Management's Discussion and Analysis (MD&A) and Operating Results for the Three-Month Period Ended March 31, 2008 1. Financial and Operating Highlights 1Q 2008 1Q2007 Crude intake (kbpd) 141.2 148.1 Paraxylene production (thousand tons) 84.1 103.4 Average forex rate (Baht/US$) 32.5 35.6 Gross refining margin (US$/BBL) 6.95 7.93 Sales (million Baht) 53,540 45,337 Gross profit (million Baht) 3,019 4,449 EBITDA (million Baht) 2,321 3,936 Net profit (million Baht) 1,131 2,036 (1) Earnings per share (Baht) 0.4 4.0 (1) Total number of shares outstanding as of: 31 Mar 2007 510 million ? 31 Mar 2008 2,610 million ? 1 2. Benchmark Prices for Crude Oil and Refined Petroleum Products Average Platts Singapore quoted prices for crude oil and refined products Unit: US$/BBL 1Q2008 4Q2007 1Q2007 Dubai 91.4 83.2 55.4 Tapis 102.5 93.4 63.6 Gasoline (95 Ron) 105.1 95.8 68.3 Jet fuel / kerosene 114.2 105.9 72.2 Diesel (0.5%S) 114.4 102.6 70.1 Fuel oil (180 cs) 74.6 73.2 45.1 LPG 73.4 67.0 46.4 Paraxylene - US$/Ton 1,099 1,051 1,023 (1) Gasoline (95 Ron) - US$/Ton 894 814 581 Source: Mean of Platts Singapore (1) Converted to US$/Ton using 1 Ton = 8.5 barrels Crude prices increased substantially from 4Q 2007 to 1Q 2008. Dubai and Tapis crude prices were up 10% in 1Q 2008 compared to 4Q 2007. Product prices generally increased in line with crude prices with the exception of fuel oil which stayed relatively flat between 1Q 2008 and 4Q 2007 and LPG which is currently sold ex-refinery at a government controlled price of US$340 per metric ton or about US$29.5 per barrel. 2 3. Production and Gross Margin 1Q2008 1Q 2007 + / (-) Refining capacity (kbpd) 177.0 177.0 - Crude intake (kbpd) 141.2 148.1 (6.9) Capacity utilization rate (%) 79.8% 83.7% (3.9%) Refinery production - Light products (%) (1) 34.8% 34.2% 0.6% - Middle distillates (%) 51.2% 49.4% 1.8% - Heavy products (%) 14.0% 16.4% (2.4%) Paraxylene production (thousand tons) 84.1 103.4 (19.3) Gross Refining Margin (US$/BBL) 6.95 7.93 (0.98) (1) Excludes reformate for chemical feedstock Crude intake in 1Q 2008 compared to 1Q 2007 was impacted by unattractive hydroskimming margins. Paraxylene production was down in 1Q 2008 as the decreased paraxylene margins arising from escalating feed costs made additional production uneconomical. Gross refining margin (GRM) was down by US$0.98 to US$6.95 per barrel in 1Q 2008 from US$7.93 per barrel in 1Q 2007. Paraxylene margins decreased in 1Q 2008 as paraxylene prices could not keep pace with the escalating feed costs. 3 4. Financial Performance of 1Q 2008 versus 1Q 2007 (Unit: million Baht) 1Q 2008 1Q 2007 Change Sales 53,540 45,337 8,203 Cost of sales (50,521) (40,888) (9,633) Gross profit 3,019 4,449 (1,430) Selling and administrative expenses (1,180) (1,007) (173) Profit from sales 1,839 3,442 (1,603) Memo: - Downstream 1,948 2,769 (821) - Petrochemicals (109) 673 (782) Other income 7 16 (9) Operating profit 1,846 3,458 (1,612) Other non-operating income - 161 (161) Share of profit from an associate 63 51 12 Profit before interest and income tax 1,909 3,670 (1,761) Interest income 14 82 (68) Interest expense (335) (1,286) 951 Profit before income tax 1,588 2,466 (878) Income tax charge (457) (430) (27) Net profit 1,131 2,036 (905) Both sales and cost of sales went up in 1Q 2008 compared to 1Q 2007 reflecting the trend of rising crude and refined petroleum product prices worldwide, partially offset by lower sales volumes. Gross profit was lower in 1Q 2008 as product prices did not increase as fast as the cost of crude oil. Selling and administrative expenses were higher in 1Q 2008 mainly due to the inclusion of expenses incurred by the chemical marketing business resulting from the entire business transfer of ExxonMobil Chemical (Thailand) Limited or EMCTL to the Company in September 2007, and higher transportation costs incurred for commercial and retail sales. Profit from sales for both the downstream and petrochemicals segments decreased in 1Q 2008 compared to 1Q 2007 largely due to lower margins. GRM was down by US$0.98 to US$6.95 per barrel in 1Q 2008 from US$7.93 per barrel in 1Q 2007. Paraxylene margins decreased in 1Q 2008 as paraxylene prices could not keep pace with the escalating feed costs. Other non-operating income in 1Q 2007 consisted of the amortization of the deferred gain on the sale and leaseback transaction which the Company entered into in 2000 to lease certain assets that were sold to EMCTL. The absence of other non-operating income in 1Q 2008 was due to the termination of the sale and leaseback transaction following the transfer of the entire business of EMCTL to the Company in September 2007. 4 Interest expense was down significantly by 74% in 1Q 2008 compared to 1Q 2007. This was the result of lower debt (due to debt repayment with cash from the September 2007 capital injection and from 2007 operating cash flow) as well as lower interest rates (due to the debt refinancing completed in December 2007). The effective tax rate for 1Q 2008 was 29% compared to 18% for 1Q 2007. The movement in effective tax rate was primarily impacted by the income tax holiday, granted by the Board of Investment for income generated by the Company's aromatics plant, expiring on 10 September 2007. As a result of the foregoing factors, our net profit decreased 44% to Baht 1,131 million in 1Q 2008 from Baht 2,036 million in 1Q 2007. 5 5. Balance Sheet (Unit: million Baht except for percentages) 31 Mar, 2008 31 Dec, 2007 % Change Assets - Current assets 40,856 36,482 +12% - Non-current assets 33,570 34,332 -2% Total assets 74,426 70,814 +5% Liabilities - Current liabilities 36,908 34,408 +7% - Non-current liabilities 12,013 12,012 +0% Total liabilities 48,921 46,420 +5% Shareholders' equity - Issued & paid-up share capital 12,877 12,877 - - Retained earnings 12,384 11,253 +10% - Fair value reserve 237 257 -8% Minority interest 7 7 - Total shareholders' equity 25,505 24,394 +5% Total liabilities and shareholder's equity 74,426 70,814 +5% As of 31 March 2008, current assets increased by 12% from 31 December 2007 primarily due to higher crude and product inventory. Retained earnings increased by 10% to Baht 12,384 million as of 31 March 2008 due to the net profit in 1Q 2008. There were no other significant changes in the balance sheet as of 31 March 2008 compared to 31 December 2007. 6 6. Financial Ratios Comparison of financial ratios for 1Q 2008 and 1Q 2007 are as follows: Profitability ratios 1Q 2008 1Q 2007 Gross profit margin (%) 5.6% 9.8% Net profit margin (%) 2.1% 4.5% Interest coverage ratio (times) 6.9 3.1 Liquidity and debt to equity ratios 31 Mar, 2008 31 Dec, 2007 Current ratio (times) 1.1 1.1 Quick ratio (times) 0.2 0.3 Total debt to equity ratio (times) 1.4 1.4 Long term debt to equity ratio (times) 0.4 0.5 Net debt to equity ratio (times) 1.3 1.4 Financial ratios calculation: Gross profit margin = Gross profit / Sales Net profit margin = Net profit / Sales Interest coverage ratio = EBITDA / Interest expense Current ratio = Current assets / Current liabilities Quick ratio = (Cash and cash equivalents + Short term investments + Trade receivables) / Current liabilities Total debt = Current borrowings + Non-current borrowings Total debt to equity ratio = Total debt / Total shareholders' equity Long term debt to equity ratio = Non-current borrowings / Total shareholders' equity Net debt to equity ratio = (Total debt - Cash and cash equivalents) / Total shareholder's equity 7