Management's Discussion and Analysis (MD&A) and Operating Results for the 4th Quarter of 2009 and for the year 2009 1. Financial and Operating Highlights 4Q 2009 4Q 2008 2009 2008 Crude intake (kbpd) 132.9 136.0 134.5 138.1 Paraxylene production (thousand tons) 82 71 368 316 Average forex rate (Baht/US$) 33.3 34.8 34.3 33.4 Gross refining margin (US$/BBL) 2.1 -28.3 5.6 -2.3 Paraxylene margin (US$/Ton) n/a n/a 116 -81 Sales (million Baht) 44,829 38,184 162,910 222,234 Gross profit (million Baht) 732 -13,179 11,134 -4,252 EBITDA (million Baht) 5 -13,892 8,417 -7,058 Net profit (million Baht) -362 -10,255 4,451 -6,864 Earnings per share (Baht)(1) -0.10 -2.96 1.29 -2.16 Adjusted Earnings per share (Baht)(2) -0.10 -2.96 1.29 -1.98 (1) Based on actual weighed average number of common shares during the period: ? FY 2008 3,174 million shares ? 4Q 2008, 4Q 2009 and FY 2009 3,461 million shares (2) Based on total current number of shares: 3,461 million shares 1 2. Benchmark Prices for Crude Oil and Refined Petroleum Products Average Platts Singapore quoted prices for crude oil and refined products Unit: US$/BBL 4Q 2009 4Q 2008 3Q 2009 2009 2008 Dubai 75.4 52.6 67.9 61.7 93.6 Tapis 77.8 59.7 71.6 64.9 104.2 Gasoline (95 Ron) 80.5 56.3 76.9 70.2 102.6 Jet fuel / kerosene 82.8 74.7 75.2 70.0 121.4 Diesel (0.5%S) 81.7 70.3 74.9 69.0 119.5 Fuel oil (180 cs) 70.9 44.8 64.9 57.0 78.6 LPG 58.0 47.9 47.7 45.3 68.7 Paraxylene-US$/Ton 953 673 1,013 913 1,119 Gasoline(95Ron)-US$/Ton(1) 684 479 653 597 872 Source: Mean of Platts Singapore and PCI (1) Converted to US$/Ton using 1 Ton = 8.5 barrels 4Q 2009 crude prices continued to rise from the previous quarter with Dubai and Tapis moving in the range of $68/bbl - $82/bbl. Average prices of Dubai and Tapis were $75.4/bbl and $77.8/bbl respectively, or 43% and 30% higher than the same quarter last year. However, 2009 full year average crude prices were much lower than in 2008. 2009 Dubai and Tapis average prices were $61.7/bbl and $64.9/bbl versus $93.6/bbl and $104.2/bbl in 2008. Overall product prices for 4Q 2009 increased versus the previous quarter along with the crude price movement. While jet fuel, diesel, and fuel oil prices increased broadly in line with the crude prices, gasoline prices increased to a lesser extent, resulting in weaker refining industry margins for the quarter. LPG prices remained under government price control with an average of Baht 11.2/kg during 4Q 2009 ($336/Ton or $29/bbl). Comparing 2009 with 2008, the spreads of jet fuel and diesel over crude prices were narrower reflecting the impact of the global economic slowdown. However, there was an improvement in fuel oil spreads as the increase in fuel oil prices outpaced crude prices. Paraxylene Asian Contract price (ACP) in 4Q 2009 was $953/Ton, slightly lower than in 3Q 2009, in line with the narrower spread between paraxylene and feedstock prices. Comparing 2009 with 2008, while paraxylene prices declined, the cost of feedstocks decreased by a greater extent, resulting in improved paraxylene margins. 2 3. Production and Gross Margin 4Q 2009 4Q 2008 +/(-) 2009 2008 +/(-) Refining capacity (kbpd) 177.0 177.0 - 177.0 177.0 - Crude intake (kbpd) 132.9 136.0 -3.1 134.5 138.1 -3.6 Refinery production - Light products (%)(1) 35.0% 35.4% -0.4% 34.8% 35.4% -0.6% - Middle distillates (%) 49.7% 49.0% 0.7% 50.2% 50.6% -0.4% - Heavy products (%) 15.3% 15.6% -0.3% 15.0% 14.0% 1.0% Paraxylene production ('000 tons) 82 71 11 368 316 52 Paraxylene Margin(US$/Ton) n/a n/a - 116 -81 197 Gross Refining Margin (US$/BBL) 2.1 -28.3 30.4 5.6 -2.3 7.9 (1) Excludes reformate for chemical feedstock Lower crude intake in 4Q 2009 compared to 4Q 2008 was mainly due to weaker industry margins. Crude runs were at a higher level during the first half of the year, then decreased in the second half of the year, primarily driven by planned maintenance activities in 3Q 2009 and weaker industry margins especially in 4Q 2009. 2009 crude runs were 134.5 KBD or 3.6 KBD lower than in 2008. The refining yields for 4Q 2009 and full year 2009 were in line with 2008 production. Paraxylene production was 82 Ktons in 4Q 2009 and 368 Ktons for the full year. 2009 production was 52 Ktons, or 16% higher than in 2008 due to improved margins for aromatic products. 2009 paraxylene margins were $116/Ton versus negative $81/Ton in 2008. 4Q 2009 Gross Refining Margin (GRM) was $2.1/bbl versus a loss of $28.3/bbl in 4Q 2008 as a result of stock gain impacts partially offset by weaker industry margins. Full year GRM improved from a loss of $2.3/bbl in 2008 to $5.6/bbl in 2009. Fluctuations in crude prices often impact refining margins due to stock impacts. In 2008, crude prices increased during the early part of the year but fell significantly during the second half. Over the full year, prices were much lower, resulting in stock losses, reducing refining margins. In 2009, crude prices also fluctuated,but generally rose, resulting in stock gains which helped refining margins.In total refining margins were much stronger in 2009 than in 2008; however, excluding stock impacts margins were lower. 3 4. Financial Performance in 4Q 2009 and full year 2009 (Unit: million Baht) 4Q 2009 4Q 2008 +/(-) 2009 2008 +/(-) Sales 44,829 38,184 6,645 162,910 222,234 (59,324) Cost of sales (44,097) (51,363) 7,266 (151,776) (226,486) 74,710 Gross profit 732 (13,179) 13,911 11,134 (4,252) 15,386 Selling,Administrative, and Management Benefit expenses (1,237) (1,215) (22) (4,724) (4,781) 57 Profit from sales (505) (14,394) 13,889 6,410 (9,033) 15,443 Memo: - Downstream (553) (12,679) 12,126 5,931 (7,169) 13,100 - Petrochemicals 48 (1,715) 1,763 479 (1,864) 2,343 Other income 2 6 (4) 59 87 (28) Operating profit (503) (14,388) 13,885 6,469 (8,946) 15,415 Share of profit from an associate 69 52 17 262 218 44 Profit before interest and income tax (434) (14,336) 13,902 6,731 (8,728) 15,459 Finance costs, net (104) (355) 251 (536) (1,189) 653 Profit before income tax (538) (14,691) 14,153 6,195 (9,917) 16,112 Income tax charge 176 4,436 (4,260) (1,744) 3,053 (4,797) Net profit (362) (10,255) 9,893 4,451 (6,864) 11,315 Gross profit in 4Q 2009 was Baht 732 million, Baht 13,911 million higher than 4Q 2008 due to the stronger refining and paraxylene margins partly offset by lower petroleum sales volumes. Full year 2009 gross profit was Baht 11,134 million versus the loss of Baht 4,252 million in 2008. The significant improvement in refining margins was due to the favorable stock impacts partially offset by weaker industry margins and slightly lower sales volumes. Selling, administrative and management benefit expenses in 4Q 2009 and full year 2009 were Baht 1,237 million and Baht 4,724 million respectively. Full year expenses were at about the same level for both years. Profit from sales in 4Q 2009 was a loss of Baht 505 million compared to a loss of Baht 14,394 million in 4Q 2008. The improvement of Baht 13,889 million was contributed by the Downstream segment of Baht 12,126 million and the Petrochemicals segment of Baht 1,763 4 million. Full year 2009 profit from sales was Baht 6,410 million, compared to Baht 9,033 million losses in 2008. Other income included dividend receipts from Bangkok Aviation Fuel Services (BAFS) shares and gains from asset disposals. Finance costs decreased from Baht 355 million in 4Q 2008 to Baht 104 million in 4Q 2009 due to lower interest rates and a reduction in our average debt balance. Full year finance costs declined by Baht 653 million, or 55% from the prior year. Due to the net losses incurred for the period, we had a net tax credit in 4Q 2009, 4Q 2008 and full year 2008. For full year 2009, income tax charges were Baht 1,744 million, an effective tax rate of 28%. As a result of the foregoing factors, the company reported a 4Q 2009 net loss of Baht 362 million, and full year 2009 a net profit of Baht 4,451 million. 5 5. Balance Sheet (Unit: million Baht except for percentages) 31 Dec, 31 Dec, 2009 2008 + / (-) + / (-) % Assets -Current assets 26,372 18,434 7,938 43% -Non-current assets 35,643 36,636 (993) (3%) Total assets 62,015 55,070 6,945 13% Liabilities -Current liabilities 31,375 33,682 (2,307) (7%) -Non-current liabilities 6,565 968 5,597 578% Total liabilities 37,940 34,650 3,290 9% Shareholders' equity -Issued & paid-up share capital 17,075 17,075 - - -Premium on share capital 4,032 4,032 - - -Retained earnings 2,782 (802) 3,584 N/A -Fair value reserve 179 108 71 65% Minority interest 7 7 - - Total shareholders' equity 24,075 20,420 3,655 18% Total liabilities and shareholders'equity 62,015 55,070 6,945 13% 2009 current assets increased by Baht 7,938 million versus 2008 primarily due to higher trade receivables and inventories, reflecting higher year-end crude and product prices. Non-current assets decreased by Baht 993 million mainly due to a reduction in deferred income tax assets as prior year tax losses were partially utilized. This was partly offset by an increase in investing activities in purchasing property, plant and equipment mainly associated with Euro IV standards preparations. Total liabilities increased by Baht 3,290 million mainly due to higher accounts payable of Baht 3,060 million driven by higher year-end crude prices. As of year-end, total debts were Baht 27,863 million versus Baht 27,971 million in 2008. The 2009 debts consisted of Baht 22,363 million of short-term borrowings which included Baht 4,795 million Bills of Exchange launched during the year, and Baht 5,500 million of long-term loans. Over the year, our debts remained at about the same level as the increase in short term financing about offset the long term debt repayment of 2,750 million. Higher non-current liabilities of Baht 5,597 million were due to the classification of long term loan of Baht 8,250 million to current liability in 2008, to satisfy the Thai Accounting Standard (TAS) requirement. Total shareholders' equity increased by Baht 3,655 million, reflecting 2009 net profit of Baht 4,451 million, partially offset by an interim dividend payment of Baht 865 million (0.25 Baht/share) paid in September. 6 6. Financial Ratios Comparison of financial ratios is as follows: Profitability ratios 4Q 2009 4Q 2008 3Q 2009 2009 2008 Gross profit margin (%) 1.6% -34.5% 0.9% 6.8% -1.9% Net profit margin (%) -0.8% -26.9% -1.4% 2.7% -3.1% Interest coverage ratio(times) 0.0 n/a n/a 15.5 n/a Liquidity and debt to equity ratios 31 Dec,2009 30 Sep, 2009 31 Dec, 2008 Current ratio (times) 0.8 0.9 0.5 Quick ratio (times) 0.2 0.2 0.1 Total debt to equity ratio (times) 1.2 1.0 1.4 Long term debt to equity ratio (times) 0.2 0.3 0.0 Net debt to equity ratio (times) 1.1 1.0 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: Robert Michael Cooper Title: Managing Director Date: February 26, 2010 7