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Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
 Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their generally low cash production costs and strong liquidity. Fitch expects companies to further reduce capex if oil prices remain at current levels for a longer period.
Fitch further noted that, the fall of oil prices below USD50 per barrel is hurting cash generation and affecting investment decisions of companies in the sector. However, the impact on operating cash generation varies across Fitch-rated companies. South-east Asian companies, such as PTT Public Company Limited that produce more gas (60% or more of total production), will be less affected immediately compared with their north and south Asian counterparts that are more liquids-heavy. Liquids at companies like Petrochina, CNOOC, Sinopec, Oil India Ltd and MIE Holdings Corporation account for over 70% of total production in barrels of oil equivalent (boe) terms. Companies that hedged the prices of part of their oil production benefited from the protection in 2014, but they are likely to be exposed to market prices in 2015 because these types of hedges typically do not cover long periods.
Low cash production costs and the largely conventional upstream projects of the rated Asian oil companies provide them with additional flexibility in today's low oil price environment, said Fitch. While all-in costs (cash production costs plus depreciation, depletion and amortisation, or DD&A) are important in the long run, the relatively longer production lives of conventional oil and gas wells provide additional capex flexibility during periods of low hydrocarbon prices. Lifting costs in US dollars per boe are typically in the teens for the rated companies in Asia. Lower production tax requirements stemming from low realised prices, especially in China, also reduce the net impact of the oil price rout on operating cash generation. Companies are also looking to reduce opex, which can squeeze margins of oil field services companies.
Over the longer term though, with all-in costs exceeding USD35/boe for the rated Asian names, the economic viability of projects will be impaired if there is no meaningful increase in oil prices. At current prices, we expect certain high-cost projects to be delayed. These could include ventures in the Canadian oil sands and certain enhanced oil recovery projects on mature-depleting fields in Asia. Sponsor companies could also delay final investment decisions on some large projects with long lead times, such as some green field LNG projects, to preserve cash reserves.
Capex flexibility also varies across the rated companies. CNOOC and PTT have relatively low developed reserve lives of around four years, which gives them less flexibility to curtail development capex for a long period. The state-owned companies are unlikely to cut domestic capex drastically because they are mandated by states to raise production to supply their growing economies. In addition, PTT has lagged considerably behind its Asian peers in reserve replacement, with several large acquisitions not yet adding to proved reserves. For most of the other rated oil producers, though, reserve replacement has been robust (near 100% or above) in recent years, adding further to their flexibility. We also see the prospect of reserve write-downs for some companies if oil prices do not meaningfully improve by the time reserve reports are updated over the next few months.
Rated Asian oil companies, especially the state-owned ones, have very strong balance sheets, with low financial leverage and substantial cash balances. We expect these companies to have good financial flexibility arising from their good liquidity (large cash balances and strong access to capital). In India, we expect the government to reduce the substantial discounts (USD56/barrel) the two state-controlled upstream companies, Oil India and ONGC, have to provide to refiners, improving their cash margins under low oil prices. Malaysia's PETRONAS has a very strong balance sheet. However, the high dividends required by the Malaysian government remains a challenge, although the company is pushing to lower this burden.
According to Fitch, Fitch is also expect cash-rich companies to take advantage of attractive M&A opportunities, although their approach is likely to be measured to ensure their cash balances remain strong to deal with the uncertain oil price outlook. Asian companies are likely to focus on mid-sized assets that are producing or close to production that put less stress on their balance sheets.
Smaller companies like MIE of China have less financial flexibility. While MIE's lifting costs of around USD10/boe are low, it has relatively weaker access to funding than its larger peers, especially when oil prices are low. However, MIE's cash on hand at end-September 2014 (plus expected proceeds in 4Q14 from some asset disposals) and unutilised credit lines provide adequate short-term liquidity, while its major debt maturities are several years away.
Our approach with oil and gas companies is to rate through the cycle, Fitch says in its latest analysis report. While strong production, weak demand growth and high inventory levels put significant near-term pressure on oil prices, high global marginal production costs and capex cuts leading to reduced production should over time result in a more balanced market that supports higher prices for oil. While low oil prices and high capex requirements will dent the credit metrics of Asian oil producers, ratings of many of these companies, especially the state-owned companies whose ratings benefit from state linkages, remain resilient.
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Monday, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
Sunday, 18 January 15
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN WEAK NEXT WEEK
COALspot.com: The BDI was up 4.51 pct week on week on Friday 16, January 2015. The BDI closed at 741 points on this Friday after gaining arou ...
Friday, 16 January 15
U.S. WEEKLY COAL PRODUCTION UP 7.3% W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 15 January 15
PANAMAX : MARKET CONTINUE ON LOW PACE - FEARNLEYS
Handy
On a general basis we can say that rates are softening in both hemispheres. Although for some specific trades we can see premiums being ach ...
Wednesday, 14 January 15
DRY BULK MARKET NOTED ANOTHER WEEKLY DECLINE - INTERMODAL
COALspot.com: The Dry bulk market noted another weekly decline on Friday, with the performance of the Capesize market still weighing down on the re ...
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- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Planning Commission, India
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
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