Management's Discussion and Analysis (MD&A) and Operating Results for the 2nd Quarter of 2009 and the Six-Month Period Ended June 30, 2009 1. Financial and Operating Highlights 2Q 2009 2Q 2008 1H 2009 1H 2008 Crude intake (kbpd) 143.0 148.6 140.6 144.9 Paraxylene production (thousand tons) 117 91 199 175 Average forex rate (Baht/US$) 34.8 32.3 35.0 32.4 Gross refining margin (US$/BBL) 11.9 23.3 10.2 15.3 Sales (million Baht) 42,305 68,247 75,790 121,787 Gross profit (million Baht) 6,263 9,652 10,032 12,642 EBITDA (million Baht) 5,557 8,947 8,733 11,268 Net profit (million Baht) 3,558 5,814 5,384 6,944 (1) Earnings per share (Baht) 1.03 1.84 1.56 2.41 (2) Adjusted Earnings per share (Baht) 1.03 1.68 1.56 2.01 (1) Based on actual weighed average number of common shares during the period: - 2Q 2008 3,158 million. shares - 1H 2008 2,886 million. shares - 2Q 2009 and 1H 2009 3,461 million. shares (2)Based on total current number of shares: 3,461 million. shares 1 2. Benchmark Prices for Crude Oil and Refined Petroleum Products Average Platts Singapore quoted prices for crude oil and refined products Unit: US$/BBL 2Q 2009 2Q 2008 1Q 2009 1H 2009 1H 2008 Dubai 59.1 116.9 44.3 51.7 104.2 Tapis 61.7 129.5 48.4 55.1 116.0 Gasoline (95 Ron) 68.7 129.8 54.8 61.8 117.5 Jet fuel / kerosene 66.5 154.4 55.4 61.0 134.3 Diesel (0.5%S) 66.2 154.5 53.2 59.7 134.4 Fuel oil (180 cs) 53.3 92.6 39.0 46.1 83.6 LPG 36.2 75.8 39.4 37.8 74.6 Paraxylene - US$/Ton 957 1,330 727 842 1,227 (1) Gasoline (95 Ron) - US$/Ton 584 1,104 466 525 999 Source: Mean of Platts Singapore and PCI (1) Converted to US$/Ton using 1 Ton = 8.5 barrels Crude prices for 2Q 2009 continued to rise from 1Q 2009. Average Dubai and Tapis crude prices for 2Q 2009 were at 59.1 $/bbl and 61.7 $/bbl respectively, roughly up 13 - 15 $/bbl from 1Q 2009.However,they were still lower than those prices in 2Q 2008 by approximately 58 $/bbl for Dubai and 68 $/bbl for Tapis crude. With the exception of LPG, 2Q 2009 overall product prices increased in line with the change in crude prices from 1Q 2009. LPG prices remained under government control at 11 Baht/kg (320 $/Ton or 28 $/bbl). Paraxylene Asian Contract price (ACP) in 2Q 2009 increased from 1Q 2009. 2 3. Production and Gross Margin 2Q 2009 2Q 2008 +/(-) 1H 2009 1H 2008 +/(-) Refining capacity (kbpd) 177.0 177.0 - 177.0 177.0 - Crude intake (kbpd) 143.0 148.6 -5.6 140.6 144.9 -4.3 Refinery production (1) - Light products (%) 34.9% 34.7% +0.2% 34.4% 34.8% -0.4% - Middle distillates (%) 50.5% 54.2% -3.7% 50.4% 52.7% -2.3% - Heavy products (%) 14.6% 11.1% +3.5% 15.2% 12.6% +2.6% Paraxylene production ('000 tons) 117 91 +26 199 175 +24 Gross Refining Margin (US$/BBL) 11.9 23.3 -11.4 10.2 15.3 -5.1 (1) Excludes reformate for chemical feedstock Crude intake in 2Q 2009 was lower than 2Q 2008 by 5.6 KBD, driven by weaker gross refining margin (GRM). Due to paraxylene margin improvement in 2Q09, paraxylene production was significantly increased from 91 KTon in 2Q 2008 to 117 KTon in 2Q 2009. Gross refining margin was 11.9 $/bbl in 2Q 2009 compared to 23.3 $/bbl in 2Q 2008.While both 2Q 2009 and 2Q 2008 gross refining margins reflected positive impacts from stock gains, the lower gross refining margin in 2Q 2009 was partly due to a smaller effect from stock gains during the period. The decrease in middle distillates portion to 50.5% in 2Q 2009 from 54.2% in 2Q 2008 and the increase in heavy product portion to 14.6% in 2Q 2009 from 11.1% in 2Q 2008 were driven by raw materials optimization. 3 4. Financial Performance of 2Q 2009 and first half of 2009 (Unit: million Baht) 2Q 2009 2Q 2008 +/(-) 1H 2009 1H 2008 +/(-) Sales 42,305 68,247 (25,942) 75,790 121,787 (45,997) Cost of sales (36,042) (58,595) 22,553 (65,758) (109,145) 43,387 Gross profit 6,263 9,652 (3,389) 10,032 12,642 (2,610) Selling expenses (1,093) (1,086) (7) (2,081) (2,138) 57 Administrative expenses (112) (109) (3) (207) (208) 1 Profit from sales 5,058 8,457 (3,399) 7,744 10,296 (2,552) Memo: - Downstream 4,580 8,586 (4,006) 7,479 10,534 (3,055) - Petrochemicals 478 (129) 607 265 (238) 503 Other income 22 18 4 34 25 9 Operating profit 5,080 8,475 (3,395) 7,778 10,321 (2,543) Share of profit from an associate 70 58 12 135 120 15 Profit before interest and income tax 5,150 8,533 (3,383) 7,913 10,441 (2,528) Finance costs, net (119) (252) 133 (321) (574) 253 Profit before income tax 5,031 8,281 (3,250) 7,592 9,867 (2,275) Income tax charge (1,473) (2,467) 994 (2,208) (2,923) 715 Net profit 3,558 5,814 (2,256) 5,384 6,944 (1,560) Both sales and cost of sales in 2Q 2009 were lower than 2Q 2008, reflecting lower crude and refined petroleum product prices and lower sales volumes. Gross profit for 2Q 2009 was Baht 3,389 million lower than 2Q 2008 due mainly to the lower refining gross margin for the quarter. 2Q 2009 selling and administrative expenses were Baht 1,205 million about the same level as 2Q 2008. Profit from sales for 2Q 2009 were Baht 5,058 million, Baht 3,399 million lower from 2Q 2008 due to lower Downstream profit from sales of Baht 4,006 million but partially offset with the increased Petrochemicals profit from sales of Baht 607 million. The significant improvement in 4 Petrochemicals result in 2Q 2009 was associated with both stronger paraxylene margin and higher production volume. Net finance cost was down by 53% or Baht 133 million in 2Q 2009 compared to 2Q 2008 as a result of lower debt level as well as lower interest rates. With the abovementioned factors, net profit was Baht 3,558 million in 2Q 2009, Baht 2,256 million lower than 2Q 2008. 5 5. Balance Sheet (Unit: million Baht except for percentages) 30 Jun, 31 Mar, 2009 2009 + / (-) + / (-) % Assets - Current assets 28,667 22,199 6,468 29% - Non-current assets 34,627 35,900 (1,273) (4%) Total assets 63,294 58,099 5,195 9% Liabilities - Current liabilities 29,545 26,596 2,949 11% - Non-current liabilities 7,914 9,255 (1,341) (14%) Total liabilities 37,459 35,851 1,608 4% Shareholders' equity - Issued & paid-up share capital 17,075 17,075 - - - Premium on share capital 4,032 4,032 - - - Retained earnings 4,580 1,023 3,557 348% - Fair value reserve 141 111 30 27% Minority interest 7 7 - - Total shareholders' equity 25,835 22,248 3,587 16% Total liabilities and shareholders'equity 63,294 58,099 5,195 9% As of 30 June 2009, current assets increased Baht 6,468 million from the previous quarter primarily due to higher inventory resulting from higher crude and product prices at the end of period. Non-current assets decreased by Baht 1,273 million as the net profit in 2Q 2009 decreased deferred income tax assets. Current liabilities increased by Baht 2,949 million whereas non-current liabilities decreased by Baht 1,341 million compared to 1Q 2009. An increase in current liabilities for the period was due to higher crude payables and higher short-term borrowings. The company made a scheduled repayment on its long-term syndicated loan of Baht 1,375 million in June 2009. Total shareholder's equity increased Baht 3,587 million due to 2Q 2009 net profit of Baht 3,558 million. 6 6. Financial Ratios Comparison of financial ratios is as follows: Profitability ratios 2Q 2009 2Q 2008 1Q 2009 1H 2009 1H 2008 Gross profit margin (%) 14.8% 14.1% 11.3% 13.2% 10.4% Net profit margin (%) 8.4% 8.5% 5.5% 7.1% 5.7% Interest coverage ratio (times) 46.3 31.8 15.5 26.9 18.3 Liquidity and debt to equity ratios 30 Jun, 2009 31 Mar, 2009 31 Dec, 2008 Current ratio (times) 1.0 0.8 0.5 Quick ratio (times) 0.2 0.2 0.1 Total debt to equity ratio (times) 0.9 1.1 1.4 Long term debt to equity ratio (times) 0.3 0.4 0.0 Net debt to equity ratio (times) 0.9 1.1 1.3 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 Name: Daniel E. Lyons Title: Managing Director Date: August 14, 2009 7