Analyst Meeting 4Q and FY2019 results
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“One Family…
Opportunity Day4Q and FY2019 results
Fueling the future of Thailand”
Analyst Meeting 4Q and FY2019 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 4Q and FY2019 results
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Analyst Meeting 4Q and FY2019 results
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Market overview
Operational review
Financial performance
4
Contents
Highlights
Analyst Meeting 4Q and FY2019 results
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Contents
Market overview
Operational review
Financial performance
Highlights
Analyst Meeting 4Q and FY2019 results
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“MSCI Global Small Cap Index Awards”SPRC had made it into MSCI Global Small Cap Index in November 2019
FY 2019 Achievement
“Green Industry Level 3”: Green System Awards for systematic environmental management including follow-up, assessment and revision aimed to continuous development (2019 - 2023) By Ministry of Industry
CG Award “Excellent” scoring, granted by Thai Institute of Directors Association (IOD), in collaboration with the Stock Exchange of Thailand (SET), to evaluate the good governance of Thai Listed Companies on: Rights of Shareholders, Equitable Treatment of Shareholders, Role of Stakeholders, Disclosure and Transparency, and The Board Responsibilities.
“CSR-DIW Continuous Award 2019”, granted by the Department of Industrial Works (DIW), Ministry of Industry, for 4th Consecutive years, in recognition of SPRC who has shown continuous
commitment to Corporate Social Responsibility (CSR) continuous development.
“2019 Event Project”: SPRC successfully completed the 2019 Refinery wide Turnaround and Inspection, Increase Capacity to 175 KBD and Reliability Projects during November – December 2019 without Day Away From Work Injury, maintenance was on plan and under the planned budget.
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2019 Event Project
($256M)
Turnaround & Inspection (T&I)
Increase Capacity to 175 KBD
Reliability Projects
• Successfully completed the 2019 Refinery wide Turnaround and Inspection, Increase Capacity to 175 KBD and Reliability Projects during November –
December 2019 without Day Away From Work Injury, maintenance was on plan and under the planned budget.
• Target 6 years run length without any planned shutdown
• 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.
The Best Event Ever
2019 Event Project
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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
Analyst Meeting 4Q and FY2019 results
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97.1%0
TOTAL DAYS AWAY FROM WORK RATE (‘DAFWR’)
99.9% 75.8%80.9%*
UTILIZATION OF EQUIVALENT DISTILLATION CAPACITY (UEDC)**
AVAILABILITYEX. TURNAROUND
$2.34/bbl $3.39/bbl
MARKET GRM
* Normalized UEDC excluding economically concern for the best profitability.
** Lower UEDC from Turnaround and 2019 Event project, economic returns optimization and end of run plant conditions.
BOTTOM LINE IMPROVEMENT PROGRAM
OPEX PER BARRELExcluding T&I and Project OPEX
$2.24/bbl
FY2019 Highlights
THB 0.0625/share
DIVIDEND
Excluding interim dividend of THB 0.1202/shareTotal 2019 dividend of THB 0.1827/share
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SPRC’s Formula for success
SAFETY
(Injuries per 200,000 man-hours)
▪ Achieved over 6 years without Days Away From Work injury. The last DAFW was 24 Jun 2013.
▪ Achieved 26.6 million man-hours without Days Away From Work injury.
PERFORMANCE UPLIFT
FROM “BLIP”
US$/bbl
BLIP: Bottom Line Improvement Program
RELIABILITY OPTIMIZATION MARKET GRM
▪ Sustained high availability but lower UEDC due to Refinery wide Turnaround and Event Project
▪ Target top quartile performance in availability and utilization among over 90 refineries in the Asia Pacific and India Ocean region.
▪ 4Q19: Captured BLIP benefit from good crude and process optimization.
▪ Maximized domestic placement for gasoline, diesel and jet.
▪ End of run conditions limited process optimization benefit in 2019.
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 0
1Q19 2Q19 3Q19 4Q19 2018 2019
90.9% 85.1% 85.7%
42.0%
94.2%75.8%
1Q19 2Q19 3Q19 4Q19 2018 2019
EDC UTILIZATION RATE
99.9% 99.8% 100.0% 100.0% 99.1% 99.9%
1Q19 2Q19 3Q19 4Q19 2018 2019
2.34 2.392.11
2.642.93
2.34
1Q19 2Q19 3Q19 4Q19 2018 2019
3.07
2.57
5.07
2.49
5.67
3.39
2.40 2.13
5.21
3.46
2.37
1Q19 2Q19 3Q19 4Q19 2018 2019
SG GRM
No one gets hurt
(0.27)
▪ Market GRM decreased from weak product cracks.
▪ Crude premium relative to Dubai and Freight cost limited margin recovery.
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Contents
Market overview
Operational review
Financial performance
Highlights
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▪ Typical SPRC GRM is in range of US$5-7/bbl.
SINGAPORE GRM
Overview of oil demand growth, inventories and GRM
Source: IEA
Million barrels/day
▪ For 2020, global oil demand growth forecast at 1.2 mb/d. Demand in the Middle East and parts of Asia was revised slightly increase comparing with 2019.
▪ New capacity adding defer from 2019 to 2020 cause surplus supply in the market.
ASIA (include Middle East)
NORTH AMERICA
EUROPE
LATIN AMERICA
AFRICA
INCREMENTAL OIL DEMAND
FSU
2018 2019 2020e
0.460.13 0.14
-1.00
-0.80
-0.60
-0.40
-0.20
0.0 0
0.2 0
0.4 0
0.6 0
0.8 0
1.0 0
-0.12 -0.04
0.10
-1.00
-0.80
-0.60
-0.40
-0.20
0.0 0
0.2 0
0.4 0
0.6 0
0.8 0
1.0 0
0.16 0.14 0.08
-0.06 -0.02
0.02
-0.01
0.06 0.06
0.67 0.69 0.81
-1.00
-0.80
-0.60
-0.40
-0.20
0.0 0
0.2 0
0.4 0
0.6 0
0.8 0
1.0 0
OIL MARKET OUTLOOK GLOBAL PRODUCT INVENTORIES
• Current global inventory are increase mainly from light distillation while middle distillate stock as the same level with 2018-2019.
• Global on-land FO stock built since the IMO regulation came in to force on January, 1st.
US$/bbl
Singapore
GRM
2018 2019 2020
High product
inventory globally
Strong gasoline demand & low crude
oil premium
SPRC GRM
-1
0
1
2
3
4
5
6
7
8
9
10
2010201220142016 Q1 Q3 Q1 Q3 Q1 Q3
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Overview of product cracks
DUBAI PRICE
US$/bbl US$/bbl
GASOLINE CRACK
US$/bbl
JET FUEL CRACKDIESEL CRACK
US$/bbl
US$/bbl
FUEL OIL CRACK
DUBAI
+ OPEC increases output cuts from 1.2 to 1.7 MBPD, Resolved of US China trade phase I deal provides bullish sentiment and supports price.
- Bearish demand from lower economic growth foresees from trade war, Strong supply from Non OPEC provides bearish fundamental to the market.
- Freight rates to ship U.S. crude to Asia continued to surge, with costs to charter a supertanker rising to a record $12 million caps gain US and WAF crude price.
GASOLINE
+ Cracks inched higher as supply tightened slightly owing to heavy refinery turnarounds and unplanned outages.
+ Drawdown of inventory levels in Singapore to below minimum of seasonal levels supported sentiments and cracks.
- China export limits gain of Gasoline crack.
JET
- The overall market sentiment for heating oils remains muted.
- The restart of nuclear power capacity since the beginning of the year and forecasts by both the Japanese and Korean meteorological agencies of a warmer winter.
DIESEL
+ Cracks strengthened slightly on continued buying interest ahead of IMO kept pace with the rise in supply as refiners look to capitalize on the diesel contango in the coming months.
+ Asia's 10ppm gasoil cash premium to Singapore rose to an almost one-year high on strong demand and tight supplies due to refinery maintenance across regions.
FUEL OIL
- Fuel oil cracks against Dubai collapsed as the increase in comparatively small LSFO trade volumes and subsequent rise in cracks have been dwarfed by the substantial volumes of HSFO, which now struggles to find a home.
- Cracks collapsed within a week after attack on Abqaiq as news of supply disruptions were offset by a recovery of Saudi Arabian crude production through the use of its spare capacity.
KEY HIGHLIGHT
6761 62
6964
4Q18 3Q19 4Q19 2018 2019
5
12 1311
9
4Q18 3Q19 4Q19 2018 2019
15 15 14 15 14
4Q18 3Q19 4Q19 2018 2019
16 1614 15
14
4Q18 3Q19 4Q19 2018 2019
1 1
(19)
(3) (5)
4Q18 3Q19 4Q19 2018 2019
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98 85
DEMAND GROWTH2018 (12 mths) – 2019 (12 mths)
EXPECTED GROWTH 2020 COMMENTS
▪ Auto LPG demand continue to decline due to price differential.
FUEL OIL
AUTO LPG
DIESEL
JET
GASOLINE
407 424
122 123
195 202
+3.7%
38 34
+4.2%
-10.5%
20192018
-12.6%
▪ 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
0.8%
▪ Continued strong demand for gasoline.
▪ Import GB95 continue to increase YoY.
▪ Continued long-term growth due to tourism growth.
Strong petroleum demand in Thailand
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Contents
Market overview
Operational review
Financial performance
Highlights
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CRUDE INTAKE
• 11 types of crude processed in 4Q19.
• 25 types of crude with 4 new crudes processed in 2019.
*Industry Average of 2019 during January-November 2019Source: Company data, EPPO
Crude
2% 2%
23%17% 23% 23% 16% 21%
13%15% 9% 11%13% 11%
13%
66% 68% 66% 69% 68%
51%
4Q18 3Q19 4Q19 2018 2019 Industry average2019*
Middle East
Far East
Domestic
Others
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Products
▪ Sustained higher than industry average of domestic placement in almost all products.
▪ Export sales including Indochina sales at 4% in 4Q19 and 2019.
PRODUCTION YIELD DOMESTIC SALES
▪ Higher crack spreads over Dubai drove to increase Diesel and Jet production.
Source: Company data, EPPO Source: Company data, EPPO
9% 6% 2%8% 8%
2%3%
2%
3% 3%1% 1%
1%
1% 1%
10%8%
8%
10% 8%
3%
36%37%
40%
36% 36%
43%
8%8% 10%
8% 8%
12%
23% 26% 24% 24% 24%
20%
4% 4% 5% 4% 4%4% 5% 5% 4% 4%
21%
2% 3% 2% 2% 2%
4Q18 3Q19 4Q19 2018 2019 Countrydemand
2019
PGP
LPG
Light Naphtha
Gasoline
Jet
Diesel
Fuel Oil
Asphalt
Mix C4
Others
83% 82%89% 85%
91%85% 85% 82%
89% 85%
3%
3% 4%
4%4%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 154Q18 3Q19
SPRC Competitive Export Industry Average
4Q19 2018 2019
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Contents
Market overview
Operational review
Financial performance
Highlights
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OPEX PER BARREL
▪ Efficient in OPEX management. Target NECC* at the breakpoint of quartile 1 and 2 against Asia Pacific.
▪ OPEX per barrel of 4Q19 and 2019 increased due to Turnaround and project OPEX cost and lower crude intake.
▪ Normalized OPEX Excluding End of run condition, T&I and Project OPEX was US$2.04/bbl for 4Q19 and US$1.88/bbl for 2019.
* Non Energy Cash Cost: Operating expenses exclude energy cost
US$/bbl
GROSS REFINERY MARGIN
US$/bbl
Margin and OPEX
4.40 5.07
2.49
5.67
3.39
(5.96)
3.11
1.85
4.73 4.12
4Q18 3Q19 4Q19 2018 2019
Market GRM Accounting GRM
1.84 1.944.19
1.79 2.240.71
3.04
9.51
0.35
3.04
4Q18 3Q19 4Q19 2018 2019
T&I and Project OPEX Normal OPEX
2.55
4.98
13.70
2.14
5.28
▪ Accounting GRM:
➢ QoQ: Decreased primary from a lower GRM and LCM adjustment.➢ YoY: Increased from less stock loss in 4Q19.
▪ Market GRM:
➢ Lower from the strong of crude price but weaker product crack spreads.
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NET INCOME
US$/bbl
EBITDA
US$ M US$ M
EBITDA and profitability :
➢ 4Q19 EBITDA and Net income significantly decreased mainly from high increase of T&I and Project OPEX and stock loss of US$4.6M (Including of stock loss of US$4.3M and LCM of US$0.3M).
➢ FX gain for 4Q19 decreased to US$5.2M from US$7.4M in 3Q19 due to lower appreciation of the Baht relative to the U.S. dollar.
EBITDA and profitability
(128.0)
(17.3)
(102.0)
176.9
(39.2)
4Q18 3Q19 4Q19 2018 2019
(117.8)
(29.9)
(98.0)
73.6
(93.9)
4Q18 3Q19 4Q19 2018 2019
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CFO:
➢ Cash flows used in operating activities of US$123.4M for year 2019, reflecting losses before tax in the year of US$122.9M and unfavourable working capital effects mainly from temporary inventories due to T&I impact of US$135.1M.
CFI:
➢ Primarily on Turnaround and projects spending to increase refinery reliability and efficiency.
CFF:
➢ Proceed from short term loan of US$221.9M and dividend payment of US$17.0M for 1H19 net profit.
Cash Flow
CASH FLOW
US$ M
2.3 (123.4)
(83.3)
204.9 0.1 0.7
Short term Loan
221.9
Dividend(17.0)
December-2018
CFO CFI CFF FX Adjustment
December-2019
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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** 2019 Dividend is subjected to Shareholders’ approval in AGM on 9th April 2020
DIVIDEND POLICY
DIVIDEND PAYMENT
(Avg. 4.2%-4.8%)
Closing stock price as of the performance period
Dividend Policy and Yield
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
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Looking ahead
No one gets hurt
Operational excellence
Bottom Line Improvement Program
Continue to evaluate for growth opportunities
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Appendices
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ASSET BREAKDOWN LIABILITIES & EQUITY
US$ M US$ M
Financial position
26.94 83.75
880 880
393
589
385
237 2
1
Dec-18 Dec-19
Cash and cash equivalents
Account receivables
Inventories
PP&E
Other current & non currentassets 1,182
1,071
24
16
482 703
Dec-18 Dec-19
Current liabilities
Non current liabilities
Total Equity
1,7901,687 1,7901,687
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Unit: US$ M 4Q18 3Q19 4Q19YoY QoQ
+/- +/-
Revenues 1,657.6 1,434.6 912.4 (745.2) (522.2)
OPEX (38.7) (66.3) (120.7) (81.9) (54.3)
EBITDA (128.0) (17.3) (102.0) 26.0 (84.7)
Depreciation & Amortization (21.0) (20.3) (20.5) 0.6 (0.11)
Profit for the period (117.8) (29.9) (98.0) 19.8 (68.1)
EPS (THB per share) (0.90) (0.21) (0.69) 0.21 (0.47)
2018 2019Year
+/-
6,438.6 5,391.7 (1,046.8)
(124.4) (281.3) (156.9)
176.9 (39.2) (216.1)
(84.3) (82.2)2.09
73.6 (93.9) (167.5)
0.52 (0.65) (1.17)
Income statement
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SALES BY VOLUME
US$/bbl
52%
35%
13%
SALES BY REVENUE
▪ Chevron and PTT account for 88% of total sale in 2019 by revenue.
▪ Others are products sold as Petrochemical feedstock and intermediate product exchange.
54%
34%
12%
Others
2018
Others
2019
48%
35%
17%
Others
2018
Others
51%
32%
17%
Others
2019
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
Vision:
“To create stakeholder
value by leveraging
opportunities associated
with environmental and
economic issues for the
betterment of society”
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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 East68%
Far East11%
Domestic21%
SOURCES OF CRUDEFOR 2019
89%
11%
▪ Pipeline connects Map Ta Phut, Sriracha & Bangkok
▪ Connections to petrochemical customers
TRUCK
39%
11%
50%
Business overview
(1) Based on 2019 data
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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
Refinery complexity
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
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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
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
BLIP (Bottom Line Improvement Program)
2.34 2.392.11
2.642.93
2.34
1Q19 2Q19 3Q19 4Q19 2018 2019
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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
Please send us your feedback via QR code below:
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