Healthy sales volume and ASP, but hit by hedging loss

We estimate sales volume at 380k boed in 1Q21F, flat qoq, but higher than 365k boed guidance driven by sooner-than-expected start-up of Sabah H, Oman Block 61, and higher sales volume at Bongkot and Contract4. Liquid price should be at US$59.0/bbl, up from US$42.6/bbl in 4Q20. Gas price should edge up to US$5.7/mmbtu, from US$5.6 in 4Q20. Gas sales volume portion should increase to 70% from 67% in 4Q20 due to contribution from Oman Block 61. This should lead ASP to US$41.6/boe, from 36.9/boe in 4Q20. Unit cost should drop by US$1.5 qoq to US$29.5/boe, from US$31.1 in 4Q20 due to opex adjustment during year end. PTTEP has hedged 15m bbl of liquid products, which have a collar at US$42-60/bbl. PTTEP should book US$110m hedging losses as oil price closing at end 1Q21 was higher than hedged prices. There should not be major write-off expenses in 1Q21. We estimate 1Q21F earnings at Bt5.2bn, +107% qoq but -39% yoy. Results will be out on 28 April. Note that PTTEP may book extra gains from Oman Block 61 acquisition in 1Q21 but the amount is yet final. 

Gas prices to increase to US$5.8 in 2Q21, and US$5.9 in FY21

Gas price should edge up to US$5.8 in 2Q21 driven by quarterly price adjustment at Myanmar projects. We assume US$5.9/mmbtu gas prices this year (our Dubai assumption at US$68/bbl) vs. PTTEP’s guidance at US$5.7/mmbtu based on their Dubai price assumption at US$54/bbl. Sales volume should continue to rise in following quarters due to volume contribution from Sabah H and Oman Block 61.

Maintain BUY, TP Bt160/sh; operations to continue to improve

Our TP is pegged to 15.0x FY21F PE, or 20% premium to average PE multiple in FY18-19, when Dubai crude oil prices were at US$69.4 and US$63.5 respectively, close to our US$68/bbl assumption. We assigned a 20% premium on PE multiple to reflect volume growth of 12%/22% in FY21/22F.