Thailand's PTT Exploration and Production Public Co Ltd (PTTEP) announced that it will be cutting this year’s capital expenditure by 15-20 per cent but it will still invest in the Mozambique Area 1 and Lang Lebah projects.
The company reported a net profit of US$275 million in the first quarter of this year, a decrease of 28 per cent compared with $384 million profit in the last quarter of 2019.
Phongsthorn Thavisin, president and chief executive officer of PTTEP said that the company recorded total revenues of USD 1,771 million in the first quarter of 2020, decreasing by 4 per cent compared to USD 1,841 million in the fourth quarter of 2019.
In a statement, Thavisin said that the oil price crisis situation coupled with the impact from the outbreak of Covid-19 have suppressed the domestic energy demand.
As a result, PTTEP has revised the estimated sales volume in 2020 to 362,000 BOED, a decrease of 7 per cent from the previous target of 391,000 BOED.The company was also reducing the 2020 expenditure by 15-20 per cent from USD 4,613 million.
PTTEP stated that the major spending cuts will come in the form of deferrals of some exploration activities and reduction in non-operation related expenses while keeping maintenance capital expenditure (CAPEX) to ensure continuity of the energy supply of the country.
The company stated it will continue on the investment in development projects such as Mozambique Area 1 Project, and additional drilling activity in Malaysia, Lang Lebah gas field in Block Sarawak SK410B, to ensure the first production of these projects in the next 3-4 years as planned.
“The exploration and production business is being challenged by the oil price crisis once again. During the previous downturn in the past 4-5 years, the company had achieved in restructuring its costs structure, so that its current costs are low and competitive, compared with our peers. However, the challenges we are facing today are not just about the oil price, but also a global economic downturn that affects most business sectors extensively. In order to foster the growth and sustainability of the company, rather than only the lower unit costs, we need to focus on organization and culture transformation, to be agile and adaptive to disruptions. These transformations would ultimately set the future cost structures of the company to be more resilient and able to surpass any challenging situations,” Thavisin said.