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Home  >>   Daily News  >>   Indonesia News  >> Energy  >> Acquisition of Hess' assets within PTTEP's rating tolerance: Moody’s
NEWS UPDATES Asean Affairs   4 December 2013  

Acquisition of Hess' assets within PTTEP's rating tolerance: Moody’s

Moody's Investors Service says that PTT Exploration & Production Public Company Limited's (PTTEP) joint acquisition of Hess Corporation's assets in Indonesia can be accommodated under its Baa1 issuer and bond ratings with a stable outlook.

PTTEP is carrying out the acquisition with PT Pertamina (Baa3 stable). Hess Corporation is rated Baa2 with a stable outlook.

On Nov. 30, PTTEP and Pertamina announced a US$1.3 billion joint acquisition of Hess' offshore oil and gas fields in Indonesia, comprising a 75 percent stake in the Pangkah project and a 23 percent stake in the Natuna Sea A project. On a 50:50 basis, the acquisition cost to PTTEP is $650 million.

"PTTEP is already in the middle of executing a $15 billion capital expenditure program over 2013-2017 and the announced acquisition will increase it further by acquisition cost of $650 million and capex of $400-450 million over the next 5 years. However, there is no immediate ratings impact as the acquisition increases PTTEP's production and reserves immediately and the company is able to fund the acquisition using its cash balance," Vikas Halan, a Moody's vice president and senior analyst, said in an official release on Tuesday.

As of Sept. 30, PTTEP had $2.6 billion of cash and cash equivalents after it issued a $500 million bond in September.

PTTEP estimates its share of ongoing capital expenditure, of between $400 million and $450 million over the next five years, will be adequately covered by operating cash flows from the two projects, both of which have long-term gas sales agreements in place.

PTTEP has an ambitious target to achieve production of 600,000 barrels of oil equivalent per day (boe/day) by 2020 from 326,763 boe/day in the third quarter of 2013. The shortfall may require the company to make further acquisitions.



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By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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