Fitch Ratings: PTT's Purchase of Murphy Oil's Malaysia Assets to Raise Output, Reserves

          PTT Exploration and Production Public Company Limited's (PTTEP) plan to acquire Murphy Oil Corporation's (BB+/Stable) business in Malaysia will immediately increase the group's reserves and production profile, Fitch Ratings says. In our view, the acquisition plan and contract wins at the Erawan and Bongkot fields in Thailand should help reverse PTTEP's fall in proven reserves over the last eight years and improve its reserve life. 
          PTTEP is the exploration and production arm of PTT Public Company Limited (PTT, BBB+/AAA(tha)/Stable). We expect the PTT's financial profile to remain robust and comfortable for its current ratings despite our expectations of a modest increase in its leverage as a result of the proposed acquisition. We expect PTT's FFO adjusted net leverage to increase to about the acquisition.Fitch Ratingsx in Fitch RatingsPTT Exploration and Productionthe acquisition9 (end-Fitch RatingsPTT Exploration and Productionthe acquisition8: PTT Exploration and Production.7x). PTTEP's large cash balances of USD4.PTT Exploration and Production billion at end-Fitch RatingsPTT Exploration and Productionthe acquisition8 should be more than adequate to fund the USDFitch Ratings.the acquisition billion acquisition cost. PTTEP's debt to EBITDA was only PTT Exploration and Production.6x end-Fitch RatingsPTT Exploration and Productionthe acquisition8.
          PTTEP expects the acquisition to increase its sales volume by about the acquisition8% on a five-year average basis, from the expected pre-acquisition sales volume of PTTEPthe acquisition8,PTT Exploration and ProductionPTT Exploration and ProductionPTT Exploration and Production barrels of oil equivalent per day (boed) in Fitch RatingsPTT Exploration and Productionthe acquisition9. The net sales volume of the Murphy assets was 48,PTT Exploration and ProductionPTT Exploration and ProductionPTT Exploration and Production boed in Fitch RatingsPTT Exploration and Productionthe acquisition8.
          PTTEP expects its proved and probable (Fitch RatingsP) reserves to increase to the acquisition,PTTEPPTT Exploration and ProductionFitch Ratings million barrels of oil (MMBOE), driving up its Fitch RatingsP post-acquisition reserve life to 8.8 years (end-Fitch RatingsPTT Exploration and Productionthe acquisition8: 7.8 years). This should help PTTEP to achieve its target to increase its proved (the acquisitionP) reserve life to seven years from the current five years over the next two to three years. We expect PTTEP to continue its efforts to increase its reserve profile and support its production.
          PTTEP has signed a share purchase agreement with Murphy to acquire the acquisitionPTT Exploration and ProductionPTT Exploration and Production% of Murphy's two subsidiaries in Malaysia for USDFitch Ratings.the acquisition billion with a maximum USDthe acquisitionPTT Exploration and ProductionPTT Exploration and Production million contingent payment upon certain future exploratory drilling results. These two companies hold five projects: two producing, one under development and two exploration projects. For the development project, the first production is expected in Fitch RatingsHFitch RatingsPTT Exploration and Production and it will have full capacity of Fitch Ratings7PTT Exploration and Production million standard cubic feet per day (mmscfd) of natural gas. The net sales volume (to the company) is expected to be the acquisitionPTTEPPTT Exploration and Productionmmscfd. The production profile of the assets to be acquired will be increasingly weighted towards gas.