-- PTT Exploration & Production says it is unlikely to
complete its recapitalization on schedule
-- Company now aims to complete fund raising by year-end,
instead of by October to give shareholders more time
-- Planned $3 billion capital increase sufficient for
investments over the next three years, it says
(Adds context in 2nd paragraph, possible review of share
allocation details in 3rd paragraph, quote from CEO in 4th
paragraph, background in 5th, 12th paragraphs, debt to equity ratio
in 7th paragraph, total value of Cove's deal in 9th paragraph,
description of potential future acquisition targets in 10th-11th
paragraphs, reiteration of sales volume target in final
paragraph.)
By Oranan Paweewun
BANGKOK--Thailand's PTT Exploration & Production PCL
(PTTEP.TH) is unlikely to complete its $3 billion recapitalization
by October as intended because some shareholders want more time to
consider the plan, but it aims to complete the fund-raising by the
end of this year, Chief Executive Tevin Vongvanich said
Thursday.
The Thai petroleum explorer and producer said the delay in
raising funds wouldn't have an effect on its purchase of Cove
Energy PLC (COV.LN) as it already has cash and a secured loan in
place for that acquisition. But it needs some of the funds for its
ambitious target of tripling its production capacity to 900,000
barrels of oil equivalent a day by 2020.
The company cancelled a shareholders' meeting scheduled for
Friday to allow more time for consideration of the recapitalization
plan after some existing investors expressed concerns over their
rights to subscribe to new shares during the fund-raising program.
The board is reviewing plans for the allocation of the new shares
in light of these concerns, Mr. Tevin said.
"The board needs to set a new date for the extraordinary
shareholders' meeting, but we don't know yet when the issue will be
on the table," he said.
In mid-July, PTT Exploration said it would issue up to 650
million shares, 403.4 million of which would be subscribed to by
parent company PTT PCL (PTT.TH) to retain its shareholding at
65.3%, while 214 million shares would be earmarked for the public
and 32 million for an overallotment option.
Mr. Tevin said the fresh funds would be sufficient for the
company's investments over the next three years.
Upon completion of the capital increase, the company's debt to
equity ratio would be 0.3 to 0.4, compared with 0.6 to 0.7 when the
acquisition of Cove Energy is completed by September. Its current
debt to equity ratio is 0.4.
Mr. Tevin said 96%-97% of Cove Energy shareholders have accepted
its cash offer and it expects to start the process of delisting
Cove from the London Stock Exchange's Alternative Investment Market
in September.
He said PTT Exploration would spend a total of $2.2 billion on
the Cove Energy purchase, including a capital tax burden to be paid
to the Mozambique government as a result of the acquisition. Cove
has an 8.5% participating interest in the Rovuma project in
Mozambique, which has estimated gas reserves of up to 60 trillion
cubic feet. It also has a 10% stake in the Rovuma Onshore Area,
also in Mozambique, as well as interests ranging from 10%-25%
across seven Kenya deep-water offshore oil blocks.
Future acquisition targets would be projects that are ready to
start petroleum production between 2015 and 2016, Mr. Tevin
said.
"It isn't our priority today to invest in long-term production
projects like Canada's Oil Sands and Cove Energy," he said.
The Thai company in late 2010 acquired a 40% stake in the Oil
Sands Kai Kos Dehseh project from Norway's Statoil ASA for $2.28
billion. The project is now producing around 18,000 barrels of oil
a day and its production capacity could ultimately rise to 300,000
b/d.
Mr. Tevin reiterated that PTT Exploration's 2012 average
petroleum sales volume target is 284,000 boe/d and that the goal is
reachable though its first half average sales volume was 258,426
boe/d.
Write to Oranan Paweewun at oranan.paweewun@dowjones.com
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