Opportunity Day - Stock Exchange of Thailand · Opportunity Day 2Q/2019 results . The information...
Transcript of Opportunity Day - Stock Exchange of Thailand · Opportunity Day 2Q/2019 results . The information...
“One family… Fueling the future of Thailand”
Opportunity Day2Q/2019 results
The information contained in this presentation is intended solely for your reference.
This presentation contains “forward-looking” statements that relate to future events, which are, by their nature, subject to significant risks and uncertainties. All
statements, other than statements of historical fact contained in this presentation including, without limitation, those regarding SPRC’s future financial position and
results of operations, strategy, plans, objectives, goals and targets, future developments in the markets where SPRC participates or is seeking to participate and any
statements preceded by, followed by or that include the words “believe”, “expect”, “aim”, “intend”, “will”, “may”, “project”, “estimate”, “anticipate”, “predict”, “seek”,
“should” or similar words or expressions, are forward-looking statements.
The future events referred to in these forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our
control, which may cause the actual results, performance or achievements, or industry results to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which SPRC will
operate in the future and are not a guarantee of future performance. Such forward-looking statements speak only as of the date on which they are made. SPRC does
not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. The information set out herein is
subject to change without notice, its accuracy is not guaranteed, has not been independently verified and it may not contain all material information concerning the
Company.
SPRC makes no representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking
statements represent, in each case, only one if many possible scenarios and should not be viewed as the most likely or standard scenario. No assurance given that
future events will occur or our assumptions are correct. Actual results may materially differ from those provided in the forward-looking statements and indications of
past performance are not indications of future performance. In no event shall SPRC be responsible or liable for the correctness of any such material or for any
damage or lost opportunities resulting from use of this material. SPRC makes no representation whatsoever about the opinion or statements of any analyst or other
third party. SPRC does not monitor or control the content of third party opinions or statements and does not endorse or accept any responsibility for the content or
use of any such opinion or statement.
SPRC’s securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state of the United
States, and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements
of such act or such laws.
This presentation does not constitute an offer to sell or a solicitation of an offer to buy or sell SPRC’s securities in any jurisdiction.
DISCLAIMER
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Vision, Mission& Core Values
“One Family…
Fueling the Future of Thailand”
“We are a highly engaged Family, dedicated to
providing sustained superior returns to our shareholders
through industry leading safe and reliable operations,
producing quality products that exceed customer expectations,
in harmony with our communities and the environment.”
Our Vision: Our Mission:
Core Values:
Stars Leader / Outstanding / Role model
Professional Integrity / Professionalism / Performance driven
Reliable Accountable / Ready / Trustworthy
Caring Responsible citizen / Compassion / Sincere
3Investor
Update
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CONTENTS
01 Highlights
02 Market overview
03 Operational review
04 Financial performance
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01 Highlights
02 Market overview
03 Operational review
04 Financial performance
CONTENTS
Highlights
SPRC’s Winning formula
“At SPRC we believe that
nothing is more important than
being safe and reliable.
We work together as one family
to protect our employees,
the environment, the community,
and to be our customers partner
of choice.
All of which creates maximum
value for SPRC’s shareholders.”
Tim Potter, CEO
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2Q/2019 Highlights
97.1%
7
Highlights
0
TOTAL DAYS AWAY
FROM WORK RATE (‘DAFWR’)
99.8% 85.1%91.0%*
UTILIZATION OF EQUIVALENT
DISTILLATION CAPACITY (UEDC)**
AVAILABILITY
EX. TURNAROUND
$2.39/bbl $2.57/bbl
MARKET GRM
* Normalized UEDC excluding economically concern for the best profitability.
** Lower UEDC to optimize economic returns and due to end of run plant conditions.
BOTTOM LINE
IMPROVEMENT PROGRAM
OPEX PER BARREL
Excluding T&I and Project OPEX
$1.81/bbl THB 0.1202
/share
INTERIM DIVIDEND
Dividend payout of 50%
Highlights
SPRC’s Formula for success
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SAFETY
(Injuries per 200,000 man-hours)
▪ Achieved over 6 years without
Days Away From Work injury.
The last DAFW was 24 Jun 2013.
▪ Achieved 20.2 million man-hours
without Days Away From Work
injury.
PERFORMANCE UPLIFT
FROM “BLIP”
US$/bbl
BLIP: Bottom Line Improvement Program
RELIABILITY OPTIMIZATION MARKET GRM
▪ Sustained high availability but
lower EDC to optimize economic
return during narrowed crack
spread in 2Q19 and end of run
plant conditions.
▪ Target top quartile performance in
availability and utilization among
over 90 refineries in the Asia
Pacific and India Ocean region.
▪ Captured BLIP benefit from good
process and crude optimization.
▪ Maximized domestic placement for
Gasoline and Diesel.
▪ Lower margins due to weaker crack
spreads especially gasoline and
higher crude costs relative to
benchmarks.
OPERATIONAL AVAILABILITY
EX. TURNAROUND
A strong foundation of personal safety … …exceptional reliability… …and maximizing GRM…driving optimization & cost efficiencies…
US$/bbl
TOTAL DAYS AWAY
FROM WORK RATE
0 0 0 0 0
2016 2017 2018 1Q19 2Q19
97.3%88.8%
94.2% 90.9%85.1%
2016 2017 2018 1Q19 2Q19
EDC UTILIZATION RATE
99.7%96.4%
99.1% 99.9% 99.8%
2016 2017 2018 1Q19 2Q192.69 2.59
2.93
2.34 2.39
2016 2017 2018 1Q19 2Q19
6.68
7.34
5.67
3.07
2.57
4.10
5.36
4.67
2.51 2.24
2016 2017 2018 1Q19 2Q19
SG GRM
No one gets hurt
*
*Adjusted 1Q19 BLIP number to reflect end of run plant conditions.
.
2019 Event Project
($256M)
Turnaround & Inspection (T&I) Increase Capacity to 175 KBD Reliability Projects
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• Schedule has been optimized through a multi-party approach with consultants and primary maintenance and construction contractor.
• Shut down is scheduled for a period of 45 days (+/- 5 days), starting from 1 November 2019.
• Operational planning in progress to capture benefits from reliability and capacity upgrades.
• Lower future structure OPEX per barrel.
• Looking for margin improvement opportunities post Event project.
Current Status of Event 2019
Highlights
2019 Event Project
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01 Highlights
02 Market overview
03 Operational review
04 Financial performance
CONTENTS
Overview of oil demand growth and GRM
Source: Wood Mackenzie and IHS
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Market overview
Source: IEA, IHS
OIL MARKET OUTLOOK
Million barrels/dayMillion barrels/day
ASIA (include Middle East)
NORTH AMERICA
EUROPE
LATIN AMERICA
AFRICA
INCREMENTAL OIL DEMAND
FSU
2018 2019e 2020e
0.480.18 0.36
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
-0.03
0.07 0.01
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
0.18 0.13 0.07
-0.06 -0.04
0.04
-0.01
0.08 0.06
0.01 0.140.70
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
▪ Typical SPRC GRM is in range of US$5-7/bbl.
High product
inventory globally
SINGAPORE GRM
US$/bblStrong gasoline
demand & low
crude oil premium
SPRC
GRM
Singapore
GRM
2018 2019 2020
▪ Global oil demand growth in 2019/2020 is 1.2/1.4 mb/d. Demand in the
Middle East and parts of Asia was revised slightly upwards.
▪ Global refining capacity increase in 2019/2020 are 1.8/0.7 mb/d and Asia
refinery capacity increase are 1.2/0.4 mb/d.
0
1
2
3
4
5
6
7
8
9
10
2010201220142016 Q1 Q3 Q1 Q3 Q1 Q3
Market overview
Overview of product cracks
DUBAI PRICE
72
63
67
2Q18 1Q19 2Q19
US$/bbl
12
4
8
2Q18 1Q19 2Q19
US$/bbl
GASOLINE CRACK
1513 12
2Q18 1Q19 2Q19
US$/bbl
JET FUEL CRACKDIESEL CRACK
1513 12
2Q18 1Q19 2Q19
US$/bbl
-4
1
-22Q18 1Q19 2Q19
US$/bbl
FUEL OIL CRACK
DUBAI
+ U.S. attempts to drive Iranian oil exports down to zero come against the backdrop of a global market that is sufficiently well supplied to avoid price disruptions.
+ Crude oil prices firmed as supply cuts led by producer club OPEC and U.S. sanctions on Iran and Venezuela's fuel exports outweighed concerns about an economic slowdown.
- U.S./China trade war brought a concern economic slowdown and as a result push down on demand growth.
GASOLINE
+ Gasoline prices have been supported by persistent reductions of FCC utilization rates, both within and outside the region.
+ Seasonal maintenance and refinery outage cause lower production in U.S., Middle East and Asia brought down gasoline stock in major part of the world.
- Gasoline cracks fell after a three-month rally on increased Chinese exports and reduced imports by Vietnam yearly added to the regional gasoline overhang.
JET
+ The Asian jet fuel market would likely get some support from the upcoming refinery turnarounds in China, which should cut some of the excess supply in the market.
- Jet cracks dipped as winter demand begins to bottom out, while arbitrage opportunities to the West have begun to narrow.
DIESEL
+ Lower export from China and a late start to India’s monsoon season has lent support to gasoil cracks and help soak up some of the excess diesel in the market.
- Cracks remain under pressure due to ample regional supplies as refineries restart after the end of the maintenance season amidst limited arbitrage opportunities to the west.
FUEL OIL
- The fuel oil market continued to languish, as bunker demand saw no sign of recovery due the escalating trade war between U.S. and China.
+ Higher consumption from Middle East for power generation.
+ Price jumped up in June from low western arbitrage flow coming to Singapore, but high M1/M2 spread kicked in at the same time.
KEY HIGHLIGHT
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Market overview
100 88
DEMAND GROWTH
2018 (5 mths) – 2019 (5 mths) EXPECTED GROWTH 2020 COMMENTS
▪ Auto LPG demand continue to
decline due to price differential.
FUEL OIL
AUTO LPG
DIESEL
JET
GASOLINE
425 437
128 128
194 201
+3.9%
38 36
+2.9%
-4.0%
20192018
-12.0%
▪ Healthy demand growth keeps
track with GDP growth.
▪ Seasonal import Diesel.
▪ Domestic Fuel oil consumption
remains relatively constant.
KBD
Source: EPPO
KBD
KBD
KBD
K. ton/month
+0.4%
▪ Continued strong demand for
gasoline.
▪ Import GB95 continue to
increase YoY.
▪ Continued growth due to tourism
growth and higher demand from
airlines.
Strong petroleum demand in Thailand
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01 Highlights
02 Market overview
03 Operational review
04 Financial performance
CONTENTS
CRUDE INTAKE
Crude
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Operational review
• 19 and 22 types of crude processed in 2Q19 and 6M19.
• Market drives to process more Far East crude.
*Industry Average of 5M19 during January-May 2019
Source: Company data, EPPO
2% 1%
21%14% 19% 21% 20%
11%10%
11% 12% 11%
13%
75%69% 67% 68%
55%
2Q18 1Q19 2Q19 6M19 Industry average5M19*
Middle East
Far East
Domestic
Others
Operational review
Products
SPRC Competitive Export Industry Average*
▪ Sustained industry average of domestic placement in almost all products.
▪ Export sales including Indochina sales at 5% in 2Q19.
PRODUCT YIELD DOMESTIC SALES
▪ Continued from Q1 optimization to reduce gasoline production and
increase sales of high value cracker feed stock due to low crack spreads
over Dubai.
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*Country Demand of 2Q19 during April-May 2019
Source: Company data, EPPO
*Industry Average of 2Q19 during April-May 2019
Source: Company data, EPPO
7% 10% 10%3%
2% 3%1% 1% 2%11% 9% 9%
3%
36% 36% 35%
44%
7% 8% 7%
12%
25% 23% 23%
20%
4% 4% 4%4% 4% 4%
21%
2% 2% 2%
2Q18 1Q19 2Q19 Countrydemand2Q19*
PGP
LPG
Light Naphtha
Gasoline
Jet
Diesel
Fuel Oil
Asphalt
Mix C4
Others
86% 84%90%
84% 86% 86%
4%3%
5%
2Q18 1Q19 2Q19
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01 Highlights
02 Market overview
03 Operational review
04 Financial performance
CONTENTS
Financial performance
OPEX PER BARREL
Margin and OPEX
▪ Efficient in OPEX management.
Maintain NECC* at the breakpoint of quartile 1 and 2 against Asia Pacific.
▪ OPEX of 2Q19 increased due to Turnaround preparation and project
OPEX cost.
* Non Energy Cash Cost: Operating expenses exclude energy cost
US$/bbl
GROSS REFINERY MARGIN
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▪ Accounting GRM:
➢ QoQ: Impacted from weak market margin with a slight stock loss of
US$0.28/bbl. (Net from stock gain US$0.32/bbl. offset by LCM
adjustment US$0.60/bbl.)
➢ YoY: Significantly decreased from low crack spread and stock loss in
2Q19.
▪ Market GRM:
➢ Lower from the continuing of poor crack spread over Dubai even better
Gasoline crack but offset with lower Middle Distillates and Fuel oil cracks.
US$/bbl
6.02
3.07 2.57
10.51
7.87
2.29
2Q18 1Q19 2Q19
Market GRM Accounting GRM
1.621.97 1.81
0.24
0.79
2.08
2Q18 1Q19 2Q19
T&I and Project OPEX Normal OPEX
1.86
2.76
3.89
NET INCOME
EBITDA and profitability
US$/bbl
EBITDA
US$ M US$ M
▪ EBITDA and profitability :
➢ 2Q19 EBITDA and Net income significantly decreased mainly from high increase T&I and Project OPEX and lower market refining margin included a slight
stock loss of US$3.9M (net from stock gain US$4.4 M offset by LCM adjustment US$8.3 M).
➢ FX gain for 2Q19 increased due to stronger Baht appreciation relative to the U.S. dollar.
19
Financial performance
116.285.7
(5.6)
233.5
80.2
2Q18 1Q19 2Q19 6M18 6M19
72.8 52.9
(18.9)
153.6
34.0
2Q18 1Q19 2Q19 6M18 6M19
2.3 (82.7)
(21.3)
102.6 0.3 1.2
Cash Flow
CASH FLOW
CFO:
➢ Cash generated from profit before tax of US$38.4M with cash used in working capital of US$101.4 due to temporary increase in inventories and LCM
reversal of US$53.9M.
CFI:
➢ Primarily on projects spending to increase refinery reliability and efficiency.
CFF:
➢ Increased from Short term loan of US$102.6M.
US$ M
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Financial performance
Dec-2018 CFO CFFCFI FX
AdjustmentJune-2019
38.4
(101.4)
(0.6)
Profit before
tax
D&A and Non
cash items
Working capital
Tax & Interest
paid
(19.1)
9.1
12.4
17.1
9.610.1
Dividend Policy and Yield
• SPRC’s dividend policy is to pay out at least 50% of net profits semi-annually.
• 1H19 Dividend payout at 50% of net profit
* Dividend yield based on closing stock price as of the performance period of dividend declaration
DIVIDEND POLICY
DIVIDEND PAYMENT
(Avg. 4.2%-4.8%)
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Financial performance
0.2638
1.1824 1.1427
0.5928
0.1202
3.0%
10.8%
7.1%
4.6%
1.2%
-
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
1.4000
1.6000
2H15 2016 2017 2018 1H19
Dividend per share
Dividend Yield*
SETHD
Closing stock price as of
the performance period
Looking ahead
No one gets hurt
Operational excellence
Bottom Line Improvement Program
Low gearing allows opportunities for growth
T&I Event and Capacity Expansion in 4Q19*
22*The combined costs for the Capacity Increase Project, planned maintenance, and upgrades in 2019 are approximately $256M.
Appendices
23
ASSET BREAKDOWN LIABILITIES & EQUITY
US$ M US$ M
24
Financial position
27 40
880 858
393 504
385
383
2
1
Dec-18 Jun-19
Cash and cashequivalents
Account receivables
Inventories
PP&E
Other current & noncurrent assets
1,7861,687
1,182 1,215
24 16
482 555
Dec-18 Jun-19
Current liabilities
Non current liabilities
Total Equity
1,7861,687
Unit: US$ M 2Q18 1Q19 2Q19YoY QoQ
% +/- % +/-
Revenues 1,650.4 1,491.7 1,553.0 -6% 4%
OPEX (27.9) (40.7) (53.6) -92% -32%
EBITDA 116.2 85.7 (5.6) -105% -107%
Depreciation & Amortization (21.1) (21.0) (20.4) 3% 3%
Profit for the period 72.8 52.9 (18.9) -126% -136%
EPS (THB per share) 0.54 0.39 (0.14) -126% -135%
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Income statement
6M18 6M196M
% +/-
3,210.1 3,044.7 -5%
(57.4) (94.3) 39%
233.5 80.2 -191%
(42.2) (41.4) -2%
153.6 34.0 -352%
1.13 0.25 -349%
SALES BY VOLUME
US$/bbl
SALES BY REVENUE
▪ Chevron and PTT account for 87% of total sale in 2Q19 by revenue.
▪ Others are products sold as Petrochemical feedstock and intermediate product exchange.
53%34%
13%
55%33%
12%
Others
2Q18
Others
2Q1948%
35%
17%
Others
2Q18
Others
49%
33%
18%
Others
2Q19
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Sales by customers
Low gearing means we are
financially resilient and able to
gear up to seize growth
opportunities
STRONG BALANCE SHEET
One of world’s leading oil and
gas groups with over a century
of experience worldwide. The
Chevron connection brings
bargaining power, crude supply,
offtake agreements and access
to proprietary technology and
systems
CHEVRON RELATIONSHIP STRATEGIC LOCATION
Location in Map Ta Phut
ensures low logistics costs
with access to dedicated
deep water jetty and an
SPM for VLCCs. Puts us
close to several important
customers.
TECHNICAL CONFIGURATION
Our refinery configuration enables
us to buy cheaper crudes and turn
them into higher value products,
including a higher gasoline yield
than our competitors.
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The SPRC competitive advantage
CUSTOMERS(1)DISTRIBUTION(1)REFINERYCRUDE SUPPLY
(1) Based on 2Q19 data
REFINERY
Capacity: 165 KBDSingle point mooring system
265,000 DWTPower Generation
Facilities
41 MW
VLCCUp to 265,000 DWT
PANAMAXUp to 80,000 DWT Marine terminal
CRUDE
Capacity:
4.9 M
barrels
PRODUCT
Capacity:
4.0 M
barrels
PIPELINE
▪ Supply to north, north
east of Thailand and
Indochina export
market
VESSEL
▪ Dispatch to both
domestic and export
markets at Main Pier
▪ LPG Pier
DOMESTIC
EXPORT
Middle East64%
Far East12%
Domestic17%
SOURCES
OF CRUDE
FOR 2Q19
86%
14%
▪ Pipeline connects Map Ta Phut,
Sriracha & Bangkok
▪ Connections to petrochemical
customersTRUCK
41%
10%
49%
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Business overview
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A brief history
Key contractual arrangements
CRUDE OIL
NATURAL GAS
REFINERY
POWER AND STEAM
PRODUCTS
SPMS
MARINE
TERMINAL
1
2
3
4
5 LPG
JET
GASOLINE
DIESEL
FUEL OIL
ASPHALT
HVGO
PROPYLENE
OTHERS
7
6
8
FEEDSTOCK TECHNICAL & OPERATING OFFTAKE
SP
RC
BU
SIN
ES
SK
EY
AG
RE
EM
EN
TS New Feedstock Supply
Agreement(1)
Single Point Mooring System
Operating Agreement
Natural Gas Sales
Contract for
Cogeneration and
Natural Gas Sales
Contract for Petroleum
Product Manufacturing
Process
1
2
3
Marine Services
Transportation Agreement
Technical Services Agreement and
License Agreement
4
5
Amended Offtake
Agreement(1)
Propylene
Sale Agreement
Intermediate Products
Exchange Agreement
6
7
8
COUNTERPARTIESCOUNTERPARTIESCOUNTERPARTIES
(1) Effective upon the first day of trading of SPRC’s shares on the SET
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SPRC Crude Capacity
165 KBD
Naphtha Hydrotreating Unit
(NHTU) 19 KBD
Crude Distillation Unit
(CDU) 165 KBD
Vacuum Distillation Unit
(VDU) 63 KBD
Continuous Catalytic
Regeneration Reformer
(CCR) 17 KBD
Residue Fluidized
Catalytic Cracking Unit
(RFCCU) 41 KBD
Heavy Vacuum Gas Oil
Hydrotreating Unit (HVGO
HTU) 35 KBD
Whole Cat Naphtha
Hydrotreating
(WCN) 23 KBD
Jet Merox Unit
(JMU) 20 KBD
Diesel Hydrotreating Unit
(DHTU) 66 KBD
Benzene Saturation Unit
(BSU) 15 KBD
LPG
Chemical Naphtha
Mogas
PGP
Jet
Diesel
Fuel Oil
Asphalt
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Refinery complexity
Energy Management
• Energy roadmap with
monthly and yearly targets
• Energy AOS every 2 years
• US$0.02-0.11 /bbl
Margin Improvement
People Efficiency and
Waste Management
Oil Loss Control
• Lean sigma
• Cost leadership
• US$1-6 MM/year
• Data reconciliation
• US$0.02-0.05 /bbl
• Yearly Innovation Quest
(IQ) and Asset Optimization
Studies (AOS)
• Monthly core team meeting
• Rigorous benefit tracking
BLIP
US$/bbl
Despite a challenging margin
environment, SPRC continues to drive
incremental margin improvement
through BLIP
Crude benefit over
Benchmark crudes
US$0.55-0.80/bbl
Product yield and
placement optimization
US$0.20-0.90/bbl
Process plant optimization US$0.60-0.80/bbl
Cracker feed synergy US$0.10-0.40/bbl
32
BLIP (Bottom Line Improvement Program)
2.69 2.592.93
2.34 2.39
2016 2017 2018 1Q19 2Q19
Thank You
Any queries, please contact SPRC Investor Relations
at email: [email protected]
Tel: +6638 699 887
Website: http://investor.sprc.co.th
Please send us your feedback via QR code below:
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