8. Capital Structure

As of 31 December 2008, PTTEP’s capital structure consisted of Baht
21,500 million liabilities and Baht 134,104 million shareholders’
equities. The liabilities to shareholders’ equities ratio were 0.16
times. Details of the capital structure are as follows:

1.  Securities

  8.1.1 Common Share

PTTEP currently has a registered share of Baht 3,322 million consisting
of 3,322 million ordinary shares at the par value of Baht 1 per share.

In 2008, the Company’s registered paid-up capital was increased by Baht
9.66 million (9.66 million shares at Baht 1 each), from the exercise of
warrants to purchase the Company’s common shares by the management and
employees according to the 2002-2006 Employee Stock Ownership Plan or
ESOP (please refer to details of warrants in item 8.1.3). Therefore, at
31 December 2008, the Company’s registered paid-up capital was at Baht
3,307.08 million (3,307.08 million ordinary shares, at a par value of
Baht 1).

2.  Bonds and Short-Term Commercial Paper

In April 2008 PTTEP launched the Short-Term Financing Program (“PF”)
which involved the inaugural issuance of the company’s Bills of Exchange
(B/Es) via Public Offering to institutional and high net-worth
investors. PTTEP’s Bills of Exchange are issued monthly on a revolving
basis whereby biddings were conducted on the third Wednesday of every
month to select the Arranger/Paying Agent bank offering the best
discount rate. Bidding dates were subsequently changed to the third
Thursday of every month beginning September 2008 onwards.

As of 31 December 2008, PTTEP has Baht 18,500 million in Baht Bonds
outstanding and Baht 3,000 million in B/Es outstanding; therefore,
PTTEP’s total debt to equity ratio was 0.16 times, and the long term
debt (including current portion of long-term loan) to equity ratio was
0.14 times.

Details of bonds and Bills of Exchange (B/Es) as of 31 December 2008 are
as follows:

+------------+-------------+-----------+---------+--------------------+
| Debt       | Issue Size  | Rate per  | M       | Other Details      |
| Security   |             | annum     | aturity |                    |
+------------+-------------+-----------+---------+--------------------+
| An         | Baht 2,500  | 4.625%    | 15      | PTTEP was the      |
| unsecured  | million     | per       | years,  | issuer. Swapped    |
| unsu       |             | annum,    | due in  | into USD 60.83     |
| bordinated | (2.5        | semi      | March   | million at an      |
| Baht Bond  | million     | -annually | 27,     | interest rate of   |
| issued in  | units at a  |           | 2018    | 3.85% per annum in |
| 2003*      | face value  |           |         | 2005, then         |
|            | of Baht     |           |         | unwinded swap to   |
|            | 1,000 per   |           |         | Baht 2,500 MM at   |
|            | unit.)      |           |         | 3.30% per annum in |
|            |             |           |         | 2007               |
+------------+-------------+-----------+---------+--------------------+
| Unsecured, | Baht 3,500  | 4.88% per | 3       | PTTEP was the      |
| unsu       | million     | annum,    | years,  | issuer.            |
| bordinated |             | semi      | due     |                    |
| Baht Bond  | (3.5        | -annually | 2010    |                    |
| issued     | million     |           |         |                    |
| February   | units at a  |           |         |                    |
| 2007       | face value  |           |         |                    |
|            | of Baht     |           |         |                    |
|            | 1,000 per   |           |         |                    |
|            | unit.)      |           |         |                    |
+------------+-------------+-----------+---------+--------------------+
| Unsecured, | Baht 6,000  | 3.60% per | 3       | PTTEP was the      |
| unsu       | million     | annum,    | years,  | issuer.            |
| bordinated |             | semi      | due in  |                    |
| Baht Bond  | (6 million  | -annually | 2010    | Swapped into       |
| issued     | units at a  |           |         | interest from      |
| June 2007  | face value  |           |         | fixed 3.60% to     |
| -Baht      | of Baht     |           |         | floating 6MFDR* +  |
| 12,500     | 1,000 per   |           |         | 0.99% in September |
| million    | unit.)      |           |         | 2007               |
| issued in  |             |           |         |                    |
| total      |             |           |         |                    |
+------------+-------------+-----------+---------+--------------------+
|            | Baht 3,500  | 3.91% per | 5       | PTTEP was the      |
|            | million     | annum,    | years,  | issuer.            |
|            |             | semi      | due in  |                    |
|            | (3.5        | -annually | 2012    |                    |
|            | million     |           |         |                    |
|            | units at a  |           |         |                    |
|            | face value  |           |         |                    |
|            | of Baht     |           |         |                    |
|            | 1,000 per   |           |         |                    |
|            | unit.)      |           |         |                    |
+------------+-------------+-----------+---------+--------------------+
|            | Baht 3,000  | 5.13% per | 15      | PTTEP was the      |
|            | million     | annum,    | years,  | issuer.            |
|            |             | semi      | due in  |                    |
|            | (3 million  | -annually | 2022.   |                    |
|            | units at a  |           | Issuer  |                    |
|            | face value  |           | has an  |                    |
|            | of Baht     |           | option  |                    |
|            | 1,000 per   |           | for     |                    |
|            | unit.)      |           | early   |                    |
|            |             |           | red     |                    |
|            |             |           | emption |                    |
|            |             |           | in 2012 |                    |
+------------+-------------+-----------+---------+--------------------+
| Bills of   | Baht 1,000  | 3.85%     | 94      | PTTEP was the      |
| Exchange   | million     |           | days,   | issuer             |
|            |             |           | due in  |                    |
|            |             |           | January |                    |
|            |             |           | 23,     |                    |
|            |             |           | 2009    |                    |
+------------+-------------+-----------+---------+--------------------+
| Bills of   | Baht 1,000  | 3.51%     | 94      | PTTEP was the      |
| Exchange   | million     |           | days,   | issuer.            |
|            |             |           | due in  |                    |
|            |             |           | F       |                    |
|            |             |           | ebruary |                    |
|            |             |           | 27,     |                    |
|            |             |           | 2009    |                    |
+------------+-------------+-----------+---------+--------------------+
| Bills of   | Baht 1,000  | 3.73%     | 94      | PTTEP was the      |
| Exchange   | million     |           | days,   | issuer             |
|            |             |           | due in  |                    |
|            |             |           | March   |                    |
|            |             |           | 27,     |                    |
|            |             |           | 2009    |                    |
+------------+-------------+-----------+---------+--------------------+

* 6MFDR – The average of the average 6 months fixed deposit of 4 banks
(Bangkok Bank Limited, Kasikorn Bank, Krung Thai Bank, and Siam
Commercial Bank) which appears on the Bank of Thailand website.

8.1.3 Warrant

On 30 April 2002, the PTTEP’s General Shareholders’ Meeting consented to
the 5-year (2002-2006) Employee Stock Ownership Plan to issue and to
offer 10,000,000 units of warrant to purchase the Company’s common
shares. Details of the warrant to be allocated each year were to be
approved by the Shareholders on a yearly basis.

On 28 April 2004, PTTEP’s General Shareholders’ Meeting consented to the
reallocation of 2.4 million shares[1] which was previously registered
and reserved for the exercise of right under the warrant issued to
management and employee in 1998, but had expired since 15 June 2003
(none of the warrant was exercised), to be reserved for the exercise of
right under the newly issued 2.4 million units of warrant issued for the
management and employee in 2004, 2005, and 2006.

On 12 April 2006, PTTEP amended its par value from Baht 5 to Baht 1 per
share in accordance with the 2006 General Shareholders Meeting’s
resolution. The change of its par value affected the exercise ratio of
the warrant to share from 1:1 to be 1:5, including the exercise price
from Baht 111, Baht 117, Baht 183, Baht 278 and Baht 456 to be Baht
22.20, Baht 23.40, Baht 36.60, Baht 55.60, and Baht 91.20 respectively.
The details of the allocation of each warrant which were approved by the
General Shareholders’ Meeting are as follows:

+------+--------------+-------------+--------------+-----------------+
| Year | No. of       | Year to     | Exercise     | No. of warrant  |
|      | warrants     | Maturity    | Price        | to              |
|      |              |             |              |                 |
|      |              |             | (Baht)       | No. of common   |
|      |              |             |              | share           |
+------+--------------+-------------+--------------+-----------------+
| 2002 | 2,000,000    | 5           | 22.20        | 1 : 5           |
+------+--------------+-------------+--------------+-----------------+
| 2003 | 2,000,000    | 5           | 23.40        | 1 : 5           |
+------+--------------+-------------+--------------+-----------------+
| 2004 | 2,800,000    | 5           | 36.60        | 1 : 5           |
+------+--------------+-------------+--------------+-----------------+
| 2005 | 2,800,000    | 5           | 55.60        | 1 : 5           |
+------+--------------+-------------+--------------+-----------------+
| 2006 | 2,800,000    | 5           | 91.20        | 1 : 5           |
+------+--------------+-------------+--------------+-----------------+
| T    | 12,400,000   |             |              |                 |
| otal |              |             |              |                 |
+------+--------------+-------------+--------------+-----------------+

Note: In 2002, the PTTEP’s General Shareholders’ Meeting resolved to
issue and offer the warrants to its directors, management and employee.
In 2003 – 2006 the General Shareholders’ Meeting resolved to issue and
offer the warrants to its management and employee.

Starting from the year 2003 to the end of 2008, a total of 9,416,880
units of warrants had been exercised.

8.1.4 Non-Voting Depository Receipt or NVDR

An NVDR is a trading instrument issued by the Thai NVDR Company Limited,
a subsidiary wholly owned by the Stock Exchange of Thailand (SET). NVDRs
are automatically regarded as listed securities in the SET. The
objective of issuing NVDRs is not only to stimulate trading activities
in the Thai stock market, but also to help eliminate foreign investment
barriers, such as the foreign investment limits and the impediments
faced by institutional investors who previously could not trade in the
existing Thai Trust Fund. Investors will receive all financial benefits;
i.e., dividends, right issues or warrants, just as if they had invested
in the Company’s common shares. The only difference between investing in
an NVDR and the Company’s shares is the voting right. Additionally,
although the NVDR is designed mainly to ease foreign investment
barriers, the SET does not prohibit Thai investors from investing this
instrument.

As reported on the SET website as of 12 January 2009, the Company’s
common shares of NVDRs issued and outstanding amounted to 41,858,440
shares or 1.27% of total registered paid-up shares, which amounted to
3,307,084,400 shares. The NVDR holders will not participate and vote in
shareholder’s meeting, except in the case where a listed company wishes
to delist its shares from the SET.

8.1.5 The agreement between the group of major shareholders which
affects securities issuance/offering or the operation of business

None

8.2 Shareholders

8.2.1 Top 10 major shareholders

Top 10 major shareholders of the Company as of 18 August 2008 are as
below. (The date which the Company closed shares registration book for
the right to receive the 2008 interim dividend.)

  --------------------------------------------------------------------------
  Ranking   Shareholders                     Amount          % of a total
                                                             shares
  --------- -------------------------------- --------------- ---------------
  1.        PTT Public Company Limited       2,167,500,700   65.55

  2.        Nortrust Nominees Limited        57,396,052      1.74

  3.        HSBC(Singapore) Nominees PTE     56,950,751      1.72
            Ltd.                                             

  4.        The Bank of New York (Nominees)  50,352,100      1.52
            Limited                                          

  5.        Little Down Nominee Limited      44,871,000      1.36

  6.        Thai NVDR Company Limited        44,683,678      1.35

  7.        Chase Nominees Limited 42        34,338,400      1.04

  8.        State Street Bank and Trust      32,487,911      0.98
            Company for London                               

  9.        BNP Paribas Securities Services  26,730,045      0.81
            Luxembourg                                       

  10.       State Street Bank and Trust      23,828,489      0.72
            Company                                          
  --------------------------------------------------------------------------

8.2.2 Major shareholder who has significant influence on determining
company policy or the operation of business

PTT, as the major shareholder, has nominated any person and the
management who possess the qualification in accordance with the company
criteria for election as a director or the chief executive officer. The
nominating committee will consider and propose the list of qualified
persons to the board of directors or the shareholder’s meeting for
approval, see additional details in item 9.2.1.

8.3 Dividend Policy

Normally, it is the policy of the Company’s Board of Directors to
propose to the shareholders an annual dividend of not less than 30% of
net income. Interim dividend may also be considered from time to time.
The Company has no dividend policies for its subsidiaries.

[1] ¹ On 16 June 1998, PTTEP’s General Shareholders’ Meeting approved
the issuance and offering of 1.2 million units of warrant to purchase
PTTEP’s common shares to management and employees of the Company. The
warrants had a 5 year life, and the exercise price of Baht 300.
On 30 August 2000, PTTEP’s Extraordinary General Shareholders’ Meeting
resolved to change the par value of the Company’s common shares from
Baht 10 to Baht 5, and as a result, the exercise price of the warrants
became Baht 150 each. On 15 June 2003, the warrant issued in 1998 was
expired.