PTT Exploration Raises $3 Billion in Biggest Thai Equity Offering

on Nov 30, 2012
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On 30 November 2012, Thailand’s largest oil and gas producer by market capitalisation, PTT Exploration & Production (PINK:PEXNY) announced that it was raising approximately $3 billion (£1.87 billion) in the country’s biggest equity offering. Bloomberg reports that the Thai company is seeking funding to help finance the acquisition of Cove Energy Plc after beating Royal Dutch Shell (LON:RDSA, LON:RDSB, NYSE:RDS.A, NYSE:RDS.B) in the contest for control of the East Africa-focused UK explorer, following the trend of other Asian companies to look for energy resources overseas.

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**PTT to Raise $3 Billion**
As noted in the company press release, PTTEP will sell shares at 142 baht (£2.89) apiece near the high end of a marketed range of 135 baht to 145 baht, with Bloomberg reporting that the proposed price represents a discount of 7.8 percent to the closing price of the company’s shares the previous day. “The final offering price reflects current market demand for PTTEP’s newly issued ordinary shares,” noted Tevin Vongvanich, CEO of PTTEP in the press release, adding that he expected proceeds raised from the equity offering to reach approximately $3 billion.

The Financial Times reports that PTTEP’s offering will be Thailand’s largest share sale since Siam Commercial Bank’s $2.1 billion equity offering in 1999. PTTPE also noted that it would sell 650 million shares to the parent PTT company, which owns 65 percent of PTTEP, and to existing investors, whereas shares are expected to start trading on the Stock Exchange of Thailand in mid-December.

**News Boosting PTTEP’s Share Price**
Bloomberg reports that following the equity offering news, PTTEP’s shares rose the most in three weeks in Bangkok, advancing by as much as 2.6 percent to 158 baht. In 2012, the company’s stock has fallen 6.5 percent.
“Prolonged capital raising and concerns over benefits from the Cove acquisition have put pressure on the price,” noted Kavee Chukitkasem, an investment strategist at Kasikorn Securities Co, as quoted by Bloomberg. “After the capital is raised and concerns ease, prices should climb.”

**Overseas Push**
!m[Thailand’s Oil And Gas Explorer To Finance Overseas Expansion](/uploads/story/939/thumbs/pic1_inline.png)In July, PTT won a bidding war with Royal Dutch Shell for the London-based Cove Energy Plc, whose assets include an 8.5 percent stake in Mozambique’s Rovuma Offshore Block 1. “The equity raising will enable PTTEP to strengthen its capital structure and allow the company to achieve its growth plans,” noted Mr Vongvanich in PTTEP’s press release, adding that the move was also intended “to help ensure Thailand’s energy security.”

PTTEP joins other Asian companies looking to acquire assets overseas, with some of the most recent examples including the offer of the Chinese CNOOC Ltd (HKG:0883, NYSE:CEO) for the Calgary-based Nexen (TSE:NXY), and the attempts of the Malaysian state oil company Petronas to acquire the Toronto-listed gas producer Progress Energy Resources (TSE:PRQ).
Bloomberg quotes Mr Vongvanich as saying that the stock share will also help the company to meet a target for increasing daily production of oil and natural gas to 900,000 barrels of oil equivalent by 2020. PTTEP plans to spend approximately $20 billion by 2016 to raise output.

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