PTT Exploration Delays $3B Fund-Raising Plan

BANGKOK - Thailand's PTT Exploration & Production PCL (PTTEP) is unlikely to complete its $3 billion recapitalization by October as intended because some shareholders want more time to consider the plan, but it aims to complete the fund-raising by the end of this year, Chief Executive Tevin Vongvanich said Thursday.

The Thai petroleum explorer and producer said the delay in raising funds wouldn't have an effect on its purchase of Cove Energy PLC as it already has cash and a secured loan in place for that acquisition. But it needs some of the funds for its ambitious target of tripling its production capacity to 900,000 barrels of oil equivalent a day by 2020.

The company cancelled a shareholders' meeting scheduled for Friday to allow more time for consideration of the recapitalization plan after some existing investors expressed concerns over their rights to subscribe to new shares during the fund-raising program. The board is reviewing plans for the allocation of the new shares in light of these concerns, Mr. Tevin said.

"The board needs to set a new date for the extraordinary shareholders' meeting, but we don't know yet when the issue will be on the table," he said.

In mid-July, PTT Exploration said it would issue up to 650 million shares, 403.4 million of which would be subscribed to by parent company PTT PCL to retain its shareholding at 65.3%, while 214 million shares would be earmarked for the public and 32 million for an overallotment option.

Mr. Tevin said the fresh funds would be sufficient for the company's investments over the next three years.

Upon completion of the capital increase, the company's debt to equity ratio would be 0.3 to 0.4, compared with 0.6 to 0.7 when the acquisition of Cove Energy is completed by September. Its current debt to equity ratio is 0.4.

Mr. Tevin said 96%-97% of Cove Energy shareholders have accepted its cash offer and it expects to start the process of delisting Cove from the London Stock Exchange's Alternative Investment Market in September.

He said PTT Exploration would spend a total of $2.2 billion on the Cove Energy purchase, including a capital tax burden to be paid to the Mozambique government as a result of the acquisition. Cove has an 8.5% participating interest in the Rovuma project in Mozambique, which has estimated gas reserves of up to 60 trillion cubic feet. It also has a 10% stake in the Rovuma Onshore Area, also in Mozambique, as well as interests ranging from 10%-25% across seven Kenya deep-water offshore oil blocks.

Future acquisition targets would be projects that are ready to start petroleum production between 2015 and 2016, Mr. Tevin said.

"It isn't our priority today to invest in long-term production projects like Canada's Oil Sands and Cove Energy," he said.

The Thai company in late 2010 acquired a 40% stake in the Oil Sands Kai Kos Dehseh project from Norway's Statoil ASA for $2.28 billion. The project is now producing around 18,000 barrels of oil a day and its production capacity could ultimately rise to 300,000 b/d.

Mr. Tevin reiterated that PTT Exploration's 2012 average petroleum sales volume target is 284,000 boe/d and that the goal is reachable though its first half average sales volume was 258,426 boe/d.

Copyright (c) 2012 Dow Jones & Company, Inc.


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