Esso Thailand : Management Discussion and Analysis Quarter 3 Ending 30 Sep 2020

Esso (Thailand) Public Company Limited

Management Discussion

and Analysis

Third Quarter 2020

Esso (Thailand) Public Company Limited

Management Discussion and Analysis- Third Quarter 2020

Management's Discussion and Analysis (MD&A)

for the Third Quarter of 2020 and the Nine-Month Period Ended September 30, 2020

1. Financial and Operating Highlights
			3Q 2020	3Q 2019		9M 2020	9M 2019
	Crude intake (Kbpd)		108	100		114	127
	Paraxylene production (Ktons)		47	53		139	242
	Average forex rate (Baht/US$)		31.3	30.7		31.5	31.3
	Gross refining margin (US$/Bbl)		6.0	2.8		(6.7)	3.0
	Revenue from sales (million Baht)		30,392	39,738		94,191	131,520
	Gross profit (million Baht)		1,808	(57)		(6,580)	2,887
	EBITDA (million Baht)		1,370	(1,162)		(8,472)	(218)
	Profit (loss) for the period (million Baht)		467	(1,295)		(8,343)	(1,195)
	Earnings (loss) per share (Baht) (1)		0.13	(0.37)		(2.41)	(0.35)

1. Based on current number of shares: 3,461 million shares

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Esso (Thailand) Public Company Limited

Management Discussion and Analysis- Third Quarter 2020

2. Benchmark Prices for Crude Oil and Refined Petroleum Products

Average Platts Singapore quoted prices for crude oil and refined products
Unit: US$/Bbl		3Q 2020	3Q 2019	2Q 2020		9M 2020	9M 2019
Dubai	42.9	61.2	30.5	41.4	64.0
Gasoline (95 Ron)	47.4	72.8	33.1	46.0	71.6
Jet fuel / kerosene	42.2	76.9	30.4	44.0	77.7
Diesel (50 ppmS)	47.8	77.1	37.6	49.3	78.1
Fuel oil (180 cs)	39.5	60.7	28.3	36.7	62.3
LPG	31.0	31.7	26.8	34.7	38.7
Paraxylene - US$/Ton	546	813	495	583	921
Gasoline (95 Ron) - US$/Ton (1)	402	619	281	391	609

Source: Mean of Platts Singapore and PCI

1. Converted to US$/Ton using 1 Ton = 8.5 Barrels

Dubai prices in the third quarter of 2020 averaged $42.9/Bbl, a decrease of $18.3/Bbl from the same period last year, but an increase of $12.4/Bbl compared to the second quarter of 2020. Crude prices continued to recover as demand continuously improved from lockdown easing, with support from OPEC and its allies' production cut extension. However, crude prices moved downwards in September over concern on COVID-19 new cases in many countries as well as potential additional supply from Libya. The average monthly price for Dubai in September 2020 was $41.5/Bbl, which was higher than the June 2020 average price of $40.8/Bbl; however, still lower than the December 2019 average price of $64.9/Bbl.

In tandem with crude oil prices, all product prices improved in the third quarter of 2020 when compared with previous quarter from demand recovery as a result of lockdown easing in many countries, but still lower than the same period last year.

The Paraxylene Asian Contract Price (ACP) in the third quarter of 2020 was $546/Ton, a decrease of $267/Ton compared to the same period last year, but an increase of $51/Ton from previous quarter as a result of demand recovery after COVID-19 pandemic major impact in the second quarter. Despite increase in PX prices, margins remained weak due to demand - supply imbalance in the region.

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Middle Light

Feedstock Heavy

9M20

3Q19

9M19

3Q20

10.6%

17.4%

10.6%

17.6%

10.7%

17.6%

11.3%

17.6%

43.5%

44.1%

43.0%

45.3%

28.5%

28.1%

27.6%

26.5%

Refinery Production (%)

Esso (Thailand) Public Company Limited

Management Discussion and Analysis- Third Quarter 2020

3. Production and Gross Margin

			3Q 2020	3Q 2019	+ / -		9M 2020	9M 2019	+ / -
Refining capacity (Kbpd)		174	174	0		174	174	0
Crude intake (Kbpd)		108	100	+8		114	127	-13
Paraxylene production (Ktons)		47	53	-6		139	242	-103
Gross Refining Margin (US$/Bbl)		6.0	2.8	+3.2		(6.7)	3.0	-9.7
Total Sales volume (KBbl)		10,958	11,447	-489		33,697	37,415	-3,718
-	LPG		552	534	+18		1,663	2,007	-344
-	Gasoline		2,779	2,919	-140		8,337	9,262	-925
-	Naphtha		425	275	+150		1,130	1,436	-306
-	Jet Fuel/Kerosene		283	1,255	-972		1,794	3,851	-2,057
-	Diesel		5,482	5,363	+119		16,699	16,604	+95
-	Fuel Oil		1,012	899	+113		3,091	3,424	-333
-	Asphalt		425	202	+223		983	831	+152

Refinery crude intake for this period was 108 KBD, higher than the same period last year due to absence of scheduled plant-wide maintenance in 3Q20. Lower crude intake for this period reflected production cut following soft demand from COVID-19 pandemic and scheduled Atmospheric Pipestill number 2 (APS-2)one-month maintenance shutdown commenced September 8, 2020. Paraxylene production in the third quarter of 2020 was 47 Ktons, lower than the same period of 2019 reflecting production cut due to continued weak market environment.

Gross Refining Margin (GRM) in the third quarter of 2020 improved to $6.0/Bbl mainly from favorable inventory impact and slightly higher industry gross refining margin.

Refinery production yields in the third quarter of 2020 reflected continue production adjustment in response to demand during COVID-19 pandemic. Comparing to the same period last year, lower middle distillates yields resulted from

significant drop in jet fuel production due to demand collapse

from travel restriction, partially offset by an increase in diesel as a result of product upgrading. The absence of plant-wide turnaround in 2020 resulted in an increase of light production yields, while higher heavy production yields

in the third quarter of 2020 were contributed by an increase in asphalt volume to capture strong margin from improved local demand. The refinery reached the highest Asphalt production at 5.2 KBD in August 2020.

Total product sales volume in the third quarter of 2020 was 4% lower than the same period last year mainly due to the impact of COVID-19 pandemic on jet fuel demand. Other product sales volume increased, especially asphalt, which was doubled from that of the third quarter of 2019 to capture demand and margin opportunity as mentioned earlier. In addition, Commercial sales continued to capture further growth by successfully secured new outlet for diesel in this quarter.

Sales Channel (%)

51%55%

43%41%

6%4%

9M209M19

Export Retail Commercial

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