Moody’s Upgrades Outlook for Thai Firm Exploring For Oil

Credit rating agency Moody’s Investor’s Service has upgraded the outlook for PTT Exploration and Production Plc from negative to stable, a decision taken on the back of an earlier decision to upgrade Thailand’s sovereign debt ratings, the agency said in its weekly update to clients yesterday.

The Thai-listed firm is currently exploring in the 6,551-square-km area in Cambodian waters known as Block B in which it has so far come up empty-handed after drilling two exploration wells, one of which was conducted in April this year.

“The rating action follows Moody’s decision to revise the ratings outlook to stable for PTT Public Company Ltd, and the outlook revision of stable for Thailand’s sovereign ratings,” said Renee Lam, a senior analyst with Moody’s in Hong Kong in a statement.

Ms Lam added that the financial situation of the Thai energy company PTT had improved, making it more likely to provide PTTEP with financial assistance if the company runs into financial difficulties. The decision to upgrade the company’s outlook was made on Oct 28.

Last Wednesday, PTTEP announced financial results for the first three quarters. The company recorded net profits of 10.532 billion baht, or $351.301 million, an increase of 100.27 percent compared to the same three quarters in 2009.

PTTEP shares Block B in Cambodia with the Thai company Resourceful Petroleum Ltd and the Singapore-listed Singapore Petroleum Co, which is 45 percent owned by PetroChina Co Ltd.

PTTEP’s exploration manager Andrew Bromley said last week that the company would continue to explore in Block B despite not having discovered any oil to date. PTTEP has already completed a 650-square-kilometer seismic survey in the area and is planning toward its next exploration well, he said.

Moody’s currently rates PTT at A3, a score that gives the company low credit risk with question marks still remaining over the company’s long-term financial health.

Without the help from its parent company PTTEP’s standalone rate stands at Baa1, which gives the company moderate credit risk, Ms Lam wrote in an email yesterday.

“The final A3 rating has factored in one notch of uplift from PTT support,” she wrote.


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