SET Announcements

-Translation- 1000/072/2006 March 16, 2006 Subject: Report on the Board of Directors' resolutions Attention: President of The Stock Exchange of Thailand Attachment: Disclosure Information of Asset Acquisition According to the resolution of Board of Directors' Meeting No. 9/2005 of The Bangchak Petroleum Public Company Limited ("the Company") held on August 29, 2005, the Board of Directors approved the investment in the Product Quality Improvement ("PQI") Project. Also, the Extraordinary General Meeting No. 1/2005 held on October 11, 2005 consent to approve the issuance and offering of not exceeding 283,000,000 ordinary shares, not exceeding 135,000,000 convertible debenture which shall be converted to the Company's ordinary shares, to PTT Public Company Limited and noq exceeding 161,000,000 ordinary shares to specific investors and/or institutional investors either domestic or foreign. Disclosure of such information has been disclosed as required by relevant laws and regulations. The Board of Directors' Meeting No. 3/2006 on March 16, 2006 at 4 P.M. approved additional information and contract with regarding to the PQI, including the details of shares issuance and subscription as follows: 1. The meeting has approved the project cost since contract price and technical details have been clarified and concluded. The total project cost, when includes associated expenses, is approximately USD 348 million; moreover, the Company has already prepared additional funds for contingency reserve approximately USD 30 million so that the total cost of such project is approximately USD 378 million or Baht 17,0101 million, by using the exchange rate 45 Baht against US dollar (higher than the currently average exchange rate 39 Baht against US dollar), which is slightly increased from the previous project cost estimation.Thus, the Board of Directors has to have resolution to approve this new project cost. Although the project cost is approximately USD 378 million or Baht 17,0101 million, it is still lower than 50 percent of the total asset value in accordance with the consolidated balance sheet of the Company as of December 31, 2005. The Board of Directors also approved the appointment of CTCI Overseas Corporation Limited and CTCI (Thailand) Co., Ltd to be a contractor of the project. (Details as shown in Additional Disclosure on Asset Acquisition of the Listed Company in Product Quality Improvement Project). 2.The meeting approved the Subscription Agreement to be entered into between the Company and PTT for the common shares and the convertible debentures for the amount equal to USD 120 million, including relevant agreement for subscription. The offering price of the common shares and the conversion price for the convertible debentures are fixed at 14 Baht per share. The agreements are expected to be signed within second quarter of 2006, subject to satisfactory results of technical due diligence and completion of the conditions precedent for the Project financing. 3. The meeting also approved the authorization of the President or any persons designated by the President to negotiate, contact, coordinate, and take any other necessary or appropriate actions related to the PQI Project and also empower the President or any persons designated by the President to consider and disclose any necessary and/or appropriate information related to the PQI Project to the Office of Securities and Exchange Commission (SEC), the Stock Exchange of Thailand (SET) and/or related persons. Moreover, the President and/or any persons designated by the President shall have the authorization to issue and offer the Company's common shares and convertible debentures to PTT, to sign any related documents, to set and/or amend any details with regard to the issuance and offering of the shares, as appropriate. Moreover, the Company would like to further inform that commercial contracts i.e., Crude Supply Agreement and Product Offtake Agreement, are in the process of discussion with PTT and, when finalized, shall be proposed to the Board of Directors for approval. Please be informed accordingly. Yours sincerely, -signed- (Patiparn Sukorndhaman) Senior Executive Vice President Accounting and Finance Corporate Planning and Investor Relation Office Tel:0-2335-4583 Attachment: Disclosure Information of Asset Acquisition Reference: 1. The Resolution of Board of Directors' Meeting No. 9/2005 dated 29 August 2005 of The Bangchak Petroleum Public Company Limited 2. Disclosure Report on Asset Acquisition to the Stock Exchange of Thailand dated 8 September 2005 According to the resolution of Board of Director Meeting No. 9/2005 of The Bangchak Petroleum Public Company Limited ("BCP" or "the Company") on 29 August 2005, the Board of Directors approved the investment in the Product Quality Improvement ("PQI") Project by procuring Hydrocracking machineries and equipments to install at the Company's refinery ("Transaction") which was considered as asset acquisition transaction according to the Notification of the Board of Governors of the Stock Exchange of Thailand (the "SET") regarding Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, 2004. From the feasibility study and projection on the investment by UOP LLC. (UOP), Foster Wheeler Inc. (FWIC) and the Company, the investment amount was projected to be USD 250-350 million which equal to more than 15% but lower than 50% of total assets of the Company consolidated financial statement as of 30 June 2005. The Board had approved the Company to enter into the Transaction and the Company had reported the disclosure on the Transaction to the SET and notified the disclosure report to the Company's shareholders on 8 September 2005 to be in accordance with the abovementioned Notification of the SET. Afterwards, the Company submitted the invitation to bid (ITB) for PQI Project to 8 contractors who were well-known and experienced in procuring similar type of projects with the required bidding submission by 31 October 2005. However, the contractors requested to postpone the bidding submission date as PQI Project had many details together with they had many backlogs due to the open biding of new projects such as Capacity Expansion Project and Petrochemical Project; the contractors could not submit the bid within the company's required bidding submission period.Therefore, to obtain an appropriate price, the contractors requested to postpone the required bidding submission period for one month from the former period.In addition, as that time was during the end of year 2005 with several public holidays, it delayed the clarification and negotiation process from expected plan. After clarification on details and adjustment on PQI Project bidding price, the contractors submitted the amended bidding proposals to the Company at the end of January 2006. Nevertheless, the bidding price of the Project was slightly higher than the estimated investment, causing the Company to take time to negotiate on the detail of bidding price to obtain the appropriate price. At present, the Company has reached the conclusion on both the investment cost and technical aspects. The investment value of the Project including other related expenses is approximately USD 348 million and the Company has reserved another USD 30 million for the contingency in case there are changes in Project's details (Contingency Reserve), totaling of USD 378 million or approximately THB 17,010 million calculated at exchange rate of THB 45 per USD (this rate is higher than current exchange rate of THB 39 per USD). As the investment value of PQI Project is higher than the estimated investment value of USD 350 million, it is required the Board of Directors to approve on new investment value. Even though the investment value increases to USD 378 million or approximately THB 17,010 million (1) the Transaction value is lower than 50% of total asset value of the Company based on the consolidated financial statement as of 31 December 2005. The Company is required to report the disclosure of the Transaction to the SET and notify the shareholders according to the Notification of the Board of Governors of the Stock Exchange of Thailand regarding Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, 2004. In addition, to report the progress of the PQI Project, the Company notifies herewith the disclosure report on the Transaction, updated from the previous disclosure report to the SET on 8 September 2005, as follows:- 1. Transaction Date According to the resolution of Board of Directors' Meeting No. 3/2006 on 16 March 2006, the Board of Directors resolved to appoint CTCI Corporation by entering into agreements with CTCI Overseas Corporation Limited and CTCI (Thailand) Company Limited to be the Engineering, Procurement and Construction ("EPC") contractors of PQI Project.At present, the Company is under the process of EPC contract arrangement which is expected to be signed by May 2006.The construction will commence in second quarter of 2006, with the Commissioning & Test Run of around 30 months and Reliability Test of another 2 months, and expects to complete and commence commercial operation date (COD) by the early of 2009. 2. Parties involved The Company and CTCI Overseas Corporation Limited and CTCI (Thailand) Company Limited as the Engineering, Procurement and Construction ("EPC") contractors of PQI Project. 3. General Description of the Transaction Starting from the second quarter of 2004, world price and volatility of oil products have been increasing while the Asia-Pacific demand-supply has reached the equilibrium resulting in higher gross refinery margin ("GRM") of all refineries in the region especially those complex refineries -- produces a higher proportion (85-90%) of value-added refined oil. While simple refineries, including the one of BCP, producing 30-35% of fuel oil - the lower value product of which price is currently USD 10-12 per barrel lower than crude oil price, comparing to approximately USD 2-3 per barrel difference in the past years.The large price gap of crude oil and fuel oil does not allow the Company to reap the profit from oil price situation as the complex refinery does. Hence the Company has planned to implement the PQI project, consisting of a cracking unit and other supporting units and facilities at BCP current refinery site with the investment value of around USD 348 million and Contingency Reserve of USD 30 million, totaling of USD 378 million or approximately THB 17,010 million (1). The completion of the PQI project would turn BCP simple refinery to complex refinery, allowing the Company to produce a higher proportion of value-added refined oil; i.e., diesel and gasoline (especially diesel).According to the Feasibility Study of UOP LLC., the US-based expert in refinery design and engineering business, the success of PQI project would increase diesel production from approximately 34,000 barrel per day to approximately 55,000 barrel per day. The Transaction size calculated based on the consideration value (Transaction value compared with total assets value of the Company) equals to 49.64% of total assets value of the Company based on the consolidated financial statement as of 31 December 2005 (calculated from the total investment value of USD 378 million or Baht 17,010 million (1) (including Contingency Reserve of USD 30 million) compared by THB 34,263 million).The Transaction size is higher than 15% but lower than 50% of total assets value of the abovementioned Company's consolidated financial statement.Therefore, the Transaction is required the Board of Directors' approval and the Company to report the disclosure of the Transaction to the SET according to the Notification of the Board of Governors of the Stock Exchange of Thailand regarding Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, 2004. 4. Detail of the assets purchased The implementation of PQI project consists of the design,engineering and construction of hydrocracking unit at the capacity of 25,000 barrel per days ("BPD") and other supporting units, details as shown below: Project owner: The Bangchak Petroleum Public Company Limited Contractor: 1) CTCI Overseas Corporation Limited and 2) CTCI (Thailand) Company Limited Contract value: Approximately of USD 378 million or Baht 17,010 million1 (comprises of EPC Contract c. value of USD 285 million, other related expenses of USD 63 million and Contingency Reserve in case there are changes in Project's details of USD 30 million or approximately THB 12,825 million1,THB 2,835 million (1) and THB 1,350 million (1), respectively). Contract type: Engineering, procurement and construction ("EPC") contract to design, procure and construct a 25,000 BPD Hydrocraking units, a 35,000 BPD vacuum unit, a hydrogen plant of which capacity would be 40 million cubic foot per day and other supporting units and facilities; in form of turnkey contract with fixed lump sum price and certain date. Project site: At the current refinery site of the Company. Construction period: 30 months for the construction period, including the Commissioning & Test Run, with additional 2 months for Reliability Test. 5. Total value of the consideration The Company estimates the Project cost of USD 348 million, excluding the Contingency Reserve of USD 30 million.Therefore, the total project cost, including the Contingency Reserve, is approximately USD 378 million or Baht 17,010 million1. Payment is subject to terms & conditions of the contract. 6. Value of assets of purchased The Company estimates the Project cost of USD 348 million, excluding the Contingency Reserve of USD 30 million. Therefore, the total project cost, including the Contingency Reserve, is approximately USD 378 million or Baht 17,010 million (1). Payment is subject to terms & conditions of the contract. 7. Basis used to determined the value of consideration The Company pursued the selection of EPC Contractor via a bidding process that defined certain criteria of the bidding contractors.The process is aimed to achieve fair bidding price, proper selection and maximize benefit of the shareholders. 8. Benefit to the Company The PQI project would allow BCP to produce a higher proportion of value-added products of which domestic demand is rising, and enhance the Company profitability while reduce the production of fuel oil, of which demand is reducing in the future due to the utilization of coal & natural gas as substitute products. In addition, the fuel oil price movement does not support the increasing price of raw material.The success of the PQI project would also enhance the flexibility of crude selection and reduce the effect of price volatility on the Company. 9. Source of Fund BCP has planned to raise fund for the project from the following sources:- 1) The issuance and offering of new ordinary shares and convertible debenture to the investors for the amount USD 170-175 million or approximately THB 7,650 -7,875 million1, where - USD 120 million or approximately THB 5,400 million1 will be from the issuance and offering of new ordinary shares at THB 14 per share and convertible debenture at conversion price of THB 14 per share to PTT Public Company Limited (PTT) in accordance with the resolution of the Board of Directors' Meeting No. 3/2006 on 16 March 2006 (currently under negotiation process on the above investment portion with PTT). - USD [50-55] million or approximately THB 2,250-2,475 million1 will be from the offering of new ordinary shares to the institutional investors.The fianl offering amount will be determined at a later stage. 2) Commercial bank loan of approximately USD 200 million (currently under the negotiation process with the commercial bank). 3) Cashflow from operation of approximately USD [8-10] million, which is paid for some Project developing expense. However, the ratio of fund raising from the investors and commercial bank may be changed, subject to negotiation. 10. Opinion of Board of Directors and Audit Committee The Board of Directors Meeting and the Audit Committee have carefully considered and opined that the PQI project would serve the increasing demand of refined oil in the future and also increase the production of value-added products which would benefit the Company and the country; hence this investment transaction is reasonable. The information disclosure has been certified true by the Board of Directors of the Company. It has been carefully prepared with best endeavor concerning the shareholders'interest and for the purpose of disclosure only, not for invitation to subscribe the offering shares. Please be informed accordingly. Yours Sincerely, The Bangchak Petroleum Public Company Limited -signed- -signed- General Tawat Ked-Unkoon Mr. Anusorn Sangnimnuan Director Notes: (1) = Calculated at exchange rate of THB 45 per USD to mitigate risk associated to Baht depreciation.