit growth by 45% in 2022 through a production increase in G1, G2 and in Algeria.
