Analyst Meeting€¦ · The information contained in this presentation is intended solely for your...

Analyst Meeting 1Q/2020 results

1

“One Family…

Analyst Meeting1Q/2020 results

Fueling the future of Thailand”


2

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


3


4

Contents

Highlight of Financial & Operation results

Market Situation

Cost Reduction Initiative

Business Email Compromise Update

Future Opportunities


5

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



6

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


7

Overview of oil demand growth, inventories and GRMHighlights &



-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


8

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)



Initiative


9

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



Initiative


10

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 &




11

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



Initiative

Current Status


12

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



Initiative


13

Appendices


14

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


15

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


16

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


17

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


18

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


19

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


20

No one gets hurt

Operational excellence

Bottom Line Improvement Program

Continue to evaluate for growth opportunities

Looking ahead


21

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


22

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


23

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


24

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


25

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


26

Sustainable Development


27

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


28

A brief history


29

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


30

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


31

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


32

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:

http://investor.sprc.co.th/

Date post:	21-Jun-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

Analyst Meeting€¦ · The information contained in this presentation is intended solely for your...

Documents