Analyst Meeting€¦ · The information contained in this presentation is intended solely for your...
Transcript of Analyst Meeting€¦ · The information contained in this presentation is intended solely for your...
Analyst Meeting 1Q/2020 results
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“One Family…
Analyst Meeting1Q/2020 results
Fueling the future of Thailand”
Analyst Meeting 1Q/2020 results
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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
Analyst Meeting 1Q/2020 results
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Analyst Meeting 1Q/2020 results
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Contents
Highlight of Financial & Operation results
Market Situation
Cost Reduction Initiative
Business Email Compromise Update
Future Opportunities
Analyst Meeting 1Q/2020 results
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TOTAL DAYS AWAY FROM WORK RATE
(‘DAFWR’)
* Normalized UEDC excluding economically concern for the best profitability.
Operational PerformanceHighlights &
Financial performanceMarket Situation BEC Incident Future Opportunities
UTILIZATION OF EQUIVALENT
DISTILLATION CAPACITY (UEDC)
AVAILABILITYEX. TURNAROUND
CRUDE & PRODUCTOPTIMIZATION
0 0 0 0 01Q19 4Q19 1Q20 2018 2019
No one gets hurt
99.9% 100.0% 99.5% 99.1% 99.9%
1Q19 4Q19 1Q20 2018 2019
Crude Optimization• Maximize ME crude up to 82%
for the most economic
Product Optimization• Maximize production of Diesel
at 39% and minimize production of Jet and FO to generate higher GRM
90.9%
42.0%
86.7% 94.2%75.8%
1Q19 4Q19 1Q20 2018 2019
94.1%*
DAFWR
AVAILABILITYEX. TURNAROUND
UEDC
Cost Reduction Initiative
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Financial Performance
3.07 2.49 1.28
7.87
1.85
(20.34)
1Q19 4Q19 1Q20
Market GRM Accounting GRMUS$/bbl
GRM
OPEX PER BARREL
US$/bbl
13.70
2.76
1.974.19
1.660.79
9.51
0.32
1Q19 4Q19 1Q20
Normal OPEX T&I and Project OPEX
NET INCOME
NET IBD/EQUITY RATIO
▪ Accounting GRM:
➢Significantly decreased from lower GRM with substantial stock loss of US$10.1/bbland NRV loss of US$11.5/bbl.
▪ Market GRM:
➢Decreased due to low spreads in main products reflecting the sharp fall of global oil demand due to COVID-19 outbreak.
▪ OPEX per barrel:
➢Decreased due to 1) the absence of Turnaround and project OPEX cost and 2) the effective cost management.
▪ Net Income:
➢Significant Net loss of US$261.0M in 1Q20 due to a large stock loss, low GRM and, low crude intake, but partly offset by lower OPEX and favorable FX gain.
▪ Net IBD/Equity Ratio
➢Higher from the increase of short-term loan to support the operation loss.
52.9
(98.0)
(261.0)
1Q19 4Q19 1Q20
0.0
0.2
0.5
1Q19 4Q19 1Q20
US$ M
1.98
Highlights & Financial performance
Market Situation BEC Incident Future OpportunitiesCost Reduction
Initiative
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Overview of oil demand growth, inventories and GRMHighlights &
Financial performanceMarket Situation BEC Incident Future Opportunities
Cost Reduction Initiative
-1
0
1
2
3
4
5
6
7
8
9
10
2012 2014 2016 2018 Q1 Q3 Q1
▪ Typical SPRC GRM is in range of US$5-7/bbl.
SINGAPORE GRMGLOBAL PRODUCT INVENTORIES
• Current global inventory are increase mainly from light distillation as travel restrictions due to COVID-19 are dampening demand.
• Fuel oil market has been muted by a slowdown in trade as a result of the coronavirus.
US$/bbl
Singapore
GRM
2019 2020
High product inventory globally
Strong gasoline demand & low crude
oil premium
SPRC GRM
Million barrels/day
▪ Global oil demand in 2020 has impact by the coronavirus outbreak. Expect global oil demand to fall by 10.3Mb/d y-o-y because of the impact of containment measures in 187 countries and territories has been to bring mobility almost to a halt.
▪ Global refining throughput in 2020 is expected to decline as falling demand for transport fuels, primarily due to China.
ASIA (include Middle East)
NORTH AMERICAEUROPE
LATIN AMERICA
AFRICA
INCREMENTAL OIL DEMAND
EURASIA/CIS
2019 2020e 2021e
OIL MARKET OUTLOOK
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Market situation
DUBAI PRICE
US$/bbl US$/bbl
GASOLINE CRACK
US$/bbl
JET FUEL CRACKDIESEL CRACK
US$/bbl
US$/bbl
FUEL OIL CRACK
63 62
51
23
1Q19 4Q19 1Q20 2QTD20*
4
13
7
0.4
1Q19 4Q19 1Q20 2QTD20*
13 1411
6
1Q19 4Q19 1Q20 2QTD20*
13 14
9
-31Q19 4Q19 1Q20 2QTD20*
1
-19 -7
-0.41Q19 4Q19 1Q20 2QTD20*
MURBAN OSP
* 2QTD20 refers to period from the beginning of 2Q20 to May 6th, 2020
US$/bbl
1.772.71
3.394.41
3.51
1.88 1.88
-2.75
-6.95
1Q19 2Q19 3Q19 4Q19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 (F)
Highlights & Financial performance
Market Situation BEC Incident Future OpportunitiesCost Reduction
Initiative
Analyst Meeting 1Q/2020 results
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Petroleum demand in Thailand
% SPRC PRODUCTION
THAT CAPTURED DOMESTIC DEMAND
▪ Well captured demand from the market
▪ Manage production to Petrochemical outlet
-30%
-90%
-30%
DIESEL
GASOLINE
75%
10%
80%
JET
▪ Expect to get better from domestic flight starts operation in May
▪ SPRC manages to lower Jet A-1 and makes more Diesel
▪ Well captured demand from the market
▪ Surplus from lower Jet A-1 production to export
THAILAND DEMAND IMPACTS FROM COVID-19
PRODUCTS REMARK
Highlights & Financial performance
Market Situation BEC Incident Future OpportunitiesCost Reduction
Initiative
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Inventory Reduction
Minimize inventories volume to support working capital cost
Investment Optimization
Without impacting safe and reliable operations, short term deferrals on investment spending
OPEX Reduction
Control on cost management effectiveness
Process Optimization
Maximize high value product production
Cost Reduction InitiativeHighlights &
Financial performanceMarket Situation BEC Incident Future Opportunities
Cost Reduction Initiative
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Business Email Compromise Incident
• Fraudulent emails sent to SPRC
• Transferred to wrong account
Fact of incident
✓ Informed AC and board
✓ Stopped the fund payment
Immediately action
✓ No insider involvement
✓ Investigated by external experts
Investigation process
& result
✓ Enhanced on cyber security
✓ Tightened the payment control processes
Preventive actions
o In process of recovery payment
o Engaged external counsel to assist
Recovery payment
Highlights & Financial performance
Market Situation BEC Incident Future OpportunitiesCost Reduction
Initiative
Current Status
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Future Opportunities
SPRC’s strategic team is studying on various opportunities.
Specific in Oil & Gas industry
Update when the Board approval with expect in 2Q/2021
Highlights & Financial performance
Market Situation BEC Incident Future OpportunitiesCost Reduction
Initiative
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Appendices
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SPRC’s Formula for success
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 27.6 million man-hours without Days Away From Work injury.
PERFORMANCE UPLIFT
FROM “BLIP”
US$/bbl
BLIP: Bottom Line Improvement Program
RELIABILITY OPTIMIZATION MARKET GRM
▪ Sustained high availability but lower UEDC due to the optimization of economic return from weak gasoline and jet fuel oil demand as a result of COVID-19 pandemic.
▪ Target top quartile performance in availability and utilization among over 90 refineries in the Asia Pacific and India Ocean region.
OPERATIONAL AVAILABILITY
EX. TURNAROUND
A strong foundation of personal safety … …exceptional reliability… …and maximizing GRM…driving optimization & cost efficiencies…
US$/bbl
TOTAL DAYS AWAY
FROM WORK RATE
0 0 0 0 0
1Q19 4Q19 1Q20 2018 2019
90.9%
42.0%
86.7% 94.2%75.8%
1Q19 4Q19 1Q20 2018 2019
EDC UTILIZATION RATE
99.9% 100.0% 99.5% 99.1% 99.9%
1Q19 4Q19 1Q20 2018 2019
3.07
2.49
1.28
5.67
3.39
2.40
0.73
3.46
2.37
1Q19 4Q19 1Q20 2018 2019
SG GRM
No one gets hurt
▪ Market GRM decreased due to low spreads in main products from the impact of the COVID-19 outbreak that weakened demand.
▪ Captured BLIP benefit from good crude and process optimization.
▪ Re-baseline BLIP target in 2020 to reflect new capacity and settle the sustainable performance.
2.34
2.64
1.38
2.93
2.34
2.20 2.20
0.80
2.05 2.20
1Q19 4Q19 1Q20 2018 2019
Target
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CRUDE INTAKE
• 12 types of crude processed in 1Q20.
• Market drove to process more Middle East Crude.
Crude
*Industry average of 1Q20 during January-February 2020Source: Company data, EPPO
37%19% 23%
16%
12%
11% 11%
2%
10%
69% 66%82%
41%
1Q19 4Q19 1Q20 Industry average1Q20*
Middle East
Far East
Domestic
Others
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Products
▪ Low domestic placement due to the impact of COVID-19.
▪ Export sales including Indochina sales at 5% in 1Q20.
PRODUCTION YIELD DOMESTIC SALES
SPRC Competitive Export Industry Average*
10%2%
7%
2%
2%3%
1%
1%1%
9%
8%6%
3%
36%40%
39%
44%
8%10% 8%
14%
23% 24% 25%21%
4% 5% 5%4% 5% 4%
19%
2% 2% 2%
1Q19 4Q19 1Q20 Countrydemand1Q20*
PGP
LPG
Light Naphtha
Gasoline
Jet
Diesel
Fuel Oil
Asphalt
Mix C4
Others
▪ Low crack spreads over Dubai from weak demand drove to decrease Jet production.
*Country Demand of 1Q20 during January-February 2020Source: Company data, EPPO
90%84%
91%85% 84% 86%
3% 4%
5%
1 2 3 4 5 6 7 81Q201Q19 4Q19
*Industry Average of 1Q20 during January-February 2020Source: Company data, EPPO
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NET INCOME
US$/bbl
EBITDA
US$ M US$ M
EBITDA and profitability :
➢ Significant Net loss of US$261.0M in 1Q20 due to a large stock loss, low GRM and, low crude intake, but partly offset by lower OPEX and favorable FX gain.
➢ FX gain in 1Q20 of US$7.2M reflected Baht depreciation against USD on net payables position which including Baht borrowing
EBITDA and profitability
85.7
(102.0)
(303.4)
1Q19 4Q19 1Q20
52.9
(98.0)
(261.0)
1Q19 4Q19 1Q20
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CFO:
➢ Cash flows used in operating activities reflecting losses in 1Q20 and impact from unfavourable working capital.
CFF:
➢ Proceed from short term loan of US$176.7M to support the operating loss.
Cash Flow
CASH FLOW
December-2019
CFO CFI CFF FX Adjustment
March-2020
0.7
(174.4)
(2.3)
176.7
0.5 1.2
US$ M
Short term Loan
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9.1
12.4
17.1
9.6 10.7
• SPRC’s dividend policy is to pay out at least 50% of net profits semi-annually.
*Dividend yield based on closing stock price as of the performance period of dividend declaration
DIVIDEND POLICY
DIVIDEND PAYMENT
(Avg. 4.2%-4.8%)
Closing stock price as of the performance period
0.2638
1.1824 1.1427
0.5928
0.1827
2.9%
10.8%
7.1%
4.6%
1.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
1.4000
2H15 2016 2017 2018 2019
Dividend per share
Dividend Yield*
SETHD
Dividend Policy and Yield
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No one gets hurt
Operational excellence
Bottom Line Improvement Program
Continue to evaluate for growth opportunities
Looking ahead
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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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ASSET BREAKDOWN LIABILITIES & EQUITY
US$ M US$ M
1,790 1,457
Financial position
83.75 140.36
880 858
589
228
237
230
1
1
Dec-19 Mar-20
Cash and cash equivalents
Account receivables
Inventories
PP&E
Other current & noncurrent assets
1,071
801
16
15
703
641
Dec-19 Mar-20
Current liabilities
Non current liabilities
Total Equity
1,790 1,457
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Unit: US$ M 1Q19 4Q19 1Q20YoY QoQ
+/- +/-
Revenues 1,491.7 912.4 1,256.4 (235.3) 344.04
OPEX (40.7) (120.7) (27.6) (79.9) 93.09
EBITDA 85.7 (102.0) (303.4) (187.8) (201.32)
Depreciation & Amortization (21.0) (20.5) (22.4) 0.5 (1.98)
Profit for the period 52.9 (98.0) (261.0) (150.9) (163.01)
EPS (THB per share) 0.39 (0.69) (1.91) (1.08) (1.22)
Income statement
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SALES BY VOLUME
US$/bbl
52%
33%
15%
SALES BY REVENUE
▪ Chevron and PTT account for 89% of total sale in 1Q20 by revenue.
▪ Others are products sold as Petrochemical feedstock and intermediate product exchange.
53%
36%
11%
Others
1Q19
Others
1Q20
49%
31%
20%
Others
1Q19
Others
48%
34%
18%
Others
1Q20
Sales by customers
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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.
The SPRC competitive advantage
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Sustainable Development
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CUSTOMERS(1)DISTRIBUTION(1)REFINERYCRUDE SUPPLY
REFINERYCapacity: 175 KBDSingle point mooring system
265,000 DWTPower Generation
Facilities41 MW
VLCCUp to 265,000 DWT
PANAMAXUp to 80,000 DWT Marine terminal
CRUDECapacity:
4.9 M barrels
PRODUCTCapacity:
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 East82%
Far East2%
Domestic16%
SOURCES OF CRUDEFOR 1Q20
86%
14%
▪ Pipeline connects Map Ta Phut, Sriracha & Bangkok
▪ Connections to petrochemical customers
TRUCK
37%
10%
53%
(1) Based on 1Q20 data
Business overview
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A brief history
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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
SPR
C B
USI
NES
SK
EY A
GR
EEM
ENTS
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
Key contractual arrangements
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SPRC Crude Capacity
175 KBD
Naphtha Hydrotreating Unit (NHTU)
20 KBD
Crude Distillation Unit (CDU)
175 KBD
Vacuum Distillation Unit (VDU)
65 KBD
Continuous Catalytic Regeneration
Reformer (CCR) 19 KBD
Residue Fluidized Catalytic
Cracking Unit (RFCCU) 42 KBD
Heavy Vacuum Gas Oil
Hydrotreating Unit (HVGO HTU) 35
KBD
Whole Cat Naphtha Hydrotreating
(WCN) 28 KBD
Jet Merox Unit
(JMU) 20 KBD
Diesel Hydrotreating Unit
(DHTU) 69.4 KBD
Benzene Saturation Unit (BSU)
15 KBD
LPG
Chemical Naphtha
Mogas
PGP
Jet
Diesel
Fuel Oil
Asphalt
EDC = 1,177 KBD
UEDC 30 KBD UEDC 98 KBD
EDC 252 KBD
EDC 132 KBD
EDC 20 KBD
UEDC 58 KBDUEDC 378 KBDUEDC 76 KBD
EDC 84 KBD
Refinery complexity
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BLIP (Bottom Line Improvement Program)
Energy Management
• Energy roadmap with monthly and yearly targets
• Energy AOS every 2 years
Margin Improvement
People Efficiency and Waste Management
Oil Loss Control
• Lean sigma
• Cost leadership
• Data reconciliation
• Yearly Innovation Quest (IQ) and Asset Optimization Studies (AOS)
• Monthly core team meeting
• Rigorous benefit tracking
BLIP
Despite a challenging margin environment, SPRC continues to drive incremental margin improvement through BLIP
2.342.64
1.38
2.93
2.34
1Q19 4Q19 1Q20 2018 2019
Analyst Meeting 1Q/2020 results
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Thank You
Any queries, please contact SPRC Investor Relations
at email: [email protected]
Tel: +6638 699 887
Website: http://investor.sprc.co.th
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