Bangchak Group Reports Stable Growth in 1H/2022, with Total Revenue of THB 152,852 million, with Main Contribution from Refinery and Trading Business and Upstream Businesses in Norway, supported by Significant Rise of Global Oil Prices

The performance of Bangchak Group in the first half of 2022 generated a total revenue of THB 152,852 million and EBITDA of THB 26,286 million reflecting oil demand recovery while oil supplies remain tight due to the ongoing Russia-Ukraine conflict resulting in net profit attributable to owners of the parent at THB 9,633 million, equivalent to THB 6.91 earnings per share. It is proceeding to balance national energy security and clean energy transition towards a low-carbon society, as well as preparing to address inflation and global economic pressures in the second-half.

Chaiwat Kovavisarach, Group Chief Executive Officer and President, Bangchak Group, revealed the Group’s first-half 2022 performance stating that the company and its subsidiaries generated revenues from sales and rendering of services totaling THB 152,852 million, increased by 80% year on year, and EBITDA of THB 26,286 million, increased by 192% year on year. The increase in performance was partially supported by the change in accounting treatment regarding OKEA consolidation since Q3/2021, and the remaining part coming from the Refinery and Trading Business Group which was supported by a significant rise in the crude oil and finished product prices in the global market as a result of demand recovery following the lifting of COVID-19 measures which restored economic and travel activities. Simultaneously, oil supplies remain tight from the ongoing Russia-Ukraine conflict, and the inability of OPEC to meet oil production targets. Average Dubai crude oil price in the first half was 102.17 $/BBL, an increase of 38.55 $/BBL, or 61%, from the first-half of 2021. Consequently, the Group recorded an inventory gain of THB 8,451 million.

The increase in performance from demand recovery following the lifting of COVID-19 preventative measures has resulting in the resumption of economic and travel activities, while supplies remain tight from the ongoing Russia-Ukraine conflict and the inability of OPEC to meet production targets. The significant increase in Crack Spread according to the market price mechanism of supply and demand, resulted in Refinery and Oil Trading Business Group to record a total EBITDA of THB 11,527 million, a 163% increase year on year, and an increased average Operating GRM of 122.3 KBD or 102% utilization rate.

As for the Oil Trading Business, BCPT’s performance improved due to higher Gasoline/Naptha profit per unit, as well as the recognition of gains from entered crude and product oil price forward contracts.

Marketing Business Group recorded EBITDA of THB 2,585 million, a 44% increased year on year, influenced by increased sales volume from the easing of the COVID-19 situation. Net marketing margin was decreased slightly during high fuel prices. The company launched the “One Baht per Liter” campaign offering discount coupons for Gasohol products through the Daily News newspaper as a way of helping to reduce the cost of living. Simultaneously, it continues to expand partnerships with leading restaurants and street food vendors to support the modern consumer lifestyle who enjoy more convenient and quick services. Presently, there continues to be more chain restaurants providing services in Bangchak service stations.

Power Plant Business Group recorded EBITDA of THB 4,187 million, a 112% increase year on year, realizing higher revenue mainly from the sales of electricity from the COD of three power projects in Japan namely Yabuki (PPA 20 MW), Komagane (PPA 25 MW) and Chiba 1 (PPA 20 MW), and the recognition of gains from the disposal of the whole investment in Star Energy Group Holdings Pte. Ltd. (“SEGHPL”) of THB 2,031 million.

Bio-Based Products Business Group recorded EBITDA of THB 437 million, decreasing 39% year on year, while with revenue from sales increased by 3% year on year, mainly as a result of the increasing price of Biodiesel (B100) reflecting crude palm oil prices. Gross profit declined mainly from the decline of ethanol sale volume in accordance with sales strategies, coupled with higher cost of raw materials used in the production process year on year. As for High Value Products (HVP), BBGI entered into a joint venture with Biom Company Limited, the first startup to spun off from the Faculty of Science, Chulalongkorn University, in order to expand the value of research in Biotechnology to commercial use. BBGI is the first company to obtain the rights to develop research results for commercialization, especially research on biological products that uses Synthetic Biology technology and other biological products. Moreover, WIN Ingredients Co., Ltd. (BBGI holds 51% of shares) established a subsidiary named WIN Ingredients Singapore Private Limited, with the objective of developing bio-products and providing technical and commercial support.

Natural Resource Business Group and New Business Development recorded EBITDA of THB 7,792 million, increasing by more than 1,000% year on year, benefitting from increasing energy prices, especially the price of natural gas, which increase by 192% year on year. Considering only the performance of OKEA, in the first-half of 2022, it increased by 288% year on year mainly from the increased price of crude oil and gas following the global market, as well as sales volume which increased by 11% year on year, mainly from the Gjøa and Yme fields. Moreover, OKEA entered into an agreement to purchase three North Sea petroleum fields from Wintershall Dea Norge AS, which is expected to be concluded in the last quarter and will increase OKEA’s petroleum production in 2022 by approximately 5,000 – 6,000 Barrels of oil equivalent per day (BOEPD).

Performance in Q2/2022, the company and its subsidiaries recorded revenue from the sale of goods and rendering of services totaling THB 83,796 million, EBITDA of THB 12,572 million, of which the net profit attributable to the owners of the parent was THB 5,276 million, representing THB 3.79 earnings per share. This is mainly from Refinery and Oil Trading Business due to the positive pressure from significant Operating GRM increases, which helps to relieve the performance of the Natural Resource Business Group which was affected by the significant decline in the price of natural gas sold to the UK as well as the depreciation of the Norwegian Krone (NOK) against US dollar.

Chaiwat added “for the secondhalf of 2022, expect oil prices to fall as oil demand is pressured by concerns from the global economy, whichmay be entering a recession fueled by speeding inflation, and the central banks around the world enact tight monetary policies by increasing interest rates to reduce inflation. In spite of this, the price of oil is expected to continue to be affected by the ongoing Russia-Ukraine conflict, and the inability of OPEC to meet production targets. Nevertheless, the company continues to closely monitor and evaluate oil prices in order to appropriately address and adjust business plans accordingly, manage and secure working capital to ensure business continuity and investments. The company plans to issue debentures in the third quarter of this year in order to handle the volatility of the Thai economy and oil prices, and speed up investments to strike a balance between national energy security and clean energy transition towards a sustainable low-carbon society for all.”