opportunity day€¦ · the information contained in this presentation is intended solely for your...

Analyst Meeting 4Q and FY2019 results

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“One Family…

Opportunity Day4Q and FY2019 results

Fueling the future of Thailand”


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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


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4

Market overview

Operational review

Financial performance

4

Contents

Highlights


55

Contents

Market overview

Operational review


Highlights


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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


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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


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


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


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


25

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


31

A brief history


32

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


33

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:

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

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