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Fitch: Malaysian assets, Thai contracts should mean higher reserves for PTT

Fitch Ratings announced March 25 that it expects PTT Exploration and Production PCL's reserves to bounce higher following the acquisition of Malaysian assets from Murphy Oil Corp. and the recent contract wins for the Erawan and Bongkot onshore fields in Thailand.

The US$2.13 billion acquisition is expected to boost sales volume by 18% on a five-year average basis from the previous volume of 318,000 barrels of oil equivalent per day this year. In 2018, net sales volume of the assets was 48,000 boe/d.

Proved and probable reserves is also expected to rise to 1.3 billion boe, which increases its reserve life to 8.8 years.

The new figure will help the company achieve its target to boost proved reserve life to seven years from the current five years.

"We expect PTTEP to continue its efforts to increase its reserve profile and support its production," Fitch said.

The ratings agency said PTT's financial profile will remain robust and comfortable despite expected modest increases in its leverage due to the Malaysian assets deal. Funds from operations adjusted net leverage is expected to increase to around 1.2x this year.

Fitch said PTT's cash balances of US$4 billion at year-end 2018 should be sufficient to fund the acquisition from Murphy, which is seen to weigh mostly on gas. Murphy Oil could also get a $100 million bonus based on future exploratory drilling results.