ESSO Thailand up for sale?

Recently Exxon Mobil (EM) sold 99% Exxon Mobil Yugen Kaisah (EMYK) to Tonen General (TG) in Japan. What we see here is simply that EM is continuing its broadbased strategy to reduce its stake in the downstream business and focus more upon the upstream petroleum business because of its better margins. This has an impact on Esso (Thailand) as it could be divested as well by EM.

Here’s how we look at it in a very quick and dirty way:

1. The value of the deal was set at Y302bn or USD 3.94bn thus implying USD15,950/bbl for the refinery units.

2. ESSO Thailand has a refining capacity of 177,000 barrels per day (KBD), 500,000 tonnes per annum (KTA) of PX capacity, 50,000 tonnes per annum (KTA) of solvent capacity, and 535 retail gas stations nationwide (as of 2010) in second place with a 15.7% market share of retail products through service stations.

3. Based on this deal transaction, you can calculate an implied ESSO share price at Bt14.30/share from refining capacity alone. The value of the assets (PX capacity and the service stations) depends purely on negotiations.

4. Who could potentially buy ESSO (Thailand)? Thai Oil (TOP) or PTT Group.

Watch the news closely for this, the stock price for ESSO (Thailand) has been slowly creeping up in the past few weeks. There is a potential 7% upside within a short period of time if a deal does happen.


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